AB 376 — Student loan servicing.

Summary

Existing law, the Student Loan Servicing Act, prohibits a person from engaging in the business of servicing a student loan in California without first obtaining a license. Existing law commits the administration of these provisions to the Commissioner of Business Oversight and grants the commissioner various powers in this regard, including the authority to conduct investigations of applicants and licensees. The act requires an applicant for a license to submit audited financial statements prepared in accordance with generally accepted accounting principles and acceptable to the commissioner that indicate a net worth of at least $250,000 and requires a licensee to maintain a minimum net worth of $250,000. Existing law, the Rosenthal Fair Debt Collection Practices Act, regulates the collection of consumer debts by debt collectors, as defined. Under existing law, a debt collector who violates the act is liable to a debtor for actual damages resulting from the violation, and is subject to additional civil penalties for any willful or knowing violation of the act, and other specified remedies. This bill would authorize the commissioner to allow a licensee that is a wholly owned subsidiary of a public holding company required to comply with the requirements of the Securities and Exchange Commission to satisfy the requirement to submit audited financial statements with an application for a license and to maintain a minimum net worth of $250,000 by submitting the annual consolidated audited financial statements filed with the Securities and Exchange Commission, as specified. This bill would impose new requirements on a student loan servicer, defined as any person engaged in the business of servicing student loans in the state. These requirements would include the timely posting, processing, and crediting of student loan payments within certain timeframes, applying overpayments consistent with the best financial interest of a student loan borrower, as defined, applying partial payments to minimize late fees and negative credit reporting, maintaining records, timely processing of paperwork, and diligently overseeing service providers. The bill would require a student loan servicer to provide specialized training for customer service personnel that advises military borrowers, borrowers in public service, borrowers with disabilities, and older borrowers. The bill would prohibit a student loan servicer from engaging in unfair or deceptive practices, or abusive acts or practices in connection with the servicing of a student loan, as specified. The bill would authorize a consumer who suffers damages as a result of a person's failure to comply with these provisions as well as all applicable federal laws relating to student loan servicing to bring an action for actual damages, injunctive relief, restitution, punitive damages, attorney's fees, and other relief, including treble damages in certain circumstances. The bill would require a consumer to give specified notice to a person before bringing an action for damages against that person for a violation of the bill's provisions and would provide that person an opportunity to cure the alleged violation, as specified. The bill would prohibit an attempt to cure a violation by a person who receives a notice of that violation from being admissible in court against that person but would authorize the attempt to cure to be admitted as evidence by that person, as specified. The bill would define terms for purposes of its provisions. The bill would require, beginning on July 1, 2021, the commissioner, as specified, to designate a Student Loan Ombudsman to work within the department and to hire additional staff, as needed to implement these provisions. The bill would require the Student Loan Ombudsman to receive and review complaints, to refer complaints to an appropriate unit within the department that would be authorized to investigate the complaint, and to refer complaints regarding servicers not subject to licensing under the Student Loan Servicing Act to the Department of Justice, which would be permitted to investigate those complaints. The bill would require complaints regarding any private postsecondary educational institution licensed by the Bureau for Private Postsecondary Education to be referred to the Bureau for Private Postsecondary Education's Office of Student Assistance and Relief. The bill would require the Student Loan Ombudsman to confer with the Department of Justice and the Office of Student Assistance and Relief regarding the student loan servicing complaints, the proper referral processes for those complaints, and the reporting requirements imposed by the bill. The bill would require the Student Loan Ombudsman not later than 18 months after the operative date of the bill, and no less than once yearly thereafter, to submit a report to the appropriate committees of the Legislature regarding the implementation of these provisions, the types of complaints received, and other data and analysis on student loan issues. The bill would also, beginning July 1, 2021, authorize the Commissioner of Business Oversight to monitor for risks to consumers in the provision of student loan servicing and would authorize the commissioner to gather information regarding the organization, business conduct, and activities of student loan services. The bill would authorize the commissioner to gather and compile information from student loan servicers and to develop and publicize metrics based on the data collected. Among other actions, the bill would authorize the commissioner to require student loan servicers to file, under oath or otherwise, annual or special reports or answers in writing to specific questions. By expanding the crime of perjury, the bill would impose a state-mandated local program. The bill would include related legislative findings and would make conforming and nonsubstantive changes to provisions in the Student Loan Servicing Act. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.

