Bill Text: CA SB1289 | 2011-2012 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Postsecondary education: private student loans.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2012-09-27 - Chaptered by Secretary of State. Chapter 623, Statutes of 2012. [SB1289 Detail]

Download: California-2011-SB1289-Amended.html

---

BILL NUMBER: SB 1289	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 26, 2012
	AMENDED IN SENATE  MAY 3, 2012
	AMENDED IN SENATE  APRIL 24, 2012

INTRODUCED BY   Senator Corbett

                        FEBRUARY 23, 2012

   An act to add Article 14.5 (commencing with Section 69800) to
Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code,
relating to student financial aid.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1289, as amended, Corbett. Postsecondary education: private
student loans.
   Existing law establishes the University of California, California
State University, the California Community Colleges, and independent
colleges and universities as the 4 segments of postsecondary
education in this state. Existing law establishes various student
financial aid programs for students attending all segments of
postsecondary education.
   This bill would require a public, private, or independent
postsecondary educational institution, except the California
Community Colleges, to make specified disclosures related to private
student loans in financial aid material and private loan applications
provided or made available by the institution, to distinguish
private loans from federal loans in individual financial aid awards,
and, if the institution provides a private loan lender list, to
provide general information  on the terms of the loan
  about the loans  available through the lender and
disclose the  reason   basis  for each
lender's inclusion on the list. The bill would authorize and request
the California Community Colleges to comply with these provisions,
and would apply to the University of California only to the extent
that the Regents of the University of California act, by resolution,
to make it applicable.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Article 14.5 (commencing with Section 69800) is added
to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education
Code, to read:

      Article 14.5.  Private Student Loans


   69800.  A public, private, or independent postsecondary
educational institution, except the California Community Colleges,
shall do all of the following:
   (a) (1) State all of the following in all printed and online
financial aid materials issued or distributed by the institution to
applicants for admission or matriculated students and with private
loan applications provided or made available by the institution:

   (A) Private loans lack flexible repayment options and borrower
protections that federal loans are required to provide. 

   (A) Federal student loans are required by law to provide a range
of flexible repayment options, including, but not limited to,
income-based repayment and income-contingent repayment plans, and
loan forgiveness benefits, which private student loans are not
required to provide. 
   (B) Private  student  loans may  or may not 
cost more than federal loans.
   (C) Federal direct loans are available to students regardless of
income.
   (2) The institution may continue to use financial aid materials
that are printed before January 1, 2013, if the institution includes
an insert with the printed material that provides the information
required in paragraph (1). All financial aid materials printed on or
after January 1, 2013, shall include the information required in
paragraph (1).
   (b) Clearly distinguish private loans from federal loans in
individual financial aid awards by stating, for any private loans
included by the institution as part of the institution's award
package, all of the following:
   (1) Whether the rate is fixed or variable. 
   (2) An explanation that private loan interest rates may be higher
than federal loan interest rates and may increase over time through
no fault of the borrower, and that there is no legal limit to the
interest rate that borrowers may be charged on private loans.
 
   (2) An explanation that private student loan lenders can offer
variable interest rates that can increase or decrease over time,
depending on market conditions.  
   (3) An explanation that private student loans have a wide range of
interest rates and students should determine the interest rate of
the private student loan included in their financial aid award
package before accepting the loan.  
   (4) An explanation that students should contact the lender of the
private student loan or their postsecondary educational institution's
financial aid office if they have any questions about a private
student loan.  
   (3) 
    (5)  Any and all fees associated with the assumption of
the loan. 
   (4) 
    (6)  An explanation that the interest rate on a private
loan may depend on the borrower's credit rating.
   (c) If the institution provides a private loan lender list, it
also shall provide general information  on the terms of the
loan   about the loans  available through the
lender and disclose the  reason   basis 
for each lender's inclusion on the list. The institution shall also
 inform   disclose with the list that  the
student  of his or her right   has the ability
 to choose  other lenders   any lender
 .
   69800.5.  The California Community Colleges may, and are requested
to, comply with the provisions of this article.
   69801.  This article shall apply to the University of California
only to the extent that the Regents of the University of California
act, by resolution, to make it applicable.