AB 1313: This new California law eliminates schools’ counterproductive debt collection practices

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One of the problems confronting young Americans is their outstanding student loan debt, which oftentimes serves as a hindrance to their success.

At present, More than 44 million Americans have outstanding student loan debt totaling over $1.5 trillion. Therefore, the United States has a student debt crisis.

California Governor Gavin Newson recently signed into law legislation that would help alleviate the crisis by ensuring students can pursue educational and career opportunities.

The state’s newly-approved law, AB 1313, the Educational Debt Collection Practices Act, prohibits private and public postsecondary schools’ existing debt collection tactic—withholding students’ transcripts.

This practice puts strong pressure on current or former students and may experience suffering as it prevents them from getting a good job. Most employers commonly request transcripts when screening job applicants. If a student is unable to present his/her transcript to an employer, he/she might lose a job opportunity. As a result, the payment or his/her debt to the school will be delayed further.

AB 1313 key provision

California lawmakers and Gov. Newsom enacted AB 1313 believe that schools’ debt collection practice of withholding transcripts is counterproductive and worsens the student debt crisis.

Under the law, postsecondary schools are not allowed to:

  • Refuse to provide a transcript for a current or former student on the grounds that the student owes a debt.
  • Condition the provision of a transcript on the payment of a debt, other than a fee charged to provide the transcript.
  • Charge a higher fee for obtaining a transcript, or provide less favorable treatment of a transcript request because a student owes a debt.
  • Use transcript issuance as a tool for debt collection.

California is putting students first by protecting them from predatory practices

Assembly member Luz Rivas and Attorney General Xavier Becerra, the author and sponsor of AB 1313 respectively, were pleased that the Governor approved the legislation.

In a statement, Rivas and Becerra commented that AB 1313 will give California students the opportunity to succeed regardless of their financial situation.

Rivas said, “The passage of AB 1313 eliminates higher education institutions’ ability to use the predatory practice of withholding transcripts to collect student debt. California continues to put students first.”

“As our nation struggles under the weight of a $1.5 trillion student debt crisis, it is essential that we follow every road to help students succeed… California is a taking a step toward solving a chicken and egg dilemma.  Students with debt can no longer be denied their transcripts – one of the most important tools students need to help address their debt. We’re proud to help protect students from unfair debt collection practices – no one should be denied opportunity simply because of their financial situation.”

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