Bill Text

• Chaptered 09/25/20 - Chaptered Current pdf September 25, 2020
• Enrolled 09/01/20 - Enrolled pdf September 01, 2020
• Amended 08/20/20 - Amended Senate pdf August 20, 2020
• Amended 08/06/20 - Amended Senate pdf August 06, 2020
• Amended 06/20/19 - Amended Senate pdf June 20, 2019
• Amended 05/16/19 - Amended Assembly pdf May 16, 2019
• Amended 03/25/19 - Amended Assembly pdf March 25, 2019
• Introduced 02/05/19 - Introduced pdf February 05, 2019
• AB376 View text html

Action History

1. September 25, 2020

   Chaptered by Secretary of State - Chapter 154, Statutes of 2020.

2. September 25, 2020

   Approved by the Governor.

3. September 08, 2020

   Enrolled and presented to the Governor at 4:30 p.m.

4. August 30, 2020

   Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 57. Noes 15. Page 5351.).

5. August 28, 2020

   In Assembly. Concurrence in Senate amendments pending.

6. August 28, 2020

   Read third time. Passed. Ordered to the Assembly. (Ayes 29. Noes 9. Page 4404.).

7. August 24, 2020

   Read second time. Ordered to third reading.

8. August 20, 2020

   Read second time and amended. Ordered returned to second reading.

9. August 20, 2020

   From committee: Amend, and do pass as amended. (Ayes 5. Noes 2.) (August 20).

10. August 06, 2020

    From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on APPR.

11. August 30, 2019

    In committee: Held under submission.

12. August 12, 2019

    In committee: Referred to APPR. suspense file.

13. July 10, 2019

    From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 1.) (July 9). Re-referred to Com. on APPR.

14. June 20, 2019

    Read second time and amended. Re-referred to Com. on JUD.

15. June 19, 2019

    From committee: Amend, and do pass as amended and re-refer to Com. on JUD. (Ayes 4. Noes 1.) (June 19).

16. June 06, 2019

    Referred to Coms. on B. & F.I. and JUD.

17. May 29, 2019

    In Senate. Read first time. To Com. on RLS. for assignment.

18. May 28, 2019

    Read third time. Passed. Ordered to the Senate. (Ayes 59. Noes 15. Page 2032.)

19. May 20, 2019

    Read second time. Ordered to third reading.

20. May 16, 2019

    Read second time and amended. Ordered returned to second reading.

21. May 16, 2019

    From committee: Amend, and do pass as amended. (Ayes 13. Noes 4.) (May 16).

22. May 01, 2019

    In committee: Set, first hearing. Referred to APPR. suspense file.

23. April 23, 2019

    From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (April 22). Re-referred to Com. on APPR.

24. March 26, 2019

    Re-referred to Com. on B. & F.

25. March 25, 2019

    From committee chair, with author's amendments: Amend, and re-refer to Com. on B. & F. Read second time and amended.

26. March 25, 2019

    Referred to Com. on B. & F.

27. February 06, 2019

    From printer. May be heard in committee March 8.

28. February 05, 2019

    Read first time. To print.

Sponsors

• Monique Limón · Cosponsor
• Rebecca Bauer-Kahan · Cosponsor
• Sabrina Cervantes · Cosponsor
• Cottie Petrie-Norris · Cosponsor
• Robert Rivas · Cosponsor
• Buffy Wicks · Cosponsor
• Hertzberg · Cosponsor
• Mitchell · Cosponsor
• Wieckowski · Cosponsor
• Scott D. Wiener · Cosponsor
• Juan Carrillo · Cosponsor
• Mark Stone · Primary

Votes

Subjects