BILL ANALYSIS �
SB 1210
Page 1
SENATE THIRD READING
SB 1210 (Lara)
As Amended August 18, 2014
Majority vote
SENATE VOTE :26-11
HIGHER EDUCATION 8-2 APPROPRIATIONS 12-4
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|Ayes:|Williams, Bloom, Fong, |Ayes:|Gatto, Bocanegra, |
| |Jones-Sawyer, Levine, | |Bradford, |
| |Medina, Quirk-Silva, | |Ian Calderon, Campos, |
| |Weber | |Eggman, Gomez, Holden, |
| | | |Pan, Quirk, |
| | | |Ridley-Thomas, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Fox, Wilk |Nays:|Bigelow, Donnelly, Jones, |
| | | |Wagner |
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SUMMARY : Establishes the California Development, Relief, and
Education for Alien Minors (DREAM) Loan Act to provide loans to
students attending the California State University (CSU) and the
University of California (UC). Specifically, this bill :
1)Establishes the DREAM Program to, commencing with the 2015-16
academic year provide student loans to students who meet
specified requirements.
2)Requires California Student Aid Commission (CSAC), in
collaboration with the participating institution, to certify
that the student satisfies all of the requirements before the
participating institution may issue an award to the student
pursuant to this bill.
3)Provides that the amount of the DREAM loan offered to an
individual student by a participating institution shall be
determined by the institution, subject to various provisions,
including that the loan may not exceed the financial need of
the student; no student may borrow more than $4,000 per year
and $20,000 per aggregate from any participating institution;
the interest rate for loans issued under the program shall be
the same as the then-current interest rate for undergraduate
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loans under the William D. Ford Federal Direct Loan Program;
the standard repayment term for a DREAM loan shall be 10
years; and, repayment shall commence following a six-month
grace period that begins when a student graduates or ceases to
maintain at least half-time enrollment in a degree or
certificate program; and
4)Provides that at the start of each academic year, before DREAM
loans for that academic year are awarded, each participating
institution shall contribute discretionary funds into its
DREAM revolving fund so that the institution's contribution of
funds equals or exceeds 50% of all funds in the institution's
DREAM revolving fund.
5)Provides that if an institution terminates its participation
in the DREAM Program, the institution shall continue to
service DREAM loans, collect DREAM loan repayments, and
perform all due diligence required by the federal Fair Credit
Reporting Act until the last students at that institution
issued loans under the DREAM Program prior to the institution
terminating its participation have repaid their loans. An
institution that terminates its participation in the DREAM
Program, is also required to annually repay all funds provided
by the state as the institution collects DREAM loan
repayments.
6)Requires CSU and UC to annually report to the Legislature as
part of their respective annual financial aid reports the
dollar amount of each DREAM loan awarded and number of
students for whom a DREAM loan was awarded that academic year
and other specified information.
7)Requires participating institutions to establish various
processes and procedures, including those covering entrance
and exit loan counselling, loan default procedures, and fund
maintenance. Requires CSU and UC to adopt regulations
governing withholding of institutional services from students
or former students in default of their DREAM loan.
8)Provides that if a state court finds this bill, or any
provision adopted by the UC Regents, as unlawful, the court
may order, as equitable relief, that the participating
institution subject to the lawsuit terminate all loans awarded
deemed unlawful, but no money damages, loans, or other
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retroactive relief, may be awarded. Provides that the CSU and
UC are immune from the imposition of any award of money
damages, loans, or other retroactive relief.
EXISTING LAW :
1)Qualifies students that meet all of the following outlined
requirements for lower "resident" fee/tuition payments at the
California Community College (CCC), CSU, and UC ("AB 540
Students") (AB 540 (Firebaugh), Chapter 814, Statutes of
2001):
a) Is a student, other than a nonimmigrant alien within the
meaning of Title 8 of the United States Code Section
1101(a)(15);
b) Attended high school in California for three or more
years;
c) Graduated from a California high school or attainment of
equivalency;
d) Registered as an entering student at, or enrolled at, an
accredited institution of higher education in California
not earlier than the fall semester or quarter of the
2001-02 academic year; and
e) In the case of a person without lawful immigration
status, files an affidavit with the institution of higher
education stating that the student has filed an application
to legalize his or her immigration status, or will file an
application as soon as he or she is eligible to do so.
2)Authorizes, beginning January 1, 2013, AB 540 students to be
eligible to apply for, and participate in, any student
financial aid program administered by the State of California
to the full extent permitted by federal law. CSAC is required
to establish procedures and forms that enable AB 540 students
to apply for, and participate to the extent permitted by
federal law.
3)Provides that a student attending the CSU, the CCC, or the UC
who is exempt from paying nonresident tuition under the
provisions of AB 540 is eligible to receive a scholarship
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derived from nonstate funds received, for the purpose of
scholarships, by the segment at which he or she is a student.
4)Requires the Trustees of the CSU and the Board of Governors of
the CCC, and requests the UC Regents, to establish procedures
and forms that enable AB 540 students to apply for, and
participate in, all student aid programs administered by these
segments to the full extent permitted by federal law.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)UC: Based on current and projected enrollment of AB 540
students, and an assumption that half would borrow, UC
estimates about 1,500 borrowers in the first year, growing to
about 1,800 borrowers by the fourth year and thereafter.
Based on the program's 50/50 cost-sharing parameters, and not
counting loan repayments, General Fund and UC costs would each
be $3.2 million in 2015-16 and $3.6 million annually
thereafter.
2)CSU: Based on its AB 540 population and program participation
assumptions, General Fund and CSU costs would each be $1.5
million annually.
3)Administrative costs for UC and CSU will be covered by the 5%
of program revenues allowed in the bill.
COMMENTS : According to the author, undocumented students are
exempt from paying nonresident tuition and are entitled to state
and institutional financial aid, but lack access to student
loans from the federal government. As a result, they have a
"gap" in their financial aid packages of roughly $5,000 to
$6,000 at UC and $3,000 at CSU that other students with similar
financial circumstances do not have. Unless students fill this
gap by working additional hours for pay in addition to the
student contribution already required by institutions, taking
extraordinary steps to reduce their expenses, or finding outside
resources, they risk having to withdraw from college. This bill
would create the DREAM Program to serve UC and CSU students who
meet eligibility requirements, but lack access to federal
student loans through no fault of their own.
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Program operation. Under the provisions of this bill, the DREAM
Loan Program is voluntarily implemented by UC and CSU campuses.
Both the state and the individual campus would contribute to the
loan fund, with the campus matching funds at 50%. Institutions
are authorized an administrative cost allowance of 5% of the
institution's total loan funds. According to the author, once
multiple cohorts of borrowers have entered repayment, the annual
State and institutional contributions will decline and the
program will become self-supporting. AB 540 students
participating in the program must meet several other outlined
requirements, including applying for financial aid using the
California DREAM Act application, enrolled at least half-time in
good standing in a qualifying instructional program, have
financial need, make satisfactory academic progress, and not
incarcerated or in default on a student loan. The campus
determines loan amounts, subject to several provisions,
including loan limits of $4,000 per year and $20,000 aggregate,
interest rates set at the then-current rate for federal direct
loans, repayment terms set at 10-years, and opportunities for
deferment or forbearance determined by the institution within
the standards of the federal direct loan program. CSU and UC
would adopt regulations governing student defaults.
Specifically, the regulations would provide that services
(provision of grades, transcripts, and diplomas) will be
withheld until reasonable progress has been made to repay the
loan, or a justification for the delay is determined by the
institution.
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960 FN:
0004794