AB 2251, as introduced, Mark Stone. Student Loan Borrowers’ Bill of Rights.
Existing law establishes the Student Aid Commission as the primary state agency for the administration of state-authorized student financial aid programs available to students attending all segments of postsecondary education in this state.
This bill would establish the Student Loan Borrowers’ Bill of Rights, which would require student educational loan servicers to provide each of their student loan borrowers in this state with (1) reliable information about the borrower’s loan and repayment options, (2) quality customer service and fair treatment, and (3) meaningful access to federal affordable repayment and loan forgiveness benefits available to the borrower.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Article 24 (commencing with Section 70050) is
2added to Chapter 2 of Part 42 of Division 5 of Title 3 of the 3Education Code, to read:
4
This act shall be known, and may be cited, as the
8Student Loan Borrowers’ Bill of Rights.
The Legislature finds and declares all of the following:
10(a) Student loan debt is a national crisis. More than 40,000,000
11people in the United States owe some amount of student
12educational loan debt. Total student educational debt in the United
13States has crossed the trillion dollar mark. It currently exceeds one
14trillion two hundred billion dollars ($1,200,000,000,000),
15surpassing both the amount of credit card debt and car loans. With
16college costs continuing to rise, student educational debt continues
17to rise and there is no reduction in sight.
18(b) While California’s financial aid programs are some of the
19strongest in the nation and our state’s college graduates have among
20the lowest educational
debt burdens, California students and
21graduates still incur significant debt. According to the Institute for
22College Access & Success, 55 percent of California’s graduating
23class of 2014 has student educational loan debt. According to the
24United States Department of Education, as of January 2015, there
25were approximately 4,156,000 student educational loan borrowers
26in California, and the total student educational loan debt
27outstanding for Californians was about one hundred twelve billion
28dollars ($112,000,000,000).
29(c) Student educational loan debt is a drag on the state’s
30economy, preventing borrowers from achieving financial
31independence, buying property, and starting businesses.
32(d) Student educational loan servicers administer student loans,
33serving as a critical link between borrowers and lenders in
34managing accounts, processing payments, and communicating
35directly with
borrowers. That said, according to the federal
36Consumer Financial Protection Bureau (CFPB), there are no
37consistent, marketwide federal standards for student educational
P3 1loan servicing. Currently, California does not have standards for
2student loan servicing.
3(e) The CFPB released a report in September 2015 that found
4that student educational loan borrowers encounter servicers that
5discourage borrower-friendly alternative payment plans, fail to
6respond to questions and payment processing errors, and fail to
7provide sufficient information to borrowers regarding payments,
8benefits, interest rates, and other charges.
9(f) Therefore, it is the intent of the Legislature that, as of the
10enactment of this act, every student educational loan borrower
11receive all of the following rights:
12(1) The right to meaningful access to
federal affordable
13repayment and loan forgiveness benefits for which he or she is
14eligible.
15(2) The right to reliable information about his or her student
16educational loan and loan repayment options.
17(3) The right to quality customer service and fair treatment.
(a) For purposes of this section, the following terms
19have the following meanings:
20(1) “Student educational loan” means any loan primarily for
21personal use to finance education or other school-related expenses.
22(2) “Student loan borrower” means any resident of this state
23who has received or agreed to pay a student educational loan, or
24any person who shares responsibility with that resident for repaying
25the student educational loan.
26(3) “Student loan servicer” means, to the extent authorized by
27federal law, any entity or person, wherever located, responsible
28for the servicing of any student educational loan to any
student
29loan borrower. Student loan servicer does not include banks or
30credit unions.
31(b) Student loan servicers shall provide each of their student
32loan borrowers with all of the following:
33(1) Reliable information about the borrower’s educational loan
34and repayment options.
35(2) Quality customer service and fair treatment.
36(3) Meaningful access to federal affordable repayment and loan
37forgiveness benefits available to the borrower.
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