Existing law establishes the Student Aid Commission as the primary state agency for the administration of state-authorized student financial aid programs available to students attending all segments of postsecondary education.

Existing law establishes the University of California, under the administration of the Regents of the University of California, as one of the segments of public postsecondary education in this state. The University of California provides instruction and performs research at the 10 campuses it operates and maintains in Berkeley, Davis, Irvine, Los Angeles, Merced, Riverside, San Diego, San Francisco, Santa Barbara, and Santa Cruz.

Existing law establishes the California State University, under the administration of the Trustees of the California State University, as one of the segments of postsecondary education in the state. The California State University comprises 23 institutions of higher education located throughout the state, including California State University, Northridge.

Existing law establishes the California Community Colleges, under the administration of the Board of Governors of the California Community Colleges, as one of the segments of public postsecondary education in this state. The board of governors appoints the Chancellor of the California Community Colleges to serve as the segments chief executive officer. The segment comprises 73 community college districts and a total of 116 community colleges throughout the state. One of these colleges is Glendale Community College.

This bill, until January 1, 2029, would establish the Students at Risk of Homelessness Emergency Pilot Program under the administration of the commission to award interest-free loans for housing and college attendance costs to eligible undergraduate students attending the University of California, Los Angeles, the University of California, Merced, the California State University, Northridge, and Glendale Community College who demonstrate financial need, as defined. The bill would require the commission to enter into a contract with a nonprofit organization that has existed for more than 50 years and operates an interest-free loan program virtually in the state for the nonprofit organization to award loans to eligible students. The bill would create the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program, and upon appropriation by the Legislature, would require the commission to distribute moneys in the fund to the nonprofit organization to award loans to eligible students. The bill would require the nonprofit organization to annually report to the commission the number of students who qualified for a loan and the number of students awarded a loan. The bill would require the commission to submit an annual report to the Legislature that includes this information.

Existing law establishes the Student Aid Commission as the primary state agency for the administration of state-authorized student financial aid programs available to students attending all segments of postsecondary education.

Existing law establishes the University of California, under the administration of the Regents of the University of California, as one of the segments of public postsecondary education in this state. The University of California provides instruction and performs research at the 10 campuses it operates and maintains in Berkeley, Davis, Irvine, Los Angeles, Merced, Riverside, San Diego, San Francisco, Santa Barbara, and Santa Cruz.

Existing law establishes the California State University, under the administration of the Trustees of the California State University, as one of the segments of postsecondary education in the state. The California State University comprises 23 institutions of higher education located throughout the state, including California State University, Northridge.

Existing law establishes the California Community Colleges, under the administration of the Board of Governors of the California Community Colleges, as one of the segments of public postsecondary education in this state. The board of governors appoints the Chancellor of the California Community Colleges to serve as the segments chief executive officer. The segment comprises 73 community college districts and a total of 116 community colleges throughout the state. One of these colleges is Glendale Community College.

This bill, until January 1, 2029, would establish the Students at Risk of Homelessness Emergency Pilot Program under the administration of the commission to award interest-free loans for housing and college attendance costs to eligible undergraduate students attending the University of California, Los Angeles, the California State University, Northridge, and Glendale Community College who demonstrate financial need, as defined. The bill would require the commission to enter into a contract with a nonprofit organization that has existed for more than 100 50 years and operates an interest-free loan program remotely in 3 or more counties virtually in the state for the nonprofit organization to award loans to eligible students. The bill would create the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program, and upon appropriation by the Legislature, would require the commission to distribute moneys in the fund to the nonprofit organization to award loans to eligible students. The bill would require the nonprofit organization to annually report to the commission the number of students who qualified for a loan and the number of students awarded a loan. The bill would require the commission to submit an annual report to the Legislature that includes this information.

Existing law establishes the Student Aid Commission as the primary state agency for the administration of state-authorized student financial aid programs available to students attending all segments of postsecondary education.

Existing law establishes the University of California, under the administration of the Regents of the University of California, as one of the segments of public postsecondary education in this state. The University of California provides instruction and performs research at the 10 campuses it operates and maintains in Berkeley, Davis, Irvine, Los Angeles, Merced, Riverside, San Diego, San Francisco, Santa Barbara, and Santa Cruz.

This bill, until January 1, 2029, would establish the Students at Risk of Homelessness Emergency Pilot Program under the administration of the commission to award interest-free loans for housing and college attendance costs to eligible undergraduate students attending the University of Californias Berkeley, Irvine, and Los Angeles campuses California, Los Angeles, the California State University, Northridge, and Glendale Community College who are at risk of disenrolling from the campus, or are at risk of homelessness, due to the inability to pay for housing. demonstrate financial need, as defined. The bill would require the commission to enter into a contract with a nonprofit organization that has existed for more than 50 100 years and operates an interest-free loan program remotely in more than one county 3 or more counties in the state for the nonprofit organization to award loans to eligible students. The bill would create the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program, and upon appropriation by the Legislature, would require the commission to distribute moneys in the fund to the nonprofit organization to award loans to eligible students. The bill would require the nonprofit organization to annually report to the commission the number of students who qualified for a loan and the number of students awarded a loan. The bill would require the commission to submit an annual report to the Legislature that includes this information.

Existing law establishes the Student Aid Commission as the primary state agency for the administration of state-authorized student financial aid programs available to students attending all segments of postsecondary education.

Existing law establishes the University of California, under the administration of the Regents of the University of California, as one of the segments of public postsecondary education in this state. The University of California provides instruction and performs research at the 10 campuses it operates and maintains in Berkeley, Davis, Irvine, Los Angeles, Merced, Riverside, San Diego, San Francisco, Santa Barbara, and Santa Cruz.

This bill, until January 1, 2029, would establish the Students at Risk of Homelessness Emergency Pilot Program under the administration of the commission to award interest-free loans for housing costs to eligible undergraduate students attending the University of Californias Berkeley, Irvine, and Los Angeles campuses who are at risk of disenrolling from the campus, or are at risk of homelessness, due to the inability to pay for housing. The bill would require the commission to enter into a contract with a nonprofit organization that has existed for more than 50 years and operates an interest-free loan program in more than one county in the state for the nonprofit organization to award loans to eligible students. The bill would create the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program, and upon appropriation by the Legislature, would require the commission to distribute moneys in the fund to the nonprofit organization to award loans to eligible students. The bill would require the nonprofit organization to annually report to the commission the number of students who qualified for a loan and the number of students awarded a loan. The bill would require the commission to submit an annual report to the Legislature that includes this information.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

AB 2507 (Friedman) - Student financial aid: Students at Risk of Homelessness Emergency Pilot Program

Bill Summary:

This bill establishes the Students at Risk of Homelessness Emergency Pilot Program for a nonprofit organization to award interest-free loans to eligible students attending the University of California Los Angeles (UCLA), the University of California Merced (UCM), the California State University, Northridge (CSUN) and the Glendale Community College.

Fiscal Impact:

• While the program would be contingent upon an appropriation, it could result in General Fund cost pressures in the millions of dollars each year to provide funding to the nonprofit for distribution as interest-free loans to students. Assuming the program were to provide a loan of $10,000 each to 100 students each year, the cost would be $1 million. However, this amount could be higher or lower depending on the loan amount and the number of eligible students that receive a loan each year.
• The California Student Aid Commission (CSAC) estimates General Fund costs of approximately $30,000 each year for a total of $298,000 for the length of the contract to oversee the program. The bill would also allow administrative costs of 2.5 percent from the appropriation for the nonprofit organization.

Background:

Existing law establishes the CSAC for the purpose of administering specified student financial aid programs. It authorizes the CSAC to receive donations, bequests, grants, and philanthropic funding, subject to conditions or restrictions that the executive director of the Commission may deem advisable, and subject to the approval, as specified. Beginning January 1, 2024, at the first regular CSAC meeting of the calendar year, the Commission must publicly report both of the following:

a) The source, and the amount from each source, of any philanthropic funding received during the calendar year immediately preceding the reporting deadline; and,

b) The purpose for which that philanthropic funding was used.

According to the author, “The need for this bill is rooted in the systemic barriers that financially disadvantaged students face in pursuing higher education in California. Despite the state's commitment to providing equal educational opportunities, the burden of student debt continues to hinder access and exacerbate socio-economic disparities. This bill acknowledges the urgent need to address these inequities by introducing a pilot interest-free student loan program tailored specifically for financially needy, homeless, at-risk of homelessness, and food insecure students. By removing the barrier of interest charges on loans, the bill aims to alleviate the financial burden on this population, enabling them to pursue higher education without being deterred by the prospect of accumulating significant debt. Furthermore, this initiative recognizes the pivotal role of education in fostering social mobility and economic prosperity, underscoring the importance of ensuring equitable access to educational opportunities for all Californians.”

