CA AB850

Prohibits California colleges and universities from charging higher tuition/fees or blocking enrollment solely because a student owes institutional debt (money owed directly to the school from prior terms, such as unpaid fees or returned financial aid)

Requires institutions to grant a one-time exemption from enrollment holds for students with institutional debt, allowing them to register for one additional term while working to resolve the debt or enter a payment plan

Mandates that institutions establish written debt collection policies consistent with consumer protection laws and prohibits reporting institutional debt to credit agencies or using unlicensed third-party debt collectors

Requires public colleges to report biennial data starting January 1, 2027, on institutional debt including total amounts owed, number of accounts in collections, demographics of affected students, and collection practices used

Addresses the $350 million in institutional debt owed by over 750,000 low-income students at California public colleges, much of which arose when students withdrew and federal Title IV financial aid was returned to the government