BILL ANALYSIS Ó
AB 721
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CONCURRENCE IN SENATE AMENDMENTS
AB
721 (Medina)
As Amended July 8, 2015
Majority vote
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|ASSEMBLY: | 78-0 |(June 2, 2015) |SENATE: |40-0 | (August 24, |
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Original Committee Reference: HIGHER ED.
SUMMARY: Establishes requirements on institutions related to
disclosure of student loan data and disclosure of information to
students seeking private loans. Specifically, this bill:
1)Requires public, private or independent colleges, except
California Community Colleges (CCC), to provide average
graduate loan debt information publically, on the
institution's Internet Web site.
2)Requires public, private and independent institutions, prior
to certifying a private student loan, to provide the student
information concerning all state and federal financial aid,
including federal student loan moneys, available to that
student.
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3)Requires an institution that does not participate in federal
student loan programs to inform the student of such and that
the student may be eligible for federal loans at a
participating institution. The institution is required to
provide the student with information regarding the Cal Grants
and Federal Student Aid Web sites.
The Senate amendments require institutions to make average
graduate loan debt information available within 12 months of a
completed academic year, and clarify that average graduate loan
debt information shall be provided for each type of credential
offered by the institution.
EXISTING LAW requires public, private and independent
postsecondary educational institutions, except the CCC, to state
in printed and online financial aid materials and with private
loan applications specified information related to federal
student loans and private loans.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS: Average graduate loan debt data. This bill would
require public, private, independent postsecondary education
institutions, except CCCs, to disclose average debt of graduates
by degree level. California's public and most nonprofit,
private four-year institutions disclose this data currently to
one or more of several organizations (United States News & World
Report, Peterson's and College Board) that conducts annual
surveys of colleges that include questions about student loan
debt. To make the annual surveys easier for colleges, the
organizations use questions from a shared survey instrument
called the Common Data Set (CDS). The Institute for College
Access and Success (TICAS), in creating the annual Project on
Student Debt, licenses and uses the data from one of the
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surveying organizations. According to TICAS, one limitation of
the CDS is that very few for-profit colleges report debt data
through CDS and national data show that borrowing levels at
for-profit colleges are, on average, higher than borrowing at
other types of colleges. The data disclosure requirements of
this bill are based on the CDS.
Other loan reporting requirements. In addition to CDS, there
are two other notable formats in which institutions report
student loan information. The Integrated Postsecondary
Education Data System (IPEDS) is required for all institutions
and includes annual, but not cumulative, student loan debt
information. Federal "gainful employment" (GE) rules will
require most for-profit programs, and certificate programs at
non-profit and public institutions, to provide program-level
median graduate loan debt data. The GE rules are scheduled to
take effect July 1, 2015; pending the outcome of ongoing
industry litigation. Some for-profit institutions have
expressed concern about the reporting requirements contained in
this bill, arguing that these requirements are
duplicative/conflicting with GE reporting requirements.
According to the author, in order for a student to compare loan
debt data across higher education institutions, all institutions
must disclose the same data. This bill follows the CDS average
graduate loan debt for several reasons, including that this
formula is based on the cost of a student to start and complete
at the institution (whereas GE median graduate debt figures may
be affected by outliers of students who transfer in a
significant number of educational credits) and that most
California institutions are already voluntarily reporting this
data, thereby reducing the cost of compliance with the
requirements of this bill.
Private loans vs. federal loans. Generally, private loans are
recommended as a last resort for students, once all federal
loans have been exhausted. Data shows, however, that many
students who obtain private loans have unused federal loan
moneys available. According to TICAS, in 2011-12, 47% of
private loan borrowers borrowed less than they could have under
the federal Stafford loan program. This bill would require
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institutions to notify students, prior to certifying a private
student loan, of the student's eligibility for federal student
loan moneys, and, if the institution does not participate in
federal loans, to notify students that the student may be
eligible for federal loans at a participating institution. The
institution would be required to provide the student with
information regarding the Cal Grants and Federal Student Aid Web
sites.
Analysis Prepared by: Laura Metune /
HIGHER ED. / (916) 319-3960 FN: 0001270