Proposed Law:

This bill establishes the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program. The bill requires, upon appropriation by the Legislature, that the CSAC distribute moneys in the fund to the nonprofit organization that has entered into a contract to award loans to students.

This bill establishes the Students at Risk of Homelessness Emergency Pilot Program under the administration of the Commission to award loans for housing and college attendance costs to students attending southern California institutions UCLA, CSUN, and Glendale Community College who demonstrate financial need.

This bill requires the CSAC to enter into a contract with a nonprofit organization for the organization to award loans to eligible students. The contract may include a provision that authorizes 2.5 percent of the funds provided to the nonprofit organization to be used for its administrative costs under the program for each year that the program is operational.

This bill deems a student attending an institution eligible for loan award if the student satisfies both of the following requirements:

1. Demonstrates financial need by meeting any one or combination of the following: eligible for a federal Pell Grant; has an annual expected family contribution that is equal to, or less than, twenty thousand dollars ($20,000); facing eviction; homeless; or food insecure.
2. Is enrolled at least part-time in an undergraduate program, or a lower division community college program, at either UCLA, UCM, CSUN or Glendale Community College.

This bill provides that the nonprofit organization that enters into a contract with the Commission shall be responsible for: upon the receipt of funds from the Commission for determining student eligibility for a loan; determining the amount of a loan not to exceed a reasonable estimate of housing and college attendance costs, as determined by the nonprofit organization, and that is based on the financial need of the student; and awarding loans to students. The bill specifies that eligible students receive loan awards free of interest and receive loan awards without incurring fees for the loan or for program participation.

This bill specifies that the standard repayment term for a loan awarded under the program be no more than 10 years, as determined in the contract with the Commission and that the standard commencement and rate of loan repayment be determined in the contract entered into with the Commission. It also disqualifies a student who is in default on any federal student loan, state student loan, or student loan issued by the segment or the institution is not eligible for a loan under the program.

This bill requires a student seeking a loan to confirm in writing that they satisfy all of the requirements for loan eligibility and authorize the nonprofit organization that has entered into a contract with the CSAC to access any information pertinent to certifying that the student meets all of the requirements for loan eligibility.

This bill requires the nonprofit organization that has entered into a contract with the Commission to certify that the student meets all of the requirements for loan eligibility before awarding a loan to the student, and also submit an annual report that includes, but is not limited to, both of the following disaggregated by institution, age, gender, and ethnicity of students for the previous award year: the number of students who qualified for a loan and the number of students awarded a loan.

This bill requires that the Commission submit an annual report to the Legislature that includes the information submitted by the nonprofit organization contracting with the Commission.

Staff Comments:

The bill would require, upon an appropriation, the CSAC to distribute moneys in the fund to a nonprofit organization that has entered into a contract with the Commission to award loans to students. A qualifying nonprofit organization consists of those that have existed for more than 50 years and operate an interest-free loan program virtually in the state on and before January 1, 2025. To be eligible, a student must demonstrate financial need by meeting one of the prescribed requirements. A student must also be enrolled at least part-time in an undergraduate program or a lower division community college at one of the following—UCLA, UCM, CSUN, or the Glendale Community College. Students who are in default on any federal, state, or institution-issued student loan would not be eligible. Loan repayment under the proposed program is limited to 10 years. Additionally, the contract with CSAC would determine the standard start date and rate of loan repayment.

-- END --

SENATE COMMITTEE ON EDUCATION

Senator Josh Newman, Chair

2023 - 2024 Regular

Bill No: Hearing Date: June 26, 2024

Subject: .

SUMMARY

This bill establishes the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund and requires the California Student Aid Commission (Commission) to distribute moneys in the fund to a nonprofit organization to award student loans. It also establishes the Students at Risk of Homelessness Emergency Pilot Program under the administration of the Commission to award loans for students who demonstrate financial need attending either he University of California Los Angeles (UCLA), the California State University, Northridge (CSUN) and Glendale Community College.

BACKGROUND

Existing law:

1) Establishes the Commission for the purpose of administering specified student financial aid programs. (Education Code (EC) § 69510, et seq.)

2) Authorizes the Commission to receive donations, bequests, grants, and philanthropic funding, subject to conditions or restrictions that the executive director of the Commission may deem advisable, and subject to the approval, as specified. Beginning January 1, 2024, at the first regular Commission meeting of the calendar year, the Commission must publicly report both of the following:

a) The source, and the amount from each source, of any philanthropic funding received during the calendar year immediately preceding the reporting deadline; and,

b) The purpose for which that philanthropic funding was used. (EC § 69514.3)

3) Establishes the mission and function of the California Community Colleges (CCC) which, in part is to: 1) offer academic and vocational instruction at the lower division level for both younger and older students, including those persons returning to school; 2) authorizes the CCC to grant the associate in arts and the associate in science degrees; 3) requires the CCC to offer English as a Second Language instruction, adult noncredit instruction, and support services which help students succeed at the postsecondary level; and, 4) advance California’s economic growth and global competitiveness through education, training, and services that contribute to continuous work force improvement. (EC § 66010.4).

4) Establishes the California State University (CSU) system, made of 23 campuses, and bestows upon the CSU Trustees, through the Board of Trustees, the power, duties, and functions with respect to the management, administration, and control of the CSU system. (EC § 66606 and 89030, et seq.)

5) Establishes the University of California as a public trust to be administered by the Regents of the UC; and, grants the Regents full powers of organization and government, subject only to such legislative control as may be necessary to insure security of its funds, compliance with the terms of its endowments, statutory requirements around competitive bidding and contracts, sales of property and the purchase of materials, goods and services (Article IX, § (9)(a) of the California Constitution).

ANALYSIS

This bill:

1. Establishes the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program.
2. Requires, upon appropriation by the Legislature, that the Commission distribute moneys in the fund to the nonprofit organization that has entered into a contract with the Commission to award loans to students.
3. Establishes the Students at Risk of Homelessness Emergency Pilot Program under the administration of the Commission to award loans for housing and college attendance costs to students attending southern California institutions UCLA, CSUN, and Glendale Community College who demonstrate financial need.
4. Requires the Commission to enter into a contract with a nonprofit organization for the organization to award loans to eligible students. The contract may include a provision that authorizes 2.5 percent of the funds provided to the nonprofit organization that has entered into a contract with the Commission to be used by the nonprofit organization for its administrative costs under the program for each year that the program is operational.
5. Deems a student attending an institution eligible for loan award if the student satisfies both of the following requirements:
   1. Demonstrates financial need by meeting any one or combination of

the following:

• • 1. Is eligible for a federal Pell Grant.
    2. Has an annual expected family contribution that is equal to, or less

than, twenty thousand dollars ($20,000).

• • 1. Is facing eviction.
    2. Is homeless.
    3. Is food insecure.
  1. Is enrolled at least part-time in an undergraduate program, or a lower

division community college program, at either UCLA, CSUN or Glendale Community College.

1. Makes the nonprofit organization that enters into a contract with the Commission responsible for all of the following:
   1. Upon the receipt of funds from the Commission for determining student

eligibility for a loan.

• 1. Determining the amount of a loan not to exceed a reasonable estimate of

housing and college attendance costs, as determined by the nonprofit organization, and that is based on the financial need of the student.

• 1. Awarding loans to students.

1. Specifies that eligible students:
   1. Receive loan awards free of interest.
   2. Receive loan awards without incurring fees for the loan or for program

participation.

1. Specifies that the standard repayment term for a loan awarded under the program be no more than 10 years, as determined in the contract with the Commission and that the standard commencement and rate of loan repayment be determined in the contract entered into with the Commission.
2. Disqualifies a student who is in default on any federal student loan, state student loan, or student loan issued by the segment or the institution is not eligible for a loan under the program.
3. Requires a student seeking a loan to:
   1. Confirm in writing that they satisfy all of the requirements for loan

eligibility.

• 1. Authorize the nonprofit organization that has entered into a contract with

the Commission to access any information pertinent to certifying that the student meets all of the requirements for loan eligibility.

1. Requires the nonprofit organization that has entered into a contract with the Commission to certify that the student meets all of the requirements for loan eligibility before awarding a loan to the student.
2. Requires that the nonprofit organization that has entered into a contract with the Commission submit an annual report to the Commission that includes, but is not limited to, both of the following disaggregated by institution, age, gender, and ethnicity of students for the previous award year:
   1. The number of students who qualified for a loan.
   2. The number of students awarded a loan.
3. Requires that the Commission submit an annual report to the Legislature that includes the information submitted by the nonprofit organization contracting with the Commission.
4. Defines various terms for purposes of the bill including:
   1. “Fund” means the Emergency Students Facing Housing Crisis and

Homelessness Revolving Fund established in the bill.

