CA AB154

California State University and University of California each must select one campus to establish a pilot program starting in the 2021-22 academic year allowing students to enter income share agreements as an alternative to student loans.

Income share agreements require students to pay a specified percentage of future income for a repayment period not exceeding 10 years (extendable up to 60 additional months if annual income stays below $20,000), with repayment starting 6 months after the student is no longer enrolled full-time.

Students must receive disclosure documents clearly stating the agreement is not a debt instrument, payments are not dischargeable in bankruptcy, may exceed or fall short of the amount provided, and include caps on total repayment amounts and income thresholds of $20,000 annually before payments begin.

Pilot program is limited to undergraduate students in their sophomore, junior, or senior years, with campuses authorized to impose additional eligibility requirements and cap participant numbers based on available appropriations.

Participating campuses must submit reports by November 1, 2023, and November 1, 2026, documenting participant numbers by grade level, degree programs, average funding amounts, graduate income data, and fund balances.