Source: Orange County Register
“The goal of this bill is to help students,” said Pacheco, a Democrat whose district includes La Habra. “We’re trying to protect students from this type of debt so they can continue on with their education.”
Assemblymember Blanca Pacheco wants to ensure college students finish their education — and one way to do that is by helping them with debt owed directly to schools.
Called “institutional debt,” students can end up owing money directly to their college or university — sometimes hefty sums — through parking fees, library fines or meal plans. This doesn’t include tuition or room and board charges, but students may also end up owing institutional debt if they receive certain financial aid, including Pell Grants, and end up withdrawing early.
According to Pacheco’s bill, AB 850, these types of debts can lack basic consumer protections. And schools can prevent students who owe money from re-enrolling in coursework or receiving their degree or certificate, the bill says.
The bill would prohibit this type of debt from being reported to a credit reporting agency and require schools to publish clear policies on how the debt will be collected. It would also give students a one-time exemption to allow them to enroll or register and an opportunity to enter into a payment plan.
“The goal of this bill is to help students,” said Pacheco, a Democrat whose district includes La Habra. “We’re trying to protect students from this type of debt so they can continue on with their education.”
According to the bill, some 750,000 low-income California students owe about $350 million collectively in institutional debt to public colleges.
Pacheco put forth a similar bill in the previous legislative session, but it did not pass. This time, she said some definitions have been clarified and consumer protections strengthened.
“We’ve perfected it this time around, and we’re hoping it goes through,” she said.
AB 850 already has the backing of the University of California Student Association and the Campaign for California Borrower’s Rights, a coalition of groups affected by student debt, which called it a “game-changer.”
“This legislation will protect students from the harmful educational barriers associated with institutional debt and increase transparency on the prevalence of this crisis across our state,” the coalition said in a statement. “We believe this bill will be a game-changer in the fight against ‘shadow student debt’ and address other educational and financial obstacles that students face that are too often ignored.”
The bill is new and has not yet been referred to a committee.