• 1. “Nonprofit organization” means a nonprofit organization that has existed

for more than 50 years and operates an interest-free loan program virtually in the state on and before January 1, 2025.

1. Sunsets the bill’s provisions on January 1, 2029.

STAFF COMMENTS

1. Need for the bill. According to the author, “The need for this bill is rooted in the systemic barriers that financially disadvantaged students face in pursuing higher education in California. Despite the state's commitment to providing equal educational opportunities, the burden of student debt continues to hinder access and exacerbate socio-economic disparities. This bill acknowledges the urgent need to address these inequities by introducing a pilot interest-free student loan program tailored specifically for financially needy, homeless, at-risk of homelessness, and food insecure students. By removing the barrier of interest charges on loans, the bill aims to alleviate the financial burden on this population, enabling them to pursue higher education without being deterred by the prospect of accumulating significant debt. Furthermore, this initiative recognizes the pivotal role of education in fostering social mobility and economic prosperity, underscoring the importance of ensuring equitable access to educational opportunities for all Californians.”
2. Who is eligible? To be eligible for the proposed interest free loan program a student must demonstrate financial need by meeting on of the prescribed requirements including facing eviction or qualifying for Pell Grant. A student must be enrolled at least part-time in an undergraduate program or a lower division community college at one of three southern California colleges, UCLA, CSUN, or Glendale Community College. Students who are in default on any federal, state, or institution-issued students loan are ineligible. Students must confirm in writing that they meet all of the loan eligibility requirements and allow the nonprofit organization administrating the program to access any information pertinent to certifying the student’s eligibility requirements. Loan repayment under the proposed program is limited to 10 years. The contract with the Commission would determine the standard start date and rate of loan repayment. It is unclear from the bill's provisions whether students could be required to make loan payments prior to graduation.
3. Nonprofit would administer the program. This bill is sponsored by the Jewish Free Loan Association (JFLA). The bill would require, upon appropriation by the Legislature, that the Commission distribute moneys in the fund to a nonprofit organization that has entered into a contract with the Commission to award loans to students. A qualifying nonprofit organization consists of those that have existed for more than 50 years and operate an interest-free loan program virtually in the state on and before January 1, 2025. Presumably, JFLA would be among the nonprofit organizations qualifying for the contract. JFLA is a non-sectarian interest free lending organization in Los Angeles, Ventura and Santa Barbara Counties. According to information provided by JFLA, the organization provides interest-free, no-fee loans and has existed for 120 years, and currently has an outstanding portfolio balance of over 18 million to thousands of clients. JFLA’s total outstanding loan balance for education loans is $7,468,602 in 908 loans. JFLA averages approximately 300 interest-free student loans per year. When COVID hit in 2020, demand for student loans skyrocketed. JFLA had to reduce the size of its student loans from $10,000 to $7,500 to stretch available lending dollars and help more students. Their goal, as explained in their budget proposal, is to increase the amount back to $10,000 and to help more students.
4. Student loans and debt. Federal student loans under the Direct Subsidized and unsubsidized loan programs for undergraduate students, for loans disbursed between July 1, 2023, and July 1, 2024 currently have an interest rate of 6.53 percent. However, students are not always able to secure federal student loans (which have the same rates for every borrower), and rely on private student loans, which, as of April 2024, have interest rates ranging from 4.50 percent to 16.99 percent and are based primarily on the borrower’s credit score and could have fixed or variable interest rates. According to The Institute for College Access and Success (TICAS) and its Project on Student Debt, 46 percent of California students who graduated from public and private nonprofit colleges in 2020 had student loan debt, with an average nationally of $21,125 per borrower placing the state third lowest in the nation. Fourteen percent of California college graduates’ student loan debt was nonfederal debt the largest component of this nonfederal debt is private students loans from banks and private lenders. In California 5 percent of college, graduates had private student debt, with an average private debt load of $26, 693.
5. Recent changes to financial aid attempt to address housing costs. As noted in the Legislative Analyst’s Office 2022-2023 budget briefing on student housing, for many decades, the state’s primary strategy for promoting college affordability was to keep student tuition charges low across the public higher education segments, while also providing full tuition coverage for students with financial need through the Cal Grant program.

Over the past several years, the state has begun providing more financial aid coverage for non-tuition costs, including housing, food, and transportation costs. Specifically, for university students, the state recently revamped the Middle Class Scholarship (MCS) program to be based on total cost of attendance. As a result of the expansion, many more CSU and UC students are now receiving MCS awards to cover a portion of their living costs. For community college students, the state created the Student Success Completion Grant program in 2018-19 (building off a predecessor program). This program covers $8,000 of living costs annually for students with financial need who are enrolled in 15 or more units per term and $2,596 annually for students taking between 12 and 14 units per term.

1. Rapid rehousing grants and basic needs assistance. In 2019-20, the state provided all three segments with ongoing General Fund augmentations to create rapid rehousing programs in partnership with community organizations. These programs provide students who are homeless or at risk of homelessness with various services, including case management, emergency housing, and emergency grants.

Beyond rapid rehousing programs, all three public segments also have received ongoing state funds in recent years to address students’ basic needs, including food and housing insecurity. Basic needs assistance provided on each campus varies but can include on-campus food pantries, meal vouchers, hotel vouchers for short-term housing needs, on-campus emergency housing, security deposit assistance, rental subsidies, and a case manager to help students secure long-term housing. Colleges have also built referral pipelines with local organizations that provide housing assistance.

In addition to these ongoing program expansions, the state provided a substantial amount of one-time funding for the Higher Education Student Housing Grant program. As part of the 2022-23 budget agreement, the state provided a total of $1.5 billion one-time non-Proposition 98 General Fund for the first round of student housing grants.

1. Other services and resources available to help homeless students. In addition to the rapid rehousing grants, financial aid awards and basic needs centers. Existing law provides the following services and priorities for students who are currently or formerly homeless:
   
   1. Requires a campus of the CSU and requests campuses of the CCC, to give priority housing.
      
   2. Requires a CSU campus and requests a CCC campus, to give first priority for residence in the housing facilities that are open for uninterrupted year-round occupation.
      
   3. Requires CSU and each community college district to grant priority in that system for registration for enrollment.
   4. Requires campuses of the CCC to grant access to shower facilities.
   5. Requires CSU and CCC campuses to designate a Homeless and Foster Youth Liaison to assist these students in applying for and receiving federal and state financial aid and available services.
   6. Requires CSU and CCC designate a position of basic needs coordinator to serve students experiencing basic needs insecurity including housing.

The Committee may wish to consider whether investment in a loan program albeit interest free is the appropriate remedy to addressing student housing needs or whether augmenting limited resources toward student services or resources mentioned in this analysis, is merited.

SUPPORT

Jewish Free Loan Association (Sponsor)

30years After

Alan & Annette Leve Family Foundation

American Jewish Committee - Los Angeles

City of West Hollywood

Democrats for Israel - CA

Democrats for Israel Los Angeles

Esusu Financial

ETTA

Hadassah

Hillel at UCLA

Hillel of San Diego

Jewish Big Brothers Big Sisters of Los Angeles

Jewish Center for Justice

Jewish Community Federation and Endowment Fund

Jewish Community Relations Council, Santa Barbara

Jewish Democratic Club of Marin

Jewish Democratic Club of Solano County

Jewish Democratic Coalition of the Bay Area

Jewish Democrats of San Diego County

Jewish Family & Community Services East Bay

Jewish Family and Children's Service of Long Beach and Orange County

Jewish Family and Children's Services of San Francisco, the Peninsula, Marin and Sonoma Counties

Jewish Family Service of Los Angeles

Jewish Family Service of San Diego

Jewish Family Services of Silicon Valley

Jewish Federation of Greater Los Angeles

Jewish Federation of Greater Santa Barbara

Jewish Federation of the Greater San Gabriel and Pomona Valleys

Jewish Federation of the Sacramento Region

Jewish Long Beach

Jewish Public Affairs Committee

Jewish Silicon Valley

Jigsaw Analytics Group

Justice Design Group

JVS SoCal

Power CA Action

Progressive Zionists of California

Raoul Wallenberg Jewish Democratic Club

Supervisor Das Williams, First District, County of Santa Barbara

OPPOSITION

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2507

Author:(Friedman)

As Amended Ver:April 18, 2024

Majority vote

SUMMARY

Creates the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program, and upon appropriation by the Legislature, and requires the California Student Aid Commission (CSAC) to distribute moneys in the fund to a nonprofit organization to award loans to eligible students.

