Signed by Governor Gavin Newsom

Vote Smart's Synopsis:

Vote to concur with Senate amendments and pass a bill that establishes consumer protections for student loan borrowers.

Highlights:

• Prohibits an individual from engaging in abusive acts or practices when servicing a student loan in this state (Sec. 2).

• Defines “servicing” as any of the following activities related to a student loan, including (Sec. 2):

• Receiving any scheduled periodic payments from a borrower or any notification that a borrower made a scheduled periodic payment;

• Applying payments to the borrower’s account pursuant to the terms of the student loan or the contract governing the servicing; or

• During a period when no payment is required on a student loan, performing the following:

• Maintaining account records for the student loan;

• Communicating with the borrower regarding the student loan on behalf of the owner of the student loan promissory note; and

• Interacting with a borrower related to that borrower’s student loan, with the goal of helping the borrower avoid default on their student loan or facilitating the activities.

• Defines a “student loan” as any loan made to refinance a student loan or a loan made solely for use to finance postsecondary education and costs of attendance at a postsecondary institution, including, but not limited to (Sec. 2):

• Tuition, fees, books and supplies, room and board, transportation; and

• Miscellaneous personal expenses.

• Specifies that a student loan does not include an extension of credit under an open-end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling (Sec. 2)

• Authorizes any consumer who suffered damages as a result of the failure of a student loan servicer to comply with the aforementioned requirements, to bring an action against the student loan servicer to recover any of the following, including (Sec. 2):

• Actual damages of no less than $500 per plaintiff per violation;

• An order enjoining the methods, acts, or practices;

• Restitution of property, punitive damages, or attorney fees; and

• Any other relief that the court deems proper.

• Defines a “borrower” as an individual who has received or agreed to pay a student loan or an individual who shares responsibility for repaying a student loan with another individual and a “borrower with disabilities” as a borrower who a student loan service knows, or reasonably should know, is an individual with a disability (Sec. 2).

Full Bill Text

Vote Smart's Synopsis:

Vote to amend and pass a bill that establishes consumer protections for student loan borrowers.

Highlights:

• Prohibits an individual from engaging in abusive acts or practices when servicing a student loan in this state (Sec. 2).

• Defines “servicing” as any of the following activities related to a student loan, including (Sec. 2):

• Receiving any scheduled periodic payments from a borrower or any notification that a borrower made a scheduled periodic payment;

• Applying payments to the borrower’s account pursuant to the terms of the student loan or the contract governing the servicing; or

• During a period when no payment is required on a student loan, performing the following:

• Maintaining account records for the student loan;

• Communicating with the borrower regarding the student loan on behalf of the owner of the student loan promissory note; and

• Interacting with a borrower related to that borrower’s student loan, with the goal of helping the borrower avoid default on their student loan or facilitating the activities.

• Defines a “student loan” as any loan made to refinance a student loan or a loan made solely for use to finance postsecondary education and costs of attendance at a postsecondary institution, including, but not limited to (Sec. 2):

• Tuition, fees, books and supplies, room and board, transportation; and

• Miscellaneous personal expenses.

• Specifies that a student loan does not include an extension of credit under an open-end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling (Sec. 2)

• Authorizes any consumer who suffered damages as a result of the failure of a student loan servicer to comply with the aforementioned requirements, to bring an action against the student loan servicer to recover any of the following, including (Sec. 2):

• Actual damages of no less than $500 per plaintiff per violation;

• An order enjoining the methods, acts, or practices;

• Restitution of property, punitive damages, or attorney fees; and

• Any other relief that the court deems proper.

• Defines a “borrower” as an individual who has received or agreed to pay a student loan or an individual who shares responsibility for repaying a student loan with another individual and a “borrower with disabilities” as a borrower who a student loan service knows, or reasonably should know, is an individual with a disability (Sec. 2).

Full Bill Text