Capitol Alert

What to do about student debt? These ideas are brewing in the California Legislature

The average California college graduate has more than $20,000 in loan debt.

That’s on the low end of the national numbers.

About $1.5 trillion of student loan debt now hangs over the heads of millennials in the United States. And studies show they are, not surprisingly, drowning in attempts to make their monthly payments without going broke in the process. Websites and blogs advise students on tips, tricks and penny-pinching strategies to save a few dollars for shoveling into the always-burning student loan furnace. Young professionals work multiple jobs in a hodge podge attempt to rake in extra cash and are forgoing buying homes and cars, and getting married at a later age due to student loans and how they impact family finances.

A national dialogue between the country’s most influential lawmakers is bubbling up in Washington regarding this growing — and expensive — concern.

The conversation has spilled into California, a state that’s leading student debt reform initiatives. Here’s what’s brewing:

Stopping for-profit colleges’ ‘widespread misconduct and fraud’

A group of seven Assembly Democrats are carrying a package of bills that fiercely regulate the “widespread misconduct and fraud” of the financial and marketing strategies that for-profit colleges use to enroll students in programs that often leave them drowning in debt and unemployed.

San Francisco Assemblyman David Chiu is leading the initiative to reestablish the gainful employment rule in California with Assembly Bill 1340. The rule would test the value of a for-profit program by comparing the ratio of student debt to the salaries of graduates, and would shut down imbalanced programs that leave students with overwhelming payments and an empty wallet.

“Compared to public and nonprofit colleges, for-profit colleges have had a higher dropout rate, student loan levels and low default levels,” David Chiu of San Francisco said. “Students come first, not shareholders.”

Assembly members Marc Berman, Evan Low, Susan Talamantes Eggman, Rebecca Bauer-Kahan, Kevin McCarty and Jose Medina backed Chiu’s initiative, co-authoring bills of their own that add power to the punch against for-profit schools.

Their legislation includes assisting students who lost money after their for-profit school closed, requiring higher education institutions that enroll students online to comply with California’s regulations and calling for oversight of schools that pose as nonprofits.

About 160,000 of California’s 3 million students attend a for-profit college, a great number of which includes vulnerable residents — veterans, people of color, low-income individuals and single parents.

Income share agreement

Assemblyman Randy Voepel, R-Santee, introduced AB 154, which would set up a pilot program for students to enter into an income share agreement with a California State University system campus.

“These agreements would specify that moneys for the pilot program would be provided to students for costs of attendance, with students agreeing to pay a portion of their future incomes in exchange,” the bill reads.

The agreement would offer an alternative to a student taking on student loan debt to attend a school.

Kickstart My Future Loan Forgiveness Program

Democrat Sabrina Cervantes from Riverside, in AB 140, proposed a program that would pays 100 percent of a recent graduate’s loan payments for 24 months if the individual meets certain criteria, including a less-than-$50,000 salary.

Eligibility for noncitizens

Current law restricts many immigrants, including asylum seekers, from qualifying for financial aid and federal tuition support. Sen. Ben Allen, D-Santa Monica, wants asylum applicants who have proof of employment and a social security number to have the chance to go to school with a Cal Grant award. His measure is Senate Bill 296.

Student protections

Everything counts, including a price reduction of student parking permits and forbidding universities from withholding transcripts if a student falls behind in payments.

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Hannah Wiley joined The Bee as a legislative reporter in 2019. She produces the morning newsletter for Capitol Alert and previously reported on immigration, education and criminal justice. She’s a Chicago-area native and a graduate of Saint Louis University and Northwestern.
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