Major Provisions

1. States the following declaration and intent of the Legislature:
   1. Recognizes the crushing burden of student debt on hundreds of thousands of students and graduates, the need to financially support California students who demonstrate financial need, without onerous interest payments accelerating the debt crisis, and the lack of state budget resources to fully fund the needs of California students with grants for housing and college attendance costs; and,
   2. It is the intent of this act to award loans for housing and college attendance costs to students attending the University of California (UC), Los Angeles (UCLA), the California State University (CSU), Northridge (CSUN), and Glendale Community College (GCC) (a California Community College (CCC)) who demonstrate financial need, as specified.
2. Establishes the Students at Risk of Homelessness Emergency Pilot Program.
3.  Defines the following for purposes of this measure:
   1. "Financial need" to mean a student who meets any one, or combination of the following:
      1. Is eligible for a federal Pell Grant;
      2. Has an annual expected family contribution (EFC) that is equal to, or less than, $20,000;
      3. Is facing eviction;
      4. Is homeless; or,
      5. Is food insecure.
   2. "Fund" to mean the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund;
   3. "Institution" to mean the UCLA, the CSUN, and GCC;
   4. "Loan" to mean a loan awarded to a student under the program;
   5. "Nonprofit organization" to mean a nonprofit organization that has existed for more than 50 years and operates an interest-free loan program virtually in the state on and before January 1, 2025; and,
   6. "Program" to mean the Students at Risk of Homelessness Emergency Pilot Program.
4. Stipulates that the program is under the administration of CSAC to award loans for housing and college attendance costs to students attending institutions who demonstrate financial need.
5. Requires CSAC to enter into a contract with a nonprofit organization and for the organization to award loans to eligible students. The contract may include a provision that authorizes 2.5% of the funds provided to the nonprofit organization to be used by the nonprofit organization for its administrative costs under for each year that the program is operational.
6. Stipulates a student attending an institution may be awarded a loan if the student satisfies both of the following requirements:
   1. Demonstrates financial need; and,
   2. Is enrolled at least part-time in an undergraduate program, or a lower division community college program, at an institution.
7. Requires that the nonprofit organization contracted, as specified, must be responsible for all of the following:
   1. Upon the receipt of funds from CSAC for purposes of this measure, determining student eligibility for a loan;
   2. Determining the amount of a loan. The amount of a loan must not exceed a reasonable estimate of housing and college attendance costs, as determined by the nonprofit organization, and shall be based on the financial need of the student; and,
   3. Awarding loans to students.
8. Stipulates that a loan awarded to an eligible student cannot have an interest rate. A student will not be charged a fee on a loan awarded or to participate in the program.
9. Requires that the standard repayment term for a loan awarded under the program will be no more than 10 years, as determined in the contract entered into, as specified. The standard commencement and rate of loan repayment will be determined in the contract entered into, as specified.
10. Stipulates that a student who is in default on any federal student loan, state student loan, or student loan issued by the segment or the institution is not eligible for a loan under the program.
11. Requires a student must confirm in writing that the student satisfies all of the requirements for loan eligibility.
12. Requires a student seeking a loan must authorize the nonprofit organization contracted, as specified, to access any information pertinent to certifying that the student meets all of the requirements for loan eligibility.
13. Requires that the nonprofit organization contracted, as specified, must certify that the student meets all of the requirements for loan eligibility before awarding a loan to the student.
14. Requires the nonprofit organization contracted, as specified, to submit an annual report to CSAC that includes, but is not limited to, both of the following for the previous award year:
    1. The number of students who qualified for a loan; and,
    2. The number of students awarded a loan.
15. Requires CSAC to submit an annual report to the Legislature that includes the information submitted to CSAC by the contracted nonprofit organization.
16. Stipulates that the information contained in both reports, as enumerated in 14 (a – b) and 15 inclusive, must be disaggregated by institution and the age, gender, race, and ethnicity of students.
17. Establishes the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program. Upon appropriation by the Legislature, CSAC must distribute moneys in the fund to the nonprofit organization contracted, as specified, to award loans to students.
18. Sunsets and repeals the provisions of this measure on January 1, 2029.

COMMENTS

Student loans. According to Bankrate, LLC, a consumer financial services company, student loans often times become a necessary method for filling financial gaps when scholarships, grants, and other forms of student financial aid fall short, but the money is not free. The interest rates determine how much money a student will ultimately owe and will also influence a student's monthly payment.

Federal student loans for undergraduate students, as of April 2024, currently have an interest rate of 5.50% for the 2023-24 school year, while graduate students have interest rates of 7.05% or 8.05% for unsubsidized loans or Direct PLUS loans, respectively. However, students are not always able to secure federal student loans (which have the same rates for every borrower), and rely on private student loans, which, as of April 2024, have interest rates ranging from 4.50% to 16.99% and are based primarily on the borrower's credit score and could have fixed or variable interest rates.

Zero interest loan options. While it is virtually impossible for a lender to offer zero interest loans, Committee Staff understands that there is at least one entity in the state, the Jewish Free Loan Association (JFLA) who provides zero interest loans. Founded in 1904, the JFLA is a nonsectarian agency serving anyone facing a financial challenge and is equipped with the infrastructure in place to run a statewide interest-free lending program including the platform to track loans and store data, application, and processing forms.

The JFLA has 120 years of experience operating interest-free lending programs with staff who are experienced in evaluating prospective borrowers, reviewing loan applications, and handling the details of making and collecting loans. The JFLA's total outstanding loan balance for 908 education loans is $7,468,602.47. Further, JFLA is currently averaging approximately 300 interest-free student loans per year.

According to JFLA, "when COVID hit in 2020, demand for student loans skyrocketed. JFLA had to reduce the size of its student loans from $10,000 to $7,500 to stretch available lending dollars and help more students."

According to the Author

"Over a student's lifetime, if loans are not repaid in a timely manner, the principal loan amount can more than double because of compounding interest. California, despite its commitment to helping students graduate from college, lacks the financial resources to provide grants to make education universally free for students regardless of socio-economic backgrounds."

The author contends that, "AB 2507 would establish a pilot interest-free, no-fee student loan program at the University of California, Los Angeles, California State University, Northridge, and Glendale Community College to meet the skyrocketing demand for students who are low-income, homeless, at risk of homelessness, or food insecure to have their financial needs met while in pursuit of a higher education."

Additionally, the author states that, "therefore, this pilot interest-free student loan program to support students with financial need to get a college degree without the burden of paying off interest would provide an alternative and viable pathway for students to get a college degree without accumulating unnecessary debt."

Arguments in Support

According to the Jewish Public Affairs Committee (JPAC) and Jewish Free Loan Association (JFLA), sponsors of this measure, "with student loan interest rates soaring as high as 9%, many Californians are suffering. Over a twenty-year span, the interest on student loans often doubles from the original amount borrowed, casting a shadow over the lives of individuals and families. Borrowers sometimes make payments for decades and still find themselves under substantial, escalating debt. This severely hinders their ability to achieve key milestones such as homeownership, saving for their children's education, planning for retirement, and accumulating wealth. And this struggle is especially pronounced among those who are low-income, homeless, at risk of homelessness, or experiencing food insecurity."

Further, JPAC and JFLA state, "implementing an interest-free, no-fee student loan program would afford graduates the chance to repay their loans within a reasonable timeframe while simultaneously saving for important milestones such as homeownership, retirement, and starting a family. Loans under the pilot program would be permitted for expenses such as tuition, books and supplies, housing, food, computers and other technology, transportation, summer bridge programming, tutoring, and other activities that promote college graduation rates."

Lastly, JPAC and JFLA contend that, "loans will be serviced by the JFLA, a nonsectarian agency with a 120-year history of providing interest-free, fee-free loans. Since JFLA is not a bank, they can provide loans without interest or fees. In addition to helping borrowers, this also means that student loan repayment would fund the provision of more student loans, rather than benefiting for-profit financial lending institutions. AB 2507 aligns with our community's belief in the value of education, and the impact that access to educational opportunities can have on a person's life. Fostering equality amongst individuals in our education system creates the conditions for equality amongst communities in California."

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Committee on Appropriations:

1. Unknown General Fund (GF) costs, potentially in the hundreds of thousands of dollars to millions of dollars, to provide to a nonprofit to distribute as interest-free loans to students. The bill does not designate an amount to be appropriated to the program, but if the program were to provide loans to 100 students of $10,000, costs would be $1 million total. In addition, funding for administrative costs to the nonprofit. If the nonprofit awarded loans equaling $1 million, the bill would provide $25,000 for the nonprofit's administrative costs.
2. Ongoing General Fund costs to CSAC to oversee the program of about $30,000 annually for a portion of a staff person's time.
3. According to the Legislative Analyst's Office, the GF faces a structural deficit in the tens of billions of dollars over the next several fiscal years.

