Protecting Students from Creditor Colleges Act.

Existing law establishes the California Community Colleges, under the administration of the Board of Governors of the California Community Colleges, the California State University, under the administration of the Trustees of the California State University, the University of California, under the administration of the Regents of the University of California, independent institutions of higher education, and private postsecondary educational institutions as the segments of postsecondary education in the state. The Donahoe Higher Education Act requires public higher education entities to adopt regulations to withhold institutional services, including withholding grades and diplomas, upon notice to a student that they are in default on a loan made pursuant to specified federal law. Notwithstanding any other law, the Educational Debt Collection Practices Act prohibits a school, as defined, from refusing to provide a transcript for a current or former student on the grounds that the student owes a debt, conditioning the provision of a transcript on the payment of a debt, charging a higher fee for obtaining a transcript, providing less favorable treatment of a transcript request because a student owes a debt, or using a transcript issuance as a tool for debt collection, as specified. This bill would expand the provisions described above to also prohibit a school from refusing to provide a diploma, as defined, for a current or former student on the grounds that the student owes a debt, conditioning the provision of a diploma on the payment of a debt, charging a higher fee for obtaining a diploma, providing less favorable treatment of a diploma request because a student owes a debt, or using a diploma issuance as a tool for debt collection. The bill would make other conforming changes. This bill would prohibit an institution of higher education, as defined, from taking specified actions, including, among other things, charging a higher tuition or fee on the grounds that the student owes an institutional debt, as defined. The bill would authorize an institution of higher education to prevent a current or former student that owes an institutional debt from enrolling or registering for courses on the basis that the student owes an institutional debt if the institution of higher education complies with specified conditions, including, among other conditions, that the institution grants a one-time exemption from an enrollment or registration hold on a current or former student on the grounds that the student owes an institutional debt, as provided. The bill would require an institution of higher education to establish a written policy defining standards and practices for the collection of institutional debt, as provided, and to provide the written policy to current or former students that owe an institutional debt. The bill would prohibit an institution of higher education from taking specified actions when collecting an institutional debt. The bill would require the Board of Governors of the California Community Colleges and the Trustees of the California State University, and request the office of the President of the University of California, to require each public institution to report, beginning on or before July 1, 2026, using a specified uniform format, and on a biennial basis, specified information regarding the number and dollar amount of institutional debts at each institution. By imposing new duties on community college districts, the bill would constitute a state-mandated local program. Existing law authorizes the Controller, in their discretion, to offset any amount due to a state agency from a person or entity, against any amount owing to that person or entity, including any tax refund, by any state agency, except as specified. This bill would prohibit the Controller, for taxable years beginning on and after January 1, 2025, from offsetting any amount due to a public or private postsecondary educational institution, as defined, from a current or former student, that was incurred in their capacity as a student, against any amount owing to that current or former student by a state agency, until 730 days after the amount was incurred. The bill would make its provisions severable. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.