AB 1241: Student financial aid: Pay it Forward, Pay it Back Pilot Program: study.

California · Assembly · 2025–2026 Regular Session · last verified February 3, 2026

What AB 1241 does, verified February 3, 2026

The bill proposes a pilot program that allows students to enroll in California state universities or universities of California without paying upfront tuition, fees, or room and board. Instead, participating students would pay a percentage of their annual adjusted gross income to the state upon graduation or disenrollment and employment. The program would be studied for its effects and would require a report to be submitted to the relevant committees. The program would be made inoperative after 2027 and repealed after 2031.

Bill journey

✓IntroducedComplete

2In CommitteeCurrent

3First Chamber FloorPending

4Second ChamberPending

5GovernorPending

6ChapteredPending

Last action: From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. (2026-02-02)Alert me

Author and sponsors

Asm. Pilar SchiavoAuthor · California State Assembly

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Recent actions16 total · showing 5

Feb. 02, 2026	From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
Jan. 31, 2026	Died pursuant to Art. IV, Sec. 10(c) of the Constitution.
Jan. 22, 2026	In committee: Held under submission.
Jan. 22, 2026	In committee: Set, first hearing. Referred to suspense file.
Jan. 14, 2026	From committee: Do pass and re-refer to Com. on APPR. (Ayes 8. Noes 2.) (January 13). Re-referred to Com. on APPR.

Full action history, 11 earlier actionsConnect Plus

Latest bill textAmended version, January 5, 2026 · 1,649 words

Amended IN Assembly January 05, 2026

Amended IN Assembly April 02, 2025

Amended IN Assembly March 12, 2025

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 1241

Introduced by Assembly Member Schiavo

February 21, 2025

An act to add and repeal Section 69505.3 to of the Education Code, relating to student financial aid.

LEGISLATIVE COUNSEL'S DIGEST

AB 1241, as amended, Schiavo. Student financial aid: ~~Pay-It-Forward Financial Aid~~ ~~Program.~~ Pay it Forward, Pay it Back Pilot Program: study.

Existing law establishes the University of California, under the administration of the Regents of the University of California, ~~and~~ the California State University, under the administration of the Trustees of the California State University, the California Community Colleges, under the administration of the Board of Governors of the California Community Colleges, and independent institutions of higher education, as ~~2 of~~ the 4 segments of ~~public~~ postsecondary education in the state. Existing law establishes the Student Aid Commission as the primary state agency for the administration of state-authorized student financial aid programs available to students attending all segments of postsecondary education.

This bill would require the commission, in consultation with the ~~California State University and the University of California,~~ Legislative Analyst’s Office, to ~~establish a Pay-It-Forward Financial Aid Program~~ conduct a study of the effects of enacting, in future legislation, a Pay it Forward, Pay it Back Pilot Program that ~~allows~~ would allow students to enroll at a California State University or University of California campus without paying upfront tuition, fees, or room and board, and instead ~~requiring~~ would require participating students to pay, upon graduation or disenrollment and employment, a percentage of their annual adjusted gross income to the state for a number of years, as determined by the commission. The bill would require those collected payments to be deposited into the Pay-It-Forward Financial Aid Fund, which the bill would establish. The bill would require moneys in the fund, upon appropriation by the Legislature, to pay the tuition, fees, and room and board expenses of future participating students. The bill would require, commencing with the 2028–29 academic year, each California State University and University of California campus to offer the program to their students, and would require, commencing with the 2030–31 academic year, the California State University and the University of California to ensure that at least 10,000 students per year participate in the program. specified. The bill would require the commission to submit a report on the study of the pilot program to the Assembly Committee on Higher Education and the Senate Committee on Education on or before September 30, 2027. The bill would make these provisions inoperative on September 30, 2030, and would repeal them as of January 1, 2031.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

(a) The Legislature finds and declares all of the following:

(1) The cost of attending the University of California and the California State University remains a barrier to accessing postsecondary education, with average annual tuition and campus fees of $16,634 and $8,508 at the University of California and the California State University, respectively.

(2) Due to postsecondary education becoming increasingly unaffordable, many students are forced to borrow money to finance their postsecondary education.

(3) On average, students graduating with a baccalaureate degree in California borrow $21,125 to finance their undergraduate education.

(4) As of 2020, Californians collectively owed over $142,000,000,000 in student loan debt, with federal loans making up the majority of that debt.

~~(b)Therefore, it is the intent of the Legislature to provide students an additional financing option that does not burden them with interest-accruing debt.~~
(b) It is the intent of the Legislature that revenue received from a Pay it Forward, Pay it Back Pilot Program is managed by the state.
(c) It is further the intent of the Legislature that a Pay it Forward, Pay it Back Pilot Program does not replace existing forms of financial aid, including grants, scholarships, and loans, but would instead serve as an additional option for students to finance their education.