VOTES

ASM HIGHER EDUCATION: 11-0-0

YES: Mike Fong, Ta, Arambula, Boerner, Chen, Alanis, Irwin, Jackson, Addis, Muratsuchi, Quirk-Silva

ASM APPROPRIATIONS: 14-1-0

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Jim Patterson, Pellerin, Ta, Villapudua

NO: Dixon

UPDATED

VERSION: April 18, 2024

CONSULTANT: Jeanice Warden / HIGHER ED. / (916) 319-3960 FN: 0003235

Date of Hearing: May 1, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2507

Author:(Friedman) – As Amended Ver:April 18, 2024

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill creates a pilot program to award interest-free loans for housing and college attendance costs to students who demonstrate financial need. The bill requires the California Student Aid Commission (CSAC) to enter into a contract with a nonprofit organization to award loans to eligible students attending University of California, Los Angeles, the California State University, Northridge, and Glendale Community College.

To be eligible for such a contract, the bill requires a nonprofit to have existed for more than 50 years and operate an interest-free loan program in the state before January 1, 2025. In addition, the bill specifies the selected nonprofit organization may use 2.5% of the funds for administrative costs for each year the program is operational. The bill tasks the selected nonprofit with determining the amount of a loan for a student and specifies the loan may not exceed a reasonable estimate of housing and college attendance costs and must be based on the financial need of the student. The bill requires the nonprofit to submit an annual report to CSAC about the program.

The bill defines a student as financially needy if the student (a) is eligible for a federal Pell Grant, (b) has an annual expected family contribution that is equal to, or less than, $20,000, (c) is facing eviction, (d) is homeless, or (e) is food insecure. The bill further requires the loan be paid back within 10 years.

The bill creates the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund in the State Treasury as the depository of all money appropriated, donated, or otherwise received for the program and requires CSAC to distribute money in the fund to the nonprofit organization contracted for the program.

The bill repeals its provisions January 1, 2029.

FISCAL EFFECT:

1. Unknown General Fund costs, potentially in the hundreds of thousands of dollars to millions of dollars, to provide to a nonprofit to distribute as interest-free loans to students. The bill does not designate an amount to be appropriated to the program, but if the program were to provide loans to 100 students of $10,000, costs would be $1 million total. In addition, funding for administrative costs to the nonprofit. If the nonprofit awarded loans equaling $1 million, the bill would provide $25,000 for the nonprofit’s administrative costs.
2. Ongoing General Fund costs to CSAC to oversee the program of about $30,000 annually for a portion of a staff person’s time.

According to the Legislative Analyst’s Office, the General Fund faces a structural deficit in the tens of billions of dollars over the next several fiscal years.

COMMENTS:

1. Purpose. This bill is sponsored by the Jewish Public Affairs Committee and the Jewish Free Loan Association (JFLA), which state:

Implementing an interest-free, no-fee student loan program would afford graduates the chance to repay their loans within a reasonable timeframe while simultaneously saving for important milestones such as homeownership, retirement, and starting a family. Loans under the pilot program would be permitted for expenses such as tuition, books and supplies, housing, food, computers and other technology, transportation, summer bridge programming, tutoring, and other activities that promote college graduation rates.

Loans will be serviced by the JFLA, a nonsectarian agency with a 120-year history of providing interest-free, fee-free loans. Since JFLA is not a bank, they can provide loans without interest or fees. In addition to helping borrowers, this also means that student loan repayment would fund the provision of more student loans, rather than benefiting for-profit financial lending institutions.

1. Background. The JFLA was founded in 1904 and operates interest-free lending programs. The JFLA is a nonsectarian agency serving anyone facing a financial challenge. The JFLA currently administers an educational loan program, among other programs, with a current loan balance of about $7.5 million for 908 education loans.

While this bill does not designate the JFLA as the contractor CSAC is to select for the purposes of this bill, JFLA is one of the sponsors of the bill and meets all the criteria of the bill’s requirements for a contractor.

Analysis Prepared by: Natasha Collins / APPR. / (916) 319-2081

Date of Hearing: April 16, 2024

ASSEMBLY COMMITTEE ON HIGHER EDUCATION

Mike Fong, Chair

ABPCA Bill Id:AB 2507 (

Author:Friedman) – As Amended Ver:March 14, 2024

SUBJECT: Student financial aid: Students at Risk of Homelessness Emergency Pilot Program.

SUMMARY: Creates the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program, and upon appropriation by the Legislature, and requires the California Student Aid Commission (CSAC) to distribute moneys in the fund to a nonprofit organization to award loans to eligible students. Specifically, this bill:

1. States the following declaration and intent of the Legislature:
   1. Recognizes the crushing burden of student debt on hundreds of thousands of students and graduates, the need to financially support California students who demonstrate financial need, without onerous interest payments accelerating the debt crisis, and the lack of state budget resources to fully fund the needs of California students with grants for housing and college attendance costs; and,
   2. It is the intent of this act to award loans for housing and college attendance costs to students attending the University of California (UC), Los Angeles, the California State University (CSU), Northridge (CSUN), and Glendale Community College (GCC) (a California Community College (CCC)) who demonstrate financial need, as specified.
2. Establishes the Students at Risk of Homelessness Emergency Pilot Program.
3.  Defines the following for purposes of this measure:
   1. “Financial need” to mean a student who meets any one, or combination of the following:
      1. Is eligible for a federal Pell Grant;
      2. Has an annual expected family contribution (EFC) that is equal to, or less than, $20,000;
      3. Is facing eviction;
      4. Is homeless; or,
      5. Is food insecure.
   2. “Fund” to mean the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund;
   3. “Institution” to mean the UCLA, the CSUN, and GCC;
   4. “Loan” to mean a loan awarded to a student under the program;
   5. “Nonprofit organization” to mean a nonprofit organization that has existed for more than 100 years and operates an interest-free loan program remotely in three or more counties in the state on and before January 1, 2025; and,
   6. “Program” to mean the Students at Risk of Homelessness Emergency Pilot Program.
4. Stipulates that the program is under the administration of CSAC to award loans for housing and college attendance costs to students attending institutions who demonstrate financial need.
5. Requires CSAC to enter into a contract with a nonprofit organization and for the organization to award loans to eligible students. The contract may include a provision that authorizes 2.5% of the funds provided to the nonprofit organization to be used by the nonprofit organization for its administrative costs under for each year that the program is operational.
6. Stipulates a student attending an institution may be awarded a loan if the student satisfies both of the following requirements:
   1. Demonstrates financial need; and,
   2. Is enrolled at least part-time in an undergraduate program, or a lower division community college program, at an institution.
7. Requires that the nonprofit organization contracted, as specified, must be responsible for all of the following:
   1. Upon the receipt of funds from CSAC for purposes of this measure, determining student eligibility for a loan;
   2. Determining the amount of a loan. The amount of a loan must not exceed a reasonable estimate of housing and college attendance costs, as determined by the nonprofit organization, and shall be based on the financial need of the student; and,
   3. Awarding loans to students.
8. Stipulates that a loan awarded to an eligible student cannot have an interest rate. A student will not be charged a fee on a loan awarded or to participate in the program.
9. Requires that the standard repayment term for a loan awarded under the program will be no more than 10 years, as determined in the contract entered into, as specified. The standard commencement and rate of loan repayment will be determined in the contract entered into, as specified.
10. Stipulates that a student who is in default on any federal student loan, state student loan, or student loan issued by the segment or the institution is not eligible for a loan under the program.
11. Requires a student must confirm in writing that the student satisfies all of the requirements for loan eligibility.
12. Requires a student seeking a loan must authorize the nonprofit organization contracted, as specified, to access any information pertinent to certifying that the student meets all of the requirements for loan eligibility.
13. Requires that the nonprofit organization contracted, as specified, must certify that the student meets all of the requirements for loan eligibility before awarding a loan to the student.
14. Requires the nonprofit organization contracted, as specified, to submit an annual report to CSAC that includes, but is not limited to, both of the following for the previous award year:
    1. The number of students who qualified for a loan; and,
    2. The number of students awarded a loan.
15. Requires CSAC to submit an annual report to the Legislature that includes the information submitted to CSAC by the contracted nonprofit organization.
16. Stipulates that the information contained in both reports, as enumerated in 14 (a – b) and 15 inclusive, must be disaggregated by institution and the age, gender, race, and ethnicity of students.
17. Establishes the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program. Upon appropriation by the Legislature, CSAC must distribute moneys in the fund to the nonprofit organization contracted, as specified, to award loans to students.
18.  Sunsets and repeals the provisions of this measure on January 1, 2029.

