SACRAMENTO, Calif. — The new year is almost upon us, which means California is going to be seeing new laws taking into effect.
The new laws include undocumented college students being able to qualify for college loans for their professional or graduate degree and a limit cap on interests rates.
Expands eligibility for the California DREAM loan program at the California State University [CSU] and the University of California [UC] to students who are enrolled program that lead to a professional or a graduate degree.
Current law:
Former President Barack Obama announced the Deferred Action for Childhood Arrivals [DACA] on June 15, 2012. While DACA defers deportation against a person for a certain period, it does not provide lawful status.
The current law exempts California non-residents from paying non-resident tuition at a CSU, UC and California community colleges if they meet the following criteria:
- Attended or attained credits at a California school or worked for the equivalent of three more years.
- Graduated from a California high school or attained an equivalent degree, obtained an associate or a transfer degree from a California community college.
- Registered or attended an accredited California higher education institution that started after the fall semester of the 2001-2002 academic year.
- If the student filed an affidavit that the student has applied to legalize their immigration status. Or they would submit such an application as soon as they are eligible to do so.
What's new:
SB 354 would extend the eligibility for the DREAM loan program for both CSU and UC to a student who is in a program that would lead to either a professional or a graduate degree.
The college institution would determine the proportion of the program funds it would use for undergraduate and graduate programs.
Why it's needed:
Sen. Maria Durazo, who wrote the bill, said in the analysis there are many institutional grants, scholarships and fellowships that have legal status requirements.
"Undocumented students face significant challenges in obtaining the proper financial support that is needed to enroll in a graduate or professional degree program at a public university," Durazo said.
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Summary:
Prohibits California Financing Law [CFL] licensees from charging consumer loans that exceeds 36% per year, plus the federal funds rate for loans with a principal amount from 2,5000 to $10,000.
Current law:
Here are the four rules of the existing legislation regarding consumer loans:
- Consumer loans under $2,500 are capped from 12% to 30% a year, depending on the unpaid balance of the loan.
- The current law prohibits CFL licensees who make consumer loans under $5,000 from charging compound interest or charges. The current law limits in the number of delinquency fees loan lenders may impose $10 per loan that is 10 days late.
- The new law imposes an interest rate cap of 36% a year plus the federal funds rate of at least $2,500 but less than $10,000.
- The law also requires finance leaders to report each borrower's payment performance to at least one consumer reporting agency. The company is also to offer the borrower a credit education program or seminar.
Why it's needed:
Monique Limón, who wrote AB 539, said the lack of guidance from the legislature on interest rates for loans resulted in a "wild west" where lenders could charge interest rates of over 200%.
Limon said the bill would promote affordable and accessible credit for consumers and give lenders confidence in the regulatory stability in California.
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