California Legislation Recap
California passed student debt letter legislation on October 3, 2017, requiring higher education institutions (except for the California Community Colleges) to notify student loan borrowers annually, in an electronic communication, about their indebtedness. This includes the University of California system, the California State University system, independent institutions of higher education, and private postsecondary educational institutions.
What information must schools report in order to meet the requirements of the law?
The notification must include an estimate* of the following:
- The total cumulative principal amount of his or her federal, state, and private education loans.
- The potential total payoff amount of his or her federal, state, and private education loans incurred or a range of the total payoff amount.
- Monthly repayment amounts that a similarly situated borrower may incur, including principal and interest, for the amount of loans the student has taken out at the time the information is provided, assuming a 10-year repayment plan under the current federal loan interest rates.
* If a school is unable to provide a student with the estimates described above, the school’s letter needs to inform the student they can view their financial aid history through the National Student Loan Data System (NSLDS) and provide a website link to NSLDS so they can access their federal student aid account or create one.
Are there any additional requirements or statements?
Yes. Schools must include a statement that:
- The estimates provided are general in nature and not meant as a guarantee or promise of the actual projected amounts;
- The estimates are based on the loan amounts that the institution is aware of and may not include all student debt incurred;
- Borrowers with private loans may have substantially higher payments; and,
- Federal student loan borrowers may be eligible for repayment plans that extend beyond ten years.
Also, contact information must be included for the institution’s financial aid office or a financial aid or academic adviser of the institution.
Here's how to navigate it
Student debt letters are a great way to help you retain the students you've worked so hard to enroll. But for an already overworked staff, debt letter legislation can feel like just one more area requiring compliance. Our free downloadable resources can help you find your way!