SEC. 2.Section 69505.3 is added to the Education Code, to read:
69505.3.
~~(a)For purposes of this section, “campus” means a California State University or University of California campus.~~
~~(b)The commission shall, in consultation with the California State University and the University of California, establish a Pay-It-Forward Financial Aid Program that does all of the following:~~
~~(1)Allows a student who is admitted to a campus to enroll at the campus without paying upfront tuition, fees, or room and board.~~
(2)Requires, in lieu of paying upfront tuition, fees, or room and board, a student described in paragraph (1) to sign a contract to, upon graduation or disenrollment from a campus and employment, pay a percentage of their annual adjusted gross income to the state for a number of years, as determined by the commission.
~~(3)Does not allow participating students to pay more than the amount they received under the program.~~
(4)Deposits moneys collected pursuant to paragraph (2) into the Pay-It-Forward Financial Aid Fund, which is hereby established. Moneys in the fund shall be made available by the commission, upon appropriation by the Legislature, to pay for the tuition, fees, and room and board expenses of future participating students. The commission may accept gifts, grants, awards, and appropriations from individuals, businesses, state and local governmental entities, and third-party sources for the program. Accepted funds shall be deposited into the fund.
~~(c)Moneys received by a participating student shall supplement, but not supplant, any form of financial aid, including grants, scholarships, and loans, provided to the participating student.~~
~~(d)Commencing with the 2028–29 academic year, each campus shall offer the program to students.~~
~~(e)Commencing with the 2030–31 fiscal year, the California State University and the University of California shall ensure that at least 10,000 students per year participate in the program.~~
~~(f)The commission shall adopt rules and regulations reasonably necessary to effectively administer this section.~~

SEC. 2.

Section 69505.3 is added to the Education Code, to read:

69505.3.
(a) For purposes of this section, the following definitions apply:
(1) “Campus” means a University of California, California State University, or California Community College campus, or an independent institution of higher education.
(2) “Social impact bond” means an agreement between a nongovernmental entity and a campus under which a student’s cost of attendance is paid for by the nongovernmental entity in exchange for a security interest in the payments made by the student, as specified in the contract described in subparagraph (C) of paragraph (2) of subdivision (b).
(b) (1) The commission, in consultation with the Legislative Analyst’s Office, shall conduct a study of the effects of enacting, in future legislation, a Pay it Forward, Pay it Back Pilot Program.
(2) The study shall evaluate a pilot program described in paragraph (1) that does all of the following:
(A) Is designed to provide an additional option for students to finance the costs of their education, including the costs of upfront tuition, fees, and room and board, for enrollment at a campus.
(B) Allows a student who is admitted to a campus and is a California resident, as determined by the campus, to enroll at the campus without paying upfront tuition, fees, or room and board.
(C) Requires, in lieu of paying upfront tuition, fees, or room and board, a student described in subparagraph (B) to sign a contract to pay, upon graduation, 2 to 4 percent, inclusive, of the student’s annual adjusted gross income to the state for a specified number of years, as determined in paragraph (2) of subdivision (d).
(c) The pilot program described in paragraph (1) of subdivision (b) may vary by campus in regard to each of the following:
(1) The total cost of attendance at the campus to be reimbursed by a student.
(2) The portion of the total cost of attendance to be paid by the state.
(3) The number of years that a student would be required to make payments, as specified in the contract described in subparagraph (C) of paragraph (2) of subdivision (b).
(4) The percentage of annual adjusted gross income that would be required to be paid by a student, as specified in the contract described in subparagraph (C) of paragraph (2) of subdivision (b).
(d) The study of the pilot program shall do all of the following:
(1) Identify at least one campus of the University of California, one campus of the California State University, one campus of the California Community Colleges, and one independent institution of higher education, as defined in Section 66010, to participate in the pilot program. The campuses identified pursuant to this paragraph shall be regionally diverse.
(2) Based on current research, and projections of state subsidies, specify the number of years that a student would be required to make payments and the percentage of a student’s annual adjusted gross income to be paid, upon graduation, under a contract described in subparagraph (C) of paragraph (2) of subdivision (b) at each participating campus.
(3) Identify an immediate source of funding for the first 15 to 20 years, inclusive, of the pilot program, which would include establishment of a revolving fund for the deposit of payments made by students under the pilot program, and consider the possibility of using social impact bonds as an immediate funding source.
(e) (1) The commission shall submit a report on the study of the pilot program to the Assembly Committee on Higher Education and the Senate Committee on Education on or before September 30, 2027.
(2) A report submitted pursuant to paragraph (2) shall be submitted in compliance with Section 9795 of the Government Code.
(3) Pursuant to Section 10231.5 of the Government Code, this section shall become inoperative on September 30, 2030, and, as of January 1, 2031, is repealed.

Text of AB 1241 as amended, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions