Calderon Legislation Improving Student Loan Debt Information Headed to Governor’s Desk
SACRAMENTO, CA – Assembly Bill 1178, a measure authored by Majority Leader Ian Calderon requiring post-secondary institutions to annually inform students of their cumulative debt and future estimated monthly payments, is headed to the Governor’s desk today.
“With the recent rollback of student loan disclosure requirements at the federal level, California must take the lead in ensuring students are better informed,” state Majority Leader Ian Calderon. “AB 1178 takes proactive steps to alleviate the student loan crisis by requiring that students receive up-to-date, accurate information about their mounting student debt so they can make informed borrowing decisions.”
At no time during a student’s post-secondary education are universities required to inform students of their cumulative student loan debt or any benchmark of monthly payments. A study by Citizens Bank found that 60% of recent college graduates surveyed underestimated their own monthly loan repayment amount. Student borrowers may decide to accept more loans than necessary without understanding the full consequences of repayment upon graduation.
To increase student loan awareness, the Indiana University system sent each of its 114,912 students an individualized student loan profile including their total loan amount, estimated future monthly payment and the percentage of the cumulative federal borrowing limit a student has reached. After sending out this student debt letter, the Indiana University system witnessed a decline in the total federal, university and private loans taken out by students – a decrease of $98.7 million, or 15%, between 2011 and 2016. Upon witnessing the dramatic reduction in student borrowing, the Indiana state legislature passed legislation to send similar letters to all students attending post-secondary education in Indiana. Similar legislation has been passed in Wisconsin and Nebraska and is currently being considered by other states.
AB 1178 requires all California higher education institutions, except California Community Colleges, to provide annual individualized letters to students including:
- A students total cumulative loan amount
- Potential total payoff amount
- An estimated future monthly payment based on a formula created by each institution
Under AB 1178, this information will begin being disseminated in the 2018-19 award year. If an institution cannot provide estimates pursuant to the bill, they are permitted instead to give instructions on how to access the National Student Loan Database.
AB 1178 is supported by the California State Student Association, University of California Student Association, Institute for College Access and Success, uAspire, and the American Student Assistance.
Contact: Lerna Shirinian, (562) 692-5858