On January 1, 2020, California Law AB-1313 went into effect. If you’ve been following along (or are in California), you’ll most likely be aware of the bill, which was voted on in October 2019.
Under the new law, if a California student has outstanding debt, the institution they attend can’t charge higher transcript fees, provide less favorable treatment, or make it more difficult for the student to receive an official transcript. In essence, schools aren’t able to use transcripts as a debt collection tool.
As a state law, AB-1313 only affects institutions and students in the state of California. However, it may be smart for institutions across the country to plan ahead.
Improve financial communications with students
Institutions are already required to communicate with students about the responsibility of taking out student loans. Now’s a good time to brainstorm with your financial aid office about more effective ways to speak to students about debt prevention and share financial aid opportunities before it becomes an issue.
One solution could be to shift the burden of communication a third-party like Nelnet Campus Commerce’s actively managed payment plans. This allows for students to choose how to be notified when a payment’s due (email, text, etc.) and make the payment with the familiar single-sign they use for university life.
Students could also designate automatic payments, authorize parents to make payments, and chat with a real person from Nelnet Campus Commerce’s call center if there’s a question.
Review pre-collections processes
When a student is about to fall behind on a payment, what is your institution doing to help them along? If you offer specialized payment plans or other resources, find ways to make them more available to students before they become past due. Nelnet Campus Commerce offers a past due payment plan solution to automatically reach out when a student starts falling behind and help him get back on track.
Prepare for lost revenue
Even if your institution takes all of the right precautions, there’s a good chance some students will still have to go to a collections agency. Plan for this in advance, and make sure you have a strategy to account for any lost income from unpaid accounts.
Keep an eye on the news
At the moment, this doesn’t seem to be happening at a federal level (at least, not rapidly). However, a bill similar to AB-1313 was introduced in the Washington State Legislature . If other states follow suit, paying extra attention to state legislature agendas and news coverage will help keep you in the loop – and give you time to prepare when the issue gains more traction.