EXISTING LAW:

1. Establishes the CSAC for the purpose of administering specified student financial aid programs (Education Code (EC) Section 69510, et seq.).
2. Authorizes CSAC to receive donations, bequests, grants, and philanthropic funding, subject to conditions or restrictions that the executive director of the CSAC may deem advisable, and subject to the approval, as specified. Beginning January 1, 2024, at the first regular CSAC meeting of the calendar year, CSAC must publicly report both of the following:
   1. The source, and the amount from each source, of any philanthropic funding received during the calendar year immediately preceding the reporting deadline; and, 
   2. The purpose for which that philanthropic funding was used (EC Section 69514.3).
3. Establishes the mission and function of the CCC, which, in part is to: 1) offer academic and vocational instruction at the lower division level for both younger and older students, including those persons returning to school; 2) authorizes the CCC to grant the associate in arts and the associate in science degrees; 3) requires the CCC to offer English as a Second Language instruction, adult noncredit instruction, and support services which help students succeed at the postsecondary level; and, 4) advance California’s economic growth and global competitiveness through education, training, and services that contribute to continuous work force improvement (EC Section 66010.4).
4. Establishes the CSU system, made of 23 campuses, and bestows upon the CSU Trustees, through the Board of Trustees, the power, duties, and functions with respect to the management, administration, and control of the CSU system (EC Section 66606 and 89030, et seq.).
5. Establishes the UC as a public trust to be administered by the Regents of the UC; and, grants the Regents full powers of organization and government, subject only to such legislative control as may be necessary to insure security of its funds, compliance with the terms of its endowments, statutory requirements around competitive bidding and contracts, sales of property and the purchase of materials, goods and services (Article IX, Section (9)(a) of the California Constitution).

FISCAL EFFECT: Unknown

COMMENTS: Purpose of the measure. According to the author, “over a student’s lifetime, if loans are not repaid in a timely manner, the principal loan amount can more than double because of compounding interest. California, despite its commitment to helping students graduate from college, lacks the financial resources to provide grants to make education universally free for students regardless of socio-economic backgrounds.”

The author contends that, “AB 2507 would establish a pilot interest-free, no-fee student loan program at the University of California, Los Angeles, California State University, Northridge, and Glendale Community College to meet the skyrocketing demand for students who are low-income, homeless, at risk of homelessness, or food insecure to have their financial needs met while in pursuit of a higher education.”

Additionally, the author states that, “therefore, this pilot interest-free student loan program to support students with financial need to get a college degree without the burden of paying off interest would provide an alternative and viable pathway for students to get a college degree without accumulating unnecessary debt.”

Student loans. According to Bankrate, LLC, a consumer financial services company, student loans often times become a necessary method for filling financial gaps when scholarships, grants, and other forms of student financial aid fall short, but the money is not free. The interest rates determine how much money a student will ultimately owe and will also influence a student’s monthly payment.

Federal student loans for undergraduate students, as of April 2024, currently have an interest rate of 5.50% for the 2023-24 school year, while graduate students have interest rates of 7.05% or 8.05% for unsubsidized loans or Direct PLUS loans, respectively. However, students are not always able to secure federal student loans (which have the same rates for every borrower), and rely on private student loans, which, as of April 2024, have interest rates ranging from 4.50% to 16.99% and are based primarily on the borrower’s credit score and could have fixed or variable interest rates.

Zero interest loan options. While it is virtually impossible for a lender to offer zero interest loans, Committee Staff understands that there is at least one entity in the state, the Jewish Free Loan Association (JFLA) who provides zero interest loans. Founded in 1904, the JFLA is a nonsectarian agency serving anyone facing a financial challenge and is equipped with the infrastructure in place to run a statewide interest-free lending program including the platform to track loans and store data, application, and processing forms.

Committee Staff understands that JFLA has 120 years of experience operating interest-free lending programs with staff who are experienced in evaluating prospective borrowers, reviewing loan applications, and handling the details of making and collecting loans. The JFLA’s total outstanding loan balance for 908 education loans is $7,468,602.47. Further, JFLA is currently averaging approximately 300 interest-free student loans per year.

According to JFLA, “when COVID hit in 2020, demand for student loans skyrocketed. JFLA had to reduce the size of its student loans from $10,000 to $7,500 to stretch available lending dollars and help more students.”

Committee Staff understands that the goal of JFLA (who met the definition of “nonprofit organization” for purposes of this measure), is to increase the loan amount back to $10,000 per student and assist more students annually.

Committee amendments and comments. This measure contains a very narrow definition of “nonprofit organization;” in order to broaden the definition, Committee Staff recommends, and the author has agreed to accept, the following amendment:

69851 (e) “Nonprofit organization” means a nonprofit organization that has existed for more than 100 years and operates an interest-free loan program remotely in three or more counties in the state on and before January 1, 2025. means a nonprofit organization that has existed for more than 50 years and operates an interest-free program virtually in the state on or before January 1, 2025.

Committee Staff understands that the goal of the author is to ensure that, “students who are low-income, homeless, at risk of homelessness, or food insecure have their financial needs met while in pursuit of a higher education.” However, as this measure is currently drafted, a student could qualify for participation in the program if the student has an annual EFC that is equal to, or less than, $20,000. That means that before a student would be eligible for state or federal aid, a student would be responsible for $20,000 of the student’s education. Given the three campuses in the pilot are public institutions, the $20,000 EFC could cover the entire expenses for an academic year. It would appear that a student with an annual EFC of up to $20,000 would fall within the higher threshold of middle class.

Moving forward, the author may wish to reduce the EFC threshold in order to ensure that the neediest students are able to benefit from the program.

Additionally, the measure is currently silent if undocumented students would be eligible to participate in the program.

Moving forward, the author may wish to clarify whether or not undocumented students would be eligible to participate in the program.

Further, the pilot currently only has three named campuses to participate in the pilot. Committee Staff understands the campuses of CSUN, GCC, and UCLA, were selected to participate in the pilot because an existing nonprofit organization, JFLA, currently provides zero interest loans to some students who attend the named campuses.

However, with the three campuses relatively in the same region of the State, moving forward, the author may wish to expand the pilot to include campuses within various regions of the state, ensuring that there is representation of small, medium, and large campuses in rural, urban, and coastal areas of the State.

This measure is currently silent as to how students will be informed of the program and an opportunity to receive zero interest loans.

Moving forward, the author may wish to work with CSAC and other stakeholders in order to determine how best to inform students of the program.

Lastly, this measure sunsets, on January 1, 2029, but the measure provides up to 10 years for loans to be paid back; which means that the measure could sunset before many of the loans are paid in full.

Moving forward, the author may wish to explore changing the length of loan repayment in order to align with the sunset of the program.

Arguments in support. According to the Jewish Public Affairs Committee (JPAC) and Jewish Free Loan Association (JFLA), sponsors of this measure, “with student loan interest rates soaring as high as 9%, many Californians are suffering. Over a twenty-year span, the interest on student loans often doubles from the original amount borrowed, casting a shadow over the lives of individuals and families. Borrowers sometimes make payments for decades and still find themselves under substantial, escalating debt. This severely hinders their ability to achieve key milestones such as homeownership, saving for their children's education, planning for retirement, and accumulating wealth. And this struggle is especially pronounced among those who are low-income, homeless, at risk of homelessness, or experiencing food insecurity.”

Further, JPAC and JFLA state, “implementing an interest-free, no-fee student loan program would afford graduates the chance to repay their loans within a reasonable timeframe while simultaneously saving for important milestones such as homeownership, retirement, and starting a family. Loans under the pilot program would be permitted for expenses such as tuition, books and supplies, housing, food, computers and other technology, transportation, summer bridge programming, tutoring, and other activities that promote college graduation rates.”

Lastly, JPAC and JFLA contend that, “loans will be serviced by the JFLA, a nonsectarian agency with a 120-year history of providing interest-free, fee-free loans. Since JFLA is not a bank, they can provide loans without interest or fees. In addition to helping borrowers, this also means that student loan repayment would fund the provision of more student loans, rather than benefiting for-profit financial lending institutions. AB 2507 aligns with our community’s belief in the value of education, and the impact that access to educational opportunities can have on a person’s life. Fostering equality amongst individuals in our education system creates the conditions for equality amongst communities in California.”

