Calderon Legislation Increasing Student Loan Debt Transparency Passes Assembly Higher Education Committee
SACRAMENTO, CA – The Assembly Higher Education Committee approved AB 1178 today, a measure authored by Majority Leader Ian Calderon requiring post-secondary institutions to annually inform students of their cumulative debt and estimated monthly payments.
“College students are not actively informed about their cumulative student loan debt while they are making borrowing decisions,” state Majority Leader Ian Calderon. “Excessive student loan debt is crippling not only for graduates but also our economy. AB 1178 will ensure students, the future of our economy, receive up-to-date, accurate information about their mounting student debt so they can plan for their post-graduation finances.”
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.
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 monthly payment based on a formula created by each institution
This information will be disseminated between June 1 and August 1 each year when students make financial aid decisions for the following year.
After the Indiana University system instituted a similar student debt letter, the total federal, university and private loans taken out by students decreased by $98.7 million, or 15%, between the 2011 and 2016. Upon witnessing the dramatic reduction in student borrowing, the 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 and the federal government.
AB 1178 is supported by the Institute for College Access and Success and the American Student Assistance.
Contact: Lerna Shirinian, (562) 692-5858
Majority Leader Ian C. Calderon was elected in November 2012 to represent California's 57th Assembly District, which includes the cities of Industry, La Habra Heights, La Mirada, La Puente, Norwalk, Santa Fe Springs, South El Monte, Whittier and the unincorporated communities of Avocado Heights, Bassett, East La Mirada, East Whittier, Los Nietos-West Whittier, South San Jose Hills, South Whittier, and Hacienda Heights.