The bill establishes a new legal framework regarding the liability of regents institutions for defaulted educational loans. It defines key terms such as "borrower," "educational loan," and "institution" in relation to educational loans entered into after July 1, 2026. The bill stipulates that if a borrower defaults on an educational loan used to finance their higher education expenses while enrolled at a regents institution, that institution will be liable for 25 percent of the amount owed by the borrower due to the default.

This liability is designed to offset the borrower's responsibility for the defaulted loan, effectively reducing their financial burden by the same percentage. The terms governing the institution's liability will align with those of the borrower unless a different agreement is negotiated. This legislation aims to provide a measure of accountability for higher education institutions in relation to the financial outcomes of their students.