REGISTERED SUPPORT / OPPOSITION:

Support

Jewish Public Affairs Committee (Sponsor)

Jewish Free Loan Association (Sponsor)

30 Years After
A Place Called Home
American Jewish Committee - Los Angeles
Apartment Association of Greater Los Angeles
Bet Tzedek
Cheviot Value Management
College Track
Council District 5, City of Los Angeles
Democrats for Israel - CA
Democrats for Israel Los Angeles
Esusu Financial
ETTA
Glyphix
Hadassah
Hankin Patent Law, APC
Hillel 818
Hillel at UCLA
Hillel of San Diego
Housing and Economic Rights Advocates (HERA)
Jewish Big Brothers Big Sisters of Los Angeles
Jewish Center for Justice
Jewish Community Federation and Endowment Fund
Jewish Community Relations Council, Santa Barbara
Jewish Democratic Club of Marin
Jewish Democratic Club of Solano County
Jewish Democratic Coalition of The Bay Area
Jewish Democrats of San Diego County
Jewish Family & Community Services East Bay
Jewish Family and Children's Service of Long Beach and Orange County
Jewish Family and Children's Services of San Francisco, the Peninsula, Marin and Sonoma

Counties
Jewish Family Service of Los Angeles
Jewish Family Service of San Diego
Jewish Family Services of Silicon Valley
Jewish Federation of Greater Los Angeles, the
Jewish Federation of Greater Santa Barbara
Jewish Federation of the Greater San Gabriel and Pomona Valleys
Jewish Federation of the Sacramento Region
Jewish Long Beach
Jewish Silicon Valley
Jigsaw Analytics Group
Justice Design Group
JVS SoCal
Lift
Los Angeles City Council, District 1, Eunisses Hernandez
Merino Yebri
National Foster Youth Institute
Nithya Raman, 4th District, Los Angeles City Council
PowerCA Action
Powerca Action
Progressive Zionists of California
Raoul Wallenberg Jewish Democratic Club
Skirball Cultural Center
Supervisor Bob Nelson, District 4, County of Santa Barbara
Supervisor Das Williams, First District, County of Santa Barbara
The Rightway Foundation
USC Casden Institute
West Hollywood; City of
Yesh Tikva, Inc.
Yula High School

Individuals (107)

Opposition

None on file.

Analysis Prepared by: Jeanice Warden / HIGHER ED. / (916) 319-3960

Date of Hearing: April 16, 2024

ASSEMBLY COMMITTEE ON HIGHER EDUCATION

Mike Fong, Chair

ABPCA Bill Id:AB 2507 (

Author:Friedman) – As Amended Ver:March 14, 2024

SUBJECT: Student financial aid: Students at Risk of Homelessness Emergency Pilot Program.

SUMMARY: Creates the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program, and upon appropriation by the Legislature, and requires the California Student Aid Commission (CSAC) to distribute moneys in the fund to a nonprofit organization to award loans to eligible students. Specifically, this bill:

1. States the following declaration and intent of the Legislature:
   1. Recognizes the crushing burden of student debt on hundreds of thousands of students and graduates, the need to financially support California students who demonstrate financial need, without onerous interest payments accelerating the debt crisis, and the lack of state budget resources to fully fund the needs of California students with grants for housing and college attendance costs; and,
   2. It is the intent of this act to award loans for housing and college attendance costs to students attending the University of California (UC), Los Angeles, the California State University (CSU), Northridge (CSUN), and Glendale Community College (GCC) (a California Community College (CCC)) who demonstrate financial need, as specified.
2. Establishes the Students at Risk of Homelessness Emergency Pilot Program.
3.  Defines the following for purposes of this measure:
   1. “Financial need” to mean a student who meets any one, or combination of the following:
      1. Is eligible for a federal Pell Grant;
      2. Has an annual expected family contribution (EFC) that is equal to, or less than, $20,000;
      3. Is facing eviction;
      4. Is homeless; or,
      5. Is food insecure.
   2. “Fund” to mean the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund;
   3. “Institution” to mean the UCLA, the CSUN, and GCC;
   4. “Loan” to mean a loan awarded to a student under the program;
   5. “Nonprofit organization” to mean a nonprofit organization that has existed for more than 100 years and operates an interest-free loan program remotely in three or more counties in the state on and before January 1, 2025; and,
   6. “Program” to mean the Students at Risk of Homelessness Emergency Pilot Program.
4. Stipulates that the program is under the administration of CSAC to award loans for housing and college attendance costs to students attending institutions who demonstrate financial need.
5. Requires CSAC to enter into a contract with a nonprofit organization and for the organization to award loans to eligible students. The contract may include a provision that authorizes 2.5% of the funds provided to the nonprofit organization to be used by the nonprofit organization for its administrative costs under for each year that the program is operational.
6. Stipulates a student attending an institution may be awarded a loan if the student satisfies both of the following requirements:
   1. Demonstrates financial need; and,
   2. Is enrolled at least part-time in an undergraduate program, or a lower division community college program, at an institution.
7. Requires that the nonprofit organization contracted, as specified, must be responsible for all of the following:
   1. Upon the receipt of funds from CSAC for purposes of this measure, determining student eligibility for a loan;
   2. Determining the amount of a loan. The amount of a loan must not exceed a reasonable estimate of housing and college attendance costs, as determined by the nonprofit organization, and shall be based on the financial need of the student; and,
   3. Awarding loans to students.
8. Stipulates that a loan awarded to an eligible student cannot have an interest rate. A student will not be charged a fee on a loan awarded or to participate in the program.
9. Requires that the standard repayment term for a loan awarded under the program will be no more than 10 years, as determined in the contract entered into, as specified. The standard commencement and rate of loan repayment will be determined in the contract entered into, as specified.
10. Stipulates that a student who is in default on any federal student loan, state student loan, or student loan issued by the segment or the institution is not eligible for a loan under the program.
11. Requires a student must confirm in writing that the student satisfies all of the requirements for loan eligibility.
12. Requires a student seeking a loan must authorize the nonprofit organization contracted, as specified, to access any information pertinent to certifying that the student meets all of the requirements for loan eligibility.
13. Requires that the nonprofit organization contracted, as specified, must certify that the student meets all of the requirements for loan eligibility before awarding a loan to the student.
14. Requires the nonprofit organization contracted, as specified, to submit an annual report to CSAC that includes, but is not limited to, both of the following for the previous award year:
    1. The number of students who qualified for a loan; and,
    2. The number of students awarded a loan.
15. Requires CSAC to submit an annual report to the Legislature that includes the information submitted to CSAC by the contracted nonprofit organization.
16. Stipulates that the information contained in both reports, as enumerated in 14 (a – b) and 15 inclusive, must be disaggregated by institution and the age, gender, race, and ethnicity of students.
17. Establishes the Emergency Students Facing Housing Crisis and Homelessness Revolving Fund as the initial depository of all moneys appropriated, donated, or otherwise received for the program. Upon appropriation by the Legislature, CSAC must distribute moneys in the fund to the nonprofit organization contracted, as specified, to award loans to students.
18.  Sunsets and repeals the provisions of this measure on January 1, 2029.

EXISTING LAW:

1. Establishes the CSAC for the purpose of administering specified student financial aid programs (Education Code (EC) Section 69510, et seq.).
2. Authorizes CSAC to receive donations, bequests, grants, and philanthropic funding, subject to conditions or restrictions that the executive director of the CSAC may deem advisable, and subject to the approval, as specified. Beginning January 1, 2024, at the first regular CSAC meeting of the calendar year, CSAC must publicly report both of the following:
   1. The source, and the amount from each source, of any philanthropic funding received during the calendar year immediately preceding the reporting deadline; and, 
   2. The purpose for which that philanthropic funding was used (EC Section 69514.3).
3. Establishes the mission and function of the CCC, which, in part is to: 1) offer academic and vocational instruction at the lower division level for both younger and older students, including those persons returning to school; 2) authorizes the CCC to grant the associate in arts and the associate in science degrees; 3) requires the CCC to offer English as a Second Language instruction, adult noncredit instruction, and support services which help students succeed at the postsecondary level; and, 4) advance California’s economic growth and global competitiveness through education, training, and services that contribute to continuous work force improvement (EC Section 66010.4).
4. Establishes the CSU system, made of 23 campuses, and bestows upon the CSU Trustees, through the Board of Trustees, the power, duties, and functions with respect to the management, administration, and control of the CSU system (EC Section 66606 and 89030, et seq.).
5. Establishes the UC as a public trust to be administered by the Regents of the UC; and, grants the Regents full powers of organization and government, subject only to such legislative control as may be necessary to insure security of its funds, compliance with the terms of its endowments, statutory requirements around competitive bidding and contracts, sales of property and the purchase of materials, goods and services (Article IX, Section (9)(a) of the California Constitution).

FISCAL EFFECT: Unknown

COMMENTS: Purpose of the measure. According to the author, “over a student’s lifetime, if loans are not repaid in a timely manner, the principal loan amount can more than double because of compounding interest. California, despite its commitment to helping students graduate from college, lacks the financial resources to provide grants to make education universally free for students regardless of socio-economic backgrounds.”

