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

The bill changed from mandating an actual Pay-It-Forward Financial Aid Program with fixed start dates to requiring only a study of the effects of enacting such a pilot program in future legislation. The operational requirements (offering by 2028-29, 10,000 participants by 2030-31) were removed.

The definition of 'campus' was expanded from only California State University and University of California campuses to include California Community College campuses and independent institutions of higher education.

A new definition for 'social impact bond' was added, describing an agreement between a nongovernmental entity and a campus where the entity pays a student's cost of attendance in exchange for a security interest in the student's future payments.

The income share percentage was specified as 2 to 4 percent (inclusive) of annual adjusted gross income, rather than leaving it entirely to commission determination. The payment trigger also changed from 'upon graduation or disenrollment and employment' to simply 'upon graduation.'

The study must identify at least one campus from each of the four segments (UC, CSU, CCC, independent) that are regionally diverse, specify payment terms for each participating campus, and identify an immediate funding source for the first 15 to 20 years including consideration of social impact bonds.

A California residency requirement was added: only students who are California residents, as determined by the campus, may participate.

A report deadline of September 30, 2027 was set for the study findings, with the section becoming inoperative on September 30, 2030 and repealed as of January 1, 2031.

The entire physical education provision (amending Section 33350 of the Education Code to extend encouragements to prekindergarten districts) was removed from the bill. The bill now only addresses student financial aid.

The consultation requirement now includes 'the California State University, University and the University of California,' adding an additional entity (referred to as 'University') to the group consulted in establishing the program.

The Student Aid Commission is added as a co-administrator alongside the State Department of Education throughout the Pay-It-Forward Financial Aid Program provisions, including in establishing the program, determining payment terms, making fund moneys available, accepting gifts and grants, and adopting rules and regulations.

In the legislative findings, '$142 billion' was changed to '$142,000,000,000' for numerical precision.

Added an entirely new section (69505.3) to the Education Code establishing a Pay-It-Forward Financial Aid Program, expanding the bill from a single-topic physical education measure to one covering both K-12 physical education and postsecondary student financial aid.

Students admitted to any CSU or UC campus may enroll without paying upfront tuition, fees, or room and board. In exchange, they sign a contract to pay a percentage of their annual adjusted gross income to the state after graduation or disenrollment and employment, for a number of years determined by the State Department of Education.

Participating students cannot repay more than the total amount they received under the program, creating a hard cap on repayment obligations.

The program supplements but does not supplant any other form of financial aid (grants, scholarships, loans) provided to participating students.

Established the Pay-It-Forward Financial Aid Fund to collect student income-share payments. The fund may also accept gifts, grants, awards, and appropriations from individuals, businesses, state and local governmental entities, and third-party sources. Funds are available only upon legislative appropriation.

Each CSU and UC campus must offer the program starting with the 2028-29 academic year. Starting with the 2030-31 fiscal year, CSU and UC must ensure at least 10,000 students per year participate.

Defined 'campus' to mean a California State University or University of California campus for purposes of the new section.

The original physical education amendment (extending encouragements to prekindergarten districts) was retained with minor nonsubstantive edits and renumbered from Section 1 to Section 3 to accommodate the new financial aid provisions.