Student Loans: Borrower RightsStudent Borrower Bill of Rights

Section § 1788.100

Explanation

This section provides definitions for various terms related to student loans and their servicing. It defines a 'borrower' as someone who has taken out or shares responsibility for a student loan. 'Borrower with disabilities', 'borrower working in public service', and 'military borrower' are defined based on their specific circumstances or professions. The section also clarifies what 'servicing' a student loan entails, which includes collecting payments and maintaining communication with borrowers. A 'student loan' is any loan used exclusively for higher education expenses, except certain types of credit and small education credits from institutions. Additionally, it explains the role of 'student loan servicers', who manage the loans unless they are collecting on defaulted loans. Other terms like 'overpayment', 'partial payment', and 'qualified request' are also defined to cover situations where payments exceed or fall short and when borrowers request information.

For purposes of this title, the following definitions apply:
(a)CA Civil Law Code § 1788.100(a) “Borrower” means either of the following:
(1)CA Civil Law Code § 1788.100(a)(1) A person who has received or agreed to pay a student loan.
(2)CA Civil Law Code § 1788.100(a)(2) A person who shares responsibility for repaying a student loan with a person described in paragraph (1).
(b)CA Civil Law Code § 1788.100(b) “Borrower with disabilities” means a borrower who a student loan servicer knows, or reasonably should know, is a person who has a disability, as defined in Section 54.
(c)CA Civil Law Code § 1788.100(c) “Borrower working in public service” means a borrower who a student loan servicer knows, or reasonably should know, is employed in a public service job, as defined in the Higher Education Act (20 U.S.C. Sec. 1087e(m)) and its implementing regulations.
(d)CA Civil Law Code § 1788.100(d) “Commissioner” means the Commissioner of Financial Protection and Innovation.
(e)CA Civil Law Code § 1788.100(e) “Department” means the Department of Financial Protection and Innovation.
(f)CA Civil Law Code § 1788.100(f) “Engage in the business” means, without limitation, servicing student loans.
(g)CA Civil Law Code § 1788.100(g) “In this state” means any activity of a person relating to servicing student loans that originates from this state and is directed to persons outside this state, that originates from outside this state and is directed to persons inside this state, or that originates inside this state and is directed to persons inside this state.
(h)CA Civil Law Code § 1788.100(h) “Licensee” means a person licensed pursuant to the Student Loan Servicing Act (Division 12.5 (commencing with Section 28100) of the Financial Code).
(i)CA Civil Law Code § 1788.100(i) “Military borrower” means any of the following:
(1)CA Civil Law Code § 1788.100(i)(1) A borrower who is one of the following:
(A)CA Civil Law Code § 1788.100(i)(1)(A) A servicemember as defined in the Servicemember Civil Relief Act (50 U.S.C. Sec. 3911).
(B)CA Civil Law Code § 1788.100(i)(1)(B) Self-identifies as a service member when interacting with a student loan servicer.
(C)CA Civil Law Code § 1788.100(i)(1)(C) Is a service member as defined in Section 400 of the Military and Veterans Code.
(2)CA Civil Law Code § 1788.100(i)(2) A borrower who is a veteran of a branch of the Armed Forces as defined in Section 101 of Title 38 of the United States Code.
(3)CA Civil Law Code § 1788.100(i)(3) An authorized representative of a borrower described in paragraph (1) or (2).
(j)CA Civil Law Code § 1788.100(j) “Older borrower” means a borrower who a student loan servicer knows, or reasonably should know, is a senior citizen, as defined in Section 51.3.
(k)CA Civil Law Code § 1788.100(k) “Overpayment” means a payment on a student loan account in excess of the monthly amount due from a borrower on a student loan, also commonly referred to as a prepayment.
(l)CA Civil Law Code § 1788.100(l) “Partial payment” means a payment on a student loan account in an amount less than the current amount due from a borrower on the student loan account, also commonly referred to as an underpayment.
(m)CA Civil Law Code § 1788.100(m) “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a trust, an unincorporated organization, a government, or a political subdivision of a government, and any other entity.
(n)CA Civil Law Code § 1788.100(n) “Qualified request” means any inbound telephone call, the subject of which cannot be resolved in a single phone call, made by a borrower to a student loan servicer in which either the borrower requests specific information from the student loan servicer or reports what the borrower believes to be an error regarding the borrower’s account.
(o)CA Civil Law Code § 1788.100(o) “Qualified written request” means a written correspondence made by a borrower, other than notice on a payment medium supplied by a student loan servicer, that is transmitted by mail, facsimile, or electronically through an email address or internet website designated by the student loan servicer to receive communications from a borrower that does all of the following:
(1)CA Civil Law Code § 1788.100(o)(1) Enables the student loan servicer to identify the name and account of the borrower.
(2)CA Civil Law Code § 1788.100(o)(2) Includes a statement of the reasons for the belief by the borrower, to the extent applicable, that the account is in error or that provides sufficient detail to the servicer regarding information sought by the borrower, such as requesting a complete payment history for the loan or the borrower’s account, a copy of the borrower’s student loan promissory note, or the contact information for the creditor to whom the borrower’s student loan is owed.
(p)CA Civil Law Code § 1788.100(p) “Servicing” means any of the following activities related to a student loan of a borrower:
(1)CA Civil Law Code § 1788.100(p)(1) Performing both of the following:
(A)CA Civil Law Code § 1788.100(p)(1)(A) Receiving any scheduled periodic payments from a borrower or any notification that a borrower made a scheduled periodic payment.
(B)CA Civil Law Code § 1788.100(p)(1)(B) Applying payments to the borrower’s account pursuant to the terms of the student loan or the contract governing the servicing.
(2)CA Civil Law Code § 1788.100(p)(2) During a period when no payment is required on a student loan, performing both of the following:
(A)CA Civil Law Code § 1788.100(p)(2)(A) Maintaining account records for the student loan.
(B)CA Civil Law Code § 1788.100(p)(2)(B) Communicating with the borrower regarding the student loan on behalf of the owner of the student loan promissory note.
(3)CA Civil Law Code § 1788.100(p)(3) 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 described in paragraph (1) or (2).
(q)Copy CA Civil Law Code § 1788.100(q)
(1)Copy CA Civil Law Code § 1788.100(q)(1) “Student loan” means any loan made solely for use to finance a postsecondary education and costs of attendance at a postsecondary institution, including, but not limited to, tuition, fees, books and supplies, room and board, transportation, and miscellaneous personal expenses. A “student loan” includes a loan made to refinance a student loan.
(2)Copy CA Civil Law Code § 1788.100(q)(2)
(A)Copy CA Civil Law Code § 1788.100(q)(2)(A) A “student loan” shall 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.
(B)CA Civil Law Code § 1788.100(q)(2)(A)(B) A “student loan” shall not include an extension of credit made by a postsecondary educational institution to a borrower if one of the following