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AB 1241

Student financial aid: Pay it Forward, Pay it Back Pilot Program: study.

2025-2026 Regular Session Introduced by Pilar Schiavo

Creates a Pay‑It‑Forward Financial Aid Program letting UC/CSU students attend without upfront costs, repaying later via a share of future income.

From committee: Do pass and re-refer to Com. on APPR. (Ayes 8. Noes 2.) (January 13). Re-referred to Com. on APPR.
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Bill Summary · AB 1241

AB 1241 — Pay‑It‑Forward Financial Aid Program (Schiavo) — Summary

Status: Introduced Feb 21, 2025; most recently re‑referred to Assembly Committee on Higher Education (Apr 7, 2025).
Subject: Student financial aid; Pay‑It‑Forward financing for UC and CSU students.

Purpose / Intent

The Legislature finds that rising costs at the University of California (average annual tuition & fees $16,634) and California State University (average annual tuition & fees $8,508) pose access barriers. AB 1241 seeks to create an alternative to interest‑bearing student loans by establishing a “Pay‑It‑Forward” program that lets eligible students attend UC or CSU campuses without upfront tuition, fees, or room and board and instead repay the state through a share of future income.

Key provisions

  • Establishes a Pay‑It‑Forward Financial Aid Program administered by the State Department of Education (as described in the digest) in consultation with the California Student Aid Commission, the California State University, and the University of California. (The bill text alternately refers to “department” and “commission”; implementation authority is to be clarified in rulemaking.)
  • Allows admitted students at any UC or CSU campus to enroll without paying upfront tuition, fees, or room and board.
  • Participating students must sign a contract to repay the state, after graduation or disenrollment and upon employment, by paying a percentage of their annual adjusted gross income (AGI) for a number of years. The exact percentage and term are to be determined by the administering agency.
  • Caps total repayments so that a participating student may not pay more than the amount they received under the program.
  • Creates the Pay‑It‑Forward Financial Aid Fund; monies received from repayments (and gifts, grants, awards, appropriations) are deposited there. Funds, upon legislative appropriation, are used to pay costs for future participating students.
  • Program funds must supplement — not supplant — other forms of financial aid (grants, scholarships, loans).
  • Requires campuses to offer the program beginning in the 2028–29 academic year.
  • Requires CSU and UC to ensure at least 10,000 students per year participate beginning with the 2030–31 academic year.
  • Directs the administering agency to adopt regulations necessary to implement the program.

Who would be affected

  • Primary: students admitted to UC and CSU campuses who opt into the program (replaces upfront cost burden with future income‑based repayments).
  • Institutions: UC and CSU campuses (responsible for offering program).
  • State entities: Department/Commission and Student Aid Commission (administration, rulemaking, fund management); Legislature (appropriations).
  • State budget: potential long‑term revenue from repayments and upfront cost obligations to enroll students pending appropriation.

Fiscal & implementation considerations

  • The bill establishes a new long‑term financing model but leaves key program parameters (repayment percentage, repayment term, administrative responsibility) unspecified and subject to rulemaking.
  • The program shifts upfront revenue needs to the state and relies on future repayment streams and legislative appropriations, creating budgetary and program sustainability questions.
  • Legislative Digest notes a fiscal committee review; AB 1241 does not itself appropriate funds.

Legislative timeline / status

  • Introduced Feb 21, 2025. Multiple committee referrals and author amendments in March–April 2025; most recently re‑referred to Assembly Higher Education Committee (Apr 7, 2025). Further committee action and appropriation decisions required before enactment.

Compiled from official sources — confirm details with the bill’s official record.

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