Institutional Debt Transparency Act.

Assembly Member Pacheco's institutional debt reform legislation establishes new protections for California college students who owe money directly to their schools, while creating the state's first comprehensive tracking system for these debts. The bill prohibits institutions from charging higher tuition or blocking reenrollment based solely on past institutional debts, though schools must grant students a one-time exemption from enrollment holds and provide opportunities to establish payment plans.

The legislation requires colleges and universities to develop formal debt collection policies aligned with state consumer protection laws. Institutions must make reasonable efforts to contact students about debts before involving third-party collectors, provide itemized statements of charges, and inform students about available emergency aid. The bill bars schools and collectors from reporting institutional debts to credit agencies.

To increase transparency, public institutions must begin reporting detailed data about institutional debts by 2027, including total amounts owed, payment plan usage, and collection methods. Starting in 2029, schools must also track demographic information about affected students and break down debts by factors like major, degree type, and underlying expenses. The Board of Governors of the California Community Colleges and CSU Trustees, along with the UC President's office, must develop uniform reporting standards and publish the data annually.

The provisions apply to all public and private postsecondary institutions in California that receive state funding or enroll students receiving state financial aid. While maintaining schools' ability to require current term payments and enforce academic policies, the bill aims to prevent past institutional debts from creating barriers to degree completion.