The author contends that, “AB 2507 would establish a pilot interest-free, no-fee student loan program at the University of California, Los Angeles, California State University, Northridge, and Glendale Community College to meet the skyrocketing demand for students who are low-income, homeless, at risk of homelessness, or food insecure to have their financial needs met while in pursuit of a higher education.”

Additionally, the author states that, “therefore, this pilot interest-free student loan program to support students with financial need to get a college degree without the burden of paying off interest would provide an alternative and viable pathway for students to get a college degree without accumulating unnecessary debt.”

Student loans. According to Bankrate, LLC, a consumer financial services company, student loans often times become a necessary method for filling financial gaps when scholarships, grants, and other forms of student financial aid fall short, but the money is not free. The interest rates determine how much money a student will ultimately owe and will also influence a student’s monthly payment.

Federal student loans for undergraduate students, as of April 2024, currently have an interest rate of 5.50% for the 2023-24 school year, while graduate students have interest rates of 7.05% or 8.05% for unsubsidized loans or Direct PLUS loans, respectively. However, students are not always able to secure federal student loans (which have the same rates for every borrower), and rely on private student loans, which, as of April 2024, have interest rates ranging from 4.50% to 16.99% and are based primarily on the borrower’s credit score and could have fixed or variable interest rates.

Zero interest loan options. While it is virtually impossible for a lender to offer zero interest loans, Committee Staff understands that there is at least one entity in the state, the Jewish Free Loan Association (JFLA) who provides zero interest loans. Founded in 1904, the JFLA is a nonsectarian agency serving anyone facing a financial challenge and is equipped with the infrastructure in place to run a statewide interest-free lending program including the platform to track loans and store data, application, and processing forms.

Committee Staff understands that JFLA has 120 years of experience operating interest-free lending programs with staff who are experienced in evaluating prospective borrowers, reviewing loan applications, and handling the details of making and collecting loans. The JFLA’s total outstanding loan balance for 908 education loans is $7,468,602.47. Further, JFLA is currently averaging approximately 300 interest-free student loans per year.

According to JFLA, “when COVID hit in 2020, demand for student loans skyrocketed. JFLA had to reduce the size of its student loans from $10,000 to $7,500 to stretch available lending dollars and help more students.”

Committee Staff understands that the goal of JFLA (who met the definition of “nonprofit organization” for purposes of this measure), is to increase the loan amount back to $10,000 per student and assist more students annually.

Committee amendments and comments. This measure contains a very narrow definition of “nonprofit organization;” in order to broaden the definition, Committee Staff recommends, and the author has agreed to accept, the following amendment:

69851 (e) “Nonprofit organization” means a nonprofit organization that has existed for more than 100 years and operates an interest-free loan program remotely in three or more counties in the state on and before January 1, 2025. means a nonprofit organization that has existed for more than 50 years and operates an interest-free program virtually in the state on or before January 1, 2025.

Committee Staff understands that the goal of the author is to ensure that, “students who are low-income, homeless, at risk of homelessness, or food insecure have their financial needs met while in pursuit of a higher education.” However, as this measure is currently drafted, a student could qualify for participation in the program if the student has an annual EFC that is equal to, or less than, $20,000. That means that before a student would be eligible for state or federal aid, a student would be responsible for $20,000 of the student’s education. Given the three campuses in the pilot are public institutions, the $20,000 EFC could cover the entire expenses for an academic year. It would appear that a student with an annual EFC of up to $20,000 would fall within the higher threshold of middle class.

Moving forward, the author may wish to reduce the EFC threshold in order to ensure that the neediest students are able to benefit from the program.

Additionally, the measure is currently silent if undocumented students would be eligible to participate in the program.

Moving forward, the author may wish to clarify whether or not undocumented students would be eligible to participate in the program.

Further, the pilot currently only has three named campuses to participate in the pilot. Committee Staff understands the campuses of CSUN, GCC, and UCLA, were selected to participate in the pilot because an existing nonprofit organization, JFLA, currently provides zero interest loans to some students who attend the named campuses.

However, with the three campuses relatively in the same region of the State, moving forward, the author may wish to expand the pilot to include campuses within various regions of the state, ensuring that there is representation of small, medium, and large campuses in rural, urban, and coastal areas of the State.

This measure is currently silent as to how students will be informed of the program and an opportunity to receive zero interest loans.

Moving forward, the author may wish to work with CSAC and other stakeholders in order to determine how best to inform students of the program.

Lastly, this measure sunsets, on January 1, 2029, but the measure provides up to 10 years for loans to be paid back; which means that the measure could sunset before many of the loans are paid in full.

Moving forward, the author may wish to explore changing the length of loan repayment in order to align with the sunset of the program.

Arguments in support. According to the Jewish Public Affairs Committee (JPAC) and Jewish Free Loan Association (JFLA), sponsors of this measure, “with student loan interest rates soaring as high as 9%, many Californians are suffering. Over a twenty-year span, the interest on student loans often doubles from the original amount borrowed, casting a shadow over the lives of individuals and families. Borrowers sometimes make payments for decades and still find themselves under substantial, escalating debt. This severely hinders their ability to achieve key milestones such as homeownership, saving for their children's education, planning for retirement, and accumulating wealth. And this struggle is especially pronounced among those who are low-income, homeless, at risk of homelessness, or experiencing food insecurity.”

Further, JPAC and JFLA state, “implementing an interest-free, no-fee student loan program would afford graduates the chance to repay their loans within a reasonable timeframe while simultaneously saving for important milestones such as homeownership, retirement, and starting a family. Loans under the pilot program would be permitted for expenses such as tuition, books and supplies, housing, food, computers and other technology, transportation, summer bridge programming, tutoring, and other activities that promote college graduation rates.”

Lastly, JPAC and JFLA contend that, “loans will be serviced by the JFLA, a nonsectarian agency with a 120-year history of providing interest-free, fee-free loans. Since JFLA is not a bank, they can provide loans without interest or fees. In addition to helping borrowers, this also means that student loan repayment would fund the provision of more student loans, rather than benefiting for-profit financial lending institutions. AB 2507 aligns with our community’s belief in the value of education, and the impact that access to educational opportunities can have on a person’s life. Fostering equality amongst individuals in our education system creates the conditions for equality amongst communities in California.”

REGISTERED SUPPORT / OPPOSITION:

Support

Jewish Public Affairs Committee (Sponsor)

Jewish Free Loan Association (Sponsor)

30 Years After
A Place Called Home
American Jewish Committee - Los Angeles
Apartment Association of Greater Los Angeles
Bet Tzedek
Cheviot Value Management
College Track
Council District 5, City of Los Angeles
Democrats for Israel - CA
Democrats for Israel Los Angeles
Esusu Financial
ETTA
Glyphix
Hadassah
Hankin Patent Law, APC
Hillel 818
Hillel at UCLA
Hillel of San Diego
Housing and Economic Rights Advocates (HERA)
Jewish Big Brothers Big Sisters of Los Angeles
Jewish Center for Justice
Jewish Community Federation and Endowment Fund
Jewish Community Relations Council, Santa Barbara
Jewish Democratic Club of Marin
Jewish Democratic Club of Solano County
Jewish Democratic Coalition of The Bay Area
Jewish Democrats of San Diego County
Jewish Family & Community Services East Bay
Jewish Family and Children's Service of Long Beach and Orange County
Jewish Family and Children's Services of San Francisco, the Peninsula, Marin and Sonoma

Counties
Jewish Family Service of Los Angeles
Jewish Family Service of San Diego
Jewish Family Services of Silicon Valley
Jewish Federation of Greater Los Angeles, the
Jewish Federation of Greater Santa Barbara
Jewish Federation of the Greater San Gabriel and Pomona Valleys
Jewish Federation of the Sacramento Region
Jewish Long Beach
Jewish Silicon Valley
Jigsaw Analytics Group
Justice Design Group
JVS SoCal
Lift
Los Angeles City Council, District 1, Eunisses Hernandez
Merino Yebri
National Foster Youth Institute
Nithya Raman, 4th District, Los Angeles City Council
PowerCA Action
Powerca Action
Progressive Zionists of California
Raoul Wallenberg Jewish Democratic Club
Skirball Cultural Center
Supervisor Bob Nelson, District 4, County of Santa Barbara
Supervisor Das Williams, First District, County of Santa Barbara
The Rightway Foundation
USC Casden Institute
West Hollywood; City of
Yesh Tikva, Inc.
Yula High School

Opposition

None on file.

Analysis Prepared by: Jeanice Warden / HIGHER ED. / (916) 319-3960