Assemblymember Jesse Gabriel

Chair, Assembly Budget Committee

1021 O Street, Room 8230

Sacramento, CA 95814

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August 12, 2026

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RE: Budget Request – Student Loan Empowerment Network: $3 million investment

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Dear Chair Gabriel,

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As further budget deliberations continue, and with the main framework of the state budget completed, we write to respectfully request approval of a one-time $3 million budget investment to preserve the Student Loan Empowerment Network (SLE Network) under the Department of Financial Protection and Innovation (DFPI) to serve the 4 million Californians with student loan debt.

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Non-profit organizations working with student loan borrowers across California have started to report a rise in student loan inquires and confusion as borrowers' monthly payments have begun to increase by hundreds of dollars under newly implemented federal policy changes.

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Nearly four million California student loan borrowers collectively owe over $151 billion in student loan debt. California households are in the midst of an unprecedented student loan default and delinquency crisis. In 2025, one new borrower fell into default on a federal student loan every nine seconds. As a result, over 795,000 Californians are now in default and 23% of all borrowers in repayment across the state have fallen behind on a federal student loan. Defaults and delinquencies can be catastrophic for a borrower, their family and the broader economy as borrowers see massive decreases in their credit scores making it harder to secure housing, employment and affordable credit. Amidst a growing affordability crisis, borrowers behind on student loans desperately need access to free and trusted student loan guidance on how to get back on track.

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The state has already invested in a network of direct service providers who stand poised to meet this moment: the Student Loan Empowerment (SLE) Network offers free, quality student loan counseling and legal assistance to communities across the state. However, exactly when these services are needed the most, SLE Network’s initial state funding has expired. Most of the nonprofit organizations in the SLE Network lack the funds necessary to continue providing free student loan assistance.

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The SLE Network consists of 14 legal aid organizations and financial counseling organizations in different regions of the state along with a statewide hub of coordinators. The SLE Network has, with initial data (1), directly counseled thousands of Californian student borrowers, and the return on investment is clear:

• monthly payment savings of $14,375 for borrowers who obtained more affordable repayment plans, totaling over $128,983 in annual savings;

• $189,000 in refunds to borrowers; and a combined total of $4.6 million in debt discharged or cancelled.

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These savings, refunds, and earned debt forgiveness, are crucial dollars back into the pockets of our constituents as families struggle with the rising costs of living.

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Further, a recent report released by the Government Accountability Office showed that the Trump Administration’s mass firing of Department of Education staff has left borrowers at risk of servicer errors that could push them further behind.(2) Most recently, on July 1, 2026, the Department began implementing significant changes to the federal student loan system required under the One Big Beautiful Bill Act, which eliminates the most affordable repayment options for the lowest-income borrowers, including Parent PLUS borrowers, and removes a critical safety net for borrowers experiencing financial hardship.

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With the significant need for increased student loan assistance looming, a one-time investment of $7.25 million for retaining the SLE Network is urgently needed. California has been a national leader in protecting student borrowers and funding the SLE Network will continue to fulfill the state’s priority to ensure student loan borrowers can reach a future free of debt and contribute to the state’s economy.

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Thank you for your consideration of this request $3,000,000 to continue supporting the work of the Student Loan Empowerment Network. If you have any questions, please contact my Chief of Staff, Tomasa Dueñas, at 916-319-2028 or tomasa.duenas@asm.ca.gov.

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Sincerely,