(a) The Trustees of the California State University and the Regents of the University of California shall adopt regulations providing for the withholding of institutional services from a student or former student who has been notified in writing at the student’s or former student’s last known address that he or she is in default on a loan or loans under the DREAM Program.

(b) The regulations adopted pursuant to subdivision (a) shall provide that the services withheld may be provided during a period when the facts are in dispute or when the student or former student demonstrates to either the Trustees of the California State University or the Regents of the University of California, as applicable, that reasonable progress has been made to repay the loan or that there exists a reasonable justification for the delay as determined by the institution. The regulations shall specify the services to be withheld from the student, which may include, but are not limited to, the following:

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(1) The provision of grades.

(2) The provision of transcripts.

(3) The provision of diplomas.

(c) “Default,” for purposes of this section, means the failure of a borrower to make an installment payment when due, or to meet other terms of the promissory note if the institution holding the loan finds it reasonable to conclude that the borrower no longer intends to honor the obligation to repay, provided that this failure persists for 180 days for a loan repayable in monthly installments, or 240 days for a loan repayable in less frequent installments.

(d) This section does not impose any requirement upon the University of California unless the Regents of the University of California, by resolution, makes this section applicable.

(Amended by Stats. 2016, Ch. 86, Sec. 71. (SB 1171) Effective January 1, 2017.)