Student financial aid: Pay-It-Forward Financial Aid Program.

Assembly Member Schiavo's Pay-It-Forward Financial Aid Program legislation aims to create an alternative financing pathway for California State University and University of California students by eliminating upfront costs for tuition, fees, and room and board in exchange for future income-based payments. Under the proposed program, participating students would sign contracts agreeing to pay a percentage of their annual adjusted gross income to the state after graduation or leaving school, with payments capped at the total amount received through the program.

The bill establishes the Pay-It-Forward Financial Aid Fund to collect graduate payments and finance future students' education costs. The Student Aid Commission would administer the program in consultation with CSU and UC leadership, with authority to accept additional funding through gifts, grants, and other sources. The program would operate as a supplement to existing financial aid, including grants, scholarships, and loans.

Implementation would occur in phases, with all CSU and UC campuses required to offer the program beginning in the 2028-29 academic year. By 2030-31, the university systems must enroll at least 10,000 students annually in the program. The legislation comes as California students face average borrowing of $21,125 for undergraduate degrees, contributing to over $142 billion in outstanding student loan debt statewide as of 2020, according to the bill's legislative findings.

The Student Aid Commission would determine key program parameters through rulemaking, including the specific percentage of income graduates must contribute and the duration of payment obligations. The commission would also establish mechanisms for tracking graduate employment and income, collecting payments, and managing the revolving fund to sustain the program for future cohorts of students.