BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 721


                                                                    Page  1


          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          721 (Medina)


          As Amended  July 8, 2015


          Majority vote


           -------------------------------------------------------------------- 
          |ASSEMBLY:  | 78-0 |(June 2, 2015) |SENATE: |40-0  | (August 24,     |
          |           |      |               |        |      |2015)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 


          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.








                                                                     AB 721


                                                                    Page  2




          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  








                                                                     AB 721


                                                                    Page  3


          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  








                                                                     AB 721


                                                                    Page  4


          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