AB 2345

Introduced by Assembly Member Bains
 An act to add Article 25 (commencing with Section 70050) to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, relating to student financial aid.
student financial aid
Student loans: medical, nursing, social work, and social welfare students: California Health Care Workforce Supplemental Loan Program.
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 establish the California Health Care Workforce Supplemental Loan Program, under the administration of the commission, for the purpose of providing eligible students, as defined, with access to the same level of financial assistance toward the cost of attendance at an accredited medical or nursing school, or at a school’s accredited social work or social welfare program, that was available on or before January 20, 2025, through federal direct unsubsidized loans and federal direct grad PLUS loans. The
			 bill would require the commission to establish an application process and would require the loans issued under the program to have equivalent financial terms as the federal Direct PLUS Loans, as those terms existed on January 20, 2025, except for changes that the commission determines to be necessary to administer the program. The bill would create the Health Care Workforce Supplemental Loan Fund in the State Treasury.
The people of the State of California do enact as follows:
SECTION 1.
This act shall be known, and may be cited, as the California Health Care Workforce Supplemental Loan Act.
SEC. 2.
The Legislature finds and declares all of the following:
(a) Recent federal legislation, the “One Big Beautiful Bill Act,” has eliminated the federal Direct PLUS Loans to graduate and professional students (federal direct grad PLUS loan) and imposed strict annual and lifetime borrowing caps on federal student loans effective July 1, 2026.
(b) Under these new federal rules, medical students are capped at borrowing $50,000 per year, and nursing students are capped at borrowing only $20,500 per year due to a reclassification excluding them from “professional” status.
(c) The average cost of attendance for medical and nursing schools in California significantly exceeds these new federal limits, creating a funding gap of tens of thousands of dollars per student annually.
(d) Without access to the financing previously provided by federal direct grad PLUS loans, aspiring doctors and nurses from low- and middle-income families will be forced to turn to more costly private loans or abandon their education entirely.
(e) Facing a critical shortage of health care providers already, it is vital that financial barriers do not prevent qualified students from entering the medical and nursing professions.
SEC. 3.
Article 25 (commencing with Section 70050) is added to Chapter 2 of Part 42 of Division 5 of Title 3 of the
Education Code
, to read:
25.
California Health Care Workforce Supplemental Loan Program
70050.
For purposes of this article, the following definitions apply:
(a) “Commission” means the Student Aid Commission.
(b) “Cost of attendance” has the same meaning as defined in Section 472 of the federal Higher Education Act of 1965 (20 U.S.C. Sec. 1087 ll ).
(c) “Eligible student” means a student who satisfies all of the following conditions:
(1) The student is a resident of California.
(2) The student is enrolled at least half time in an
						  accredited medical or nursing school, or an accredited social work or social welfare program, within California.
(3) The student has applied for and received the maximum annual federal direct unsubsidized loan amount available under federal law.
(4) The student would have qualified for a federal direct grad PLUS loan under the credit and eligibility criteria in effect on or before January 20, 2025.
(d) “Federal direct grad PLUS loan” means a federal Direct PLUS Loan to graduate and professional students issued pursuant to the William D. Ford Federal Direct Loan Program (20 U.S.C. Sec. 1087a et seq.).
(e) “Federal direct unsubsidized loan” means a federal direct unsubsidized loan issued pursuant to the William D. Ford Federal Direct Loan Program (20 U.S.C. Sec. 1087a et seq.).
(f) “Gap amount” means the specific dollar amount of an eligible student’s cost of attendance that remains uncovered above the amount received by the student from federal direct unsubsidized loans and other financial aid.
(g) “Program” means the California Health Care Workforce Supplemental Loan Program established pursuant to this article.
(h) “Public Service Loan Forgiveness Program” means the federal loan forgiveness program established pursuant to Section 685.219 of Title 34 of the
						  Code of Federal Regulations.
70051.
(a) The California Health Care Workforce Supplemental Loan Program is hereby established under the administration of the commission.
(b) The purpose of the program is to provide eligible students with access to the same level of financial assistance toward the cost of attendance at an accredited medical or nursing
						  school, or a school’s accredited social work or social welfare program, that was available on or before January 20, 2025, through federal direct unsubsidized loans and federal direct grad PLUS loans.
70052.
(a) Notwithstanding any other law, an applicant who qualifies as an eligible student shall be approved for a loan under the program.
(b) The commission shall establish an application process that includes a mechanism to determine whether an applicant is an eligible student and to determine the gap amount.
(c) The commission may establish a data sharing agreement with accredited medical and nursing schools, and schools with an accredited social work or social welfare program, and the United States Department of
						  Education to automate the verification of federal loan receipt and the determination of the gap amount to facilitate a seamless application process for the student.
70053.
(a) The loans issued under the program shall have equivalent financial terms as the federal direct grad PLUS loans, as they existed on January 20, 2025, except for changes that the commission may determine to be necessary to administer the program.
(b) The interest rate shall be a fixed rate equivalent to the rate that would have applied to a federal direct grad PLUS loan for the corresponding academic year, calculated as the 10-year United States Department of the Treasury note auction price plus 4.60 percent, capped at 10.5 percent.
(c) An eligible student shall have access to the same repayment options,
						  deferment, and forbearance protections available to recipients of federal direct unsubsidized loans, including income-driven repayment plans and the equivalent to the Public Service Loan Forgiveness Program if the eligible student works at a California public health facility.
(d) The origination fee shall not exceed 4.228 percent, which was the percentage charged for a federal direct grad PLUS loan on January 20, 2025.
(e) The maximum loan amount per academic year shall be the gap amount in order to ensure that the student can cover the full cost of attendance not covered by federal direct unsubsidized loans and other financial aid.
70054.
There is hereby created in the State Treasury the Health Care Workforce Supplemental Loan Fund.
70055.
The Legislature shall annually appropriate funds to the Health Care Workforce Supplemental Loan Fund to pay for the lending capital and administrative costs required to operate the program.