AB 1456,
as amended, Jones-Sawyer. Higher education: tuition and fees:begin delete pilot program.end deletebegin insert study.end insert
Existing law provides for a public postsecondary education system in this state. This system consists of the University of California, the California State University, and the California Community Colleges. Existing law authorizes these institutions to require that mandatory systemwide fees and tuition, among other fees, be paid bybegin insert enrolledend insert studentsbegin delete at these institutionsend delete.
Existing law establishes the Student Aid Commission as the primary state agency for the administration of state-authorized student financial aid programs available to students attending all segments of postsecondary education.
This bill would
require the Student Aid Commissionbegin delete, the Trustees of the California State University, and the Board of Governors of the California Community Colleges, and would request the Regents of the University of California, to jointlyend deletebegin insert and the Legislative Analyst toend insert conduct a study of the effects of enacting, in future legislation, a Pay it Forward, Pay it Back Pilot Programbegin insert and would designate the Student Aid Commission as the lead body in charge of preparing the studyend insert. Thebegin delete bill would specify that theend deletebegin insert study would evaluate aend insert pilot
programbegin delete would beend delete
designed tobegin delete replace the current system of charging students upfront tuition and fees, including forend deletebegin insert provide an additional option for students to finance the costs of their education, by paying the costs of upfront tuition, fees, andend insert
room and board, for enrollment atbegin delete publicend delete institutions of higher education,begin delete and instead allow certain students toend deletebegin insert for admitted resident students whoend insert sign a binding contract to, upon graduation, paybegin delete a specified percentageend deletebegin insert 2 to 4%, inclusive,end insert of their annual adjusted gross incomes to the state or the institution for a specified number of years, as provided.begin delete Thisend deletebegin insert Theend insert
bill would further specify that the pilot program could vary by institutionbegin delete, as specifiedend delete.
This bill would require the study to, among other things, identify at least one campus ofbegin delete one or more of the public segmentsend deletebegin insert each segmentend insert ofbegin insert publicend insert higher educationbegin insert and one campus of a nonprofit private postsecondary educational institutionend insert to participate in the pilot program and establish an immediate source of funding for the first 15 to 20 years, inclusive, of the pilot program, as
provided. The bill would require that the study be presented for consideration by the Legislature, and would require the Student Aid Commission to submit a report on the study to the Assembly Committee on Higher Education and the Senate Committee on Education on or before September 30, 2015.begin insert
The bill would also make legislative findings and declarations related to these provisions.end insert
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
begin insert(a)end insertbegin insert end insert The Legislature finds and declares all of the
2following:
3 3(a)
end delete
4begin insert(1)end insert The Legislature recognizes that postsecondary education
5has expanded opportunities for Californians to qualify for
6high-quality
jobs and entry into the middle class, providing clear
7benefits to this state’s economy.
7 8(b)
end delete
9begin insert(2)end insert In response to decreased state support, costs at the University
10of California (UC) and the California State University (CSU) have
11grown significantly over the past decade. In 2000, the total cost
P3 1of a year of education at UC was $15,000. By 2013, this figure
2had more than doubled to $32,400. Costs at CSU are lower, but
3still increased by nearly 70 percent in this period. These increases
4far outpace inflation.
14 5(c)
end delete
6begin insert(3)end insert Tuition at California’s public institutions of higher education
7has been rising far more rapidly than family incomes. In 2000, the
8cost of attendance for a UC student living on campus was 25
9percent ofbegin delete Californiaend deletebegin insert California’send insert median family income. In 2009,
10this cost had grown to 39 percent of median family income. Costs
11at CSU also grew relative to incomes,begin delete goingend deletebegin insert increasingend insert from 19
12percent of median family income
in 2000 to 29 percent of median
13family income in 2009.
21 14(d)
end delete
15begin insert(4)end insert The increasing unaffordability of a college education has
16forced students to borrow more money to pay for higher education,
17causing 51 percent of students graduating from four-year
18institutions of higher education in California to borrow an average
19of $18,879.
3 20(e)
end delete
21begin insert(5)end insert In the 1970s, the General Fund provided $12 for every dollar
22that students paid in fees; by 2009, this amount had fallen to $1.40
23for every dollar in student fees.
6 24(f)
end delete
25begin insert(6)end insert High levels of student debt are damaging not only tobegin delete theend deletebegin insert anend insert
26 individual student’s ability to succeed financially but also will
27have grave consequences for the future economy of this state.
9 28(g)
end delete
29begin insert(7)end insert As of spring 2011, onlybegin delete 77.9end deletebegin insert 83end insert percent of UC students and
3051.4 percent of CSU students entering as freshmen had graduated
31within six years. For transfer students, only 79.6 percent of UC
32students and 64.6 percent of CSU students had graduated within
33four years.
14 34(h)
end delete
35begin insert(8)end insert By 2025, California is projected to have a shortage of 2.3
36million college graduates in the state’s workforce if the number
37of young and older adults who go to college and complete a higher
38education is not significantly increased.
18 39(i)
end delete
P4 1begin insert(9)end insert The Legislature finds that it must halt the decrease inbegin delete thisend delete
2begin insert theend insert state’s support for public education and, over time, must
3increase its contribution to the funding of higher
education.
21 4(j)
end delete
5begin insert(10)end insert The Legislature finds that it must immediately seek another
6approach to financingbegin delete the students’end deletebegin insert a student’send insert share of the cost
7ofbegin delete publicend delete higher education inbegin delete thisend deletebegin insert
theend insert state that will not result in
8students graduating from Californiabegin delete publicend delete colleges and universities
9burdened with debt.
26 10(k)
end delete11begin insert(11)end insert There is growing interest in a new financing strategy.
27 12(l)
end delete
13begin insert(12)end insert The Legislature recognizes that it is in this state’s interest
14to study and recommend a potential pilot program.
15(b) It is the intent of the Legislature that revenue received from
16a Pay it Forward, Pay it Back pilot program would be managed
17by the state.
18(c) It is further the intent of the Legislature that a Pay it
19Forward, Pay it Back pilot program would not replace existing
20forms of financial aid, including grants, scholarships, and loans,
21but would instead serve as an additional option for students to
22finance their education.
(a) The Student Aid Commissionbegin delete, the Trustees of the begin insert and the Legislative
24California State University, and the Board of Governors of the
25California Community Colleges shall, and the Regents of the
26University of California are requested to, jointlyend delete
27Analyst shallend insert conduct a study of the effects of enacting, in future
28legislation, a Pay it Forward, Pay it Back Pilot Program.begin insert The
29Student Aid Commission is designated as the lead body in charge
30of
preparing the study.end insert Thebegin insert study would evaluate aend insert pilot program
31begin delete would beend delete
designed tobegin delete replace the current system of charging begin insert provide an
32students upfront tuition and fees, including forend delete
33additional option for students to finance the costs of their
34education, including the costs of upfront tuition, fees, andend insert room
35and board, for enrollment atbegin delete publicend delete institutions of higher education.
36(b) The pilot program would do both of the following:
37(1) Allow a student who is a state resident, as determined by
38the respective institution, and who otherwise qualifies for
39admission to that institution, to enroll at the
institution without
40paying upfrontbegin delete tuition or fees.end deletebegin insert
tuition, fees, or room and board.end insert
P5 1(2) Provide that, in lieu of paying upfrontbegin delete tuition or fees,end deletebegin insert tuition,
2fees, or room and board,end insert a student may sign a binding contract to,
3upon graduation, paybegin delete a specified percentageend deletebegin insert
2 to 4 percent,
4inclusive,end insert of his or her annual adjusted gross income to the state
5or the institution for a specified number of years.
6(c) The pilot program could vary by institution, in regard to
7each of the following:
8(1) The total cost of attendance at the institution required to be
9reimbursed.
10(2) The portion of the total cost of attendance to be paid by the
11state.
12(3) The number of years that a student shall be required to make
13payments, as specified in the contract.
14(4) The percentage of annual adjusted gross income required to
15be paid by a student, as specified in
the contract.
16(d) The study of the pilot program shall do all of the following:
17(1) Identify at least one campusbegin delete of one or more of the public begin insert of the University of California, one
18segments of higher educationend delete
19campus of the California State University, one campus of the
20California Community Colleges, and one campus of a nonprofit
21private postsecondary educational institutionend insert to participate in the
22pilot program.begin insert The campuses identified pursuant to this paragraph
23shall be regionally diverse.end insert
24(2) Based on current research, and projections of state subsidies,
25specify the number of years and percentage of annual adjusted
26gross income for a contract at each participating institution that
27would reimburse thebegin delete nonstateend delete cost of a student’s attendance.
28(3) (A) Establish an immediate source of funding for the first
2915 to 20 years, inclusive, of the pilot program, which would include
30the establishment of a revolving fund for the deposit of payments
31made under the pilot program, and consider the possibility of using
32social impact bonds as an immediate funding source.
33(B) For the purposes of this paragraph, the term “social impact
34bond” means an agreement between a nongovernmental
entity and
35begin delete a publicend deletebegin insert anend insert institution of higher education under which a student’s
36cost of attendance is paid for by the nongovernmental entity in
37exchange for a security interest in the payments made by the
38student pursuant to paragraph (2) of subdivision (b).
39(e) (1) The study of the pilot program shall be presented for
40consideration by the Legislature.
P6 1(2) The Student Aid Commission shall submit a report on the
2study of the pilot program to the Assembly Committee on Higher
3Education and the Senate Committee on Education on or before
4September 30,
2015.
Section 2 of this act shall become inoperative on June
630, 2016, and, as of January 1, 2017, is repealed, unless a later
7enacted statute, that becomes operative on or before January 1,
82017, deletes or extends the dates on which it becomes inoperative
9and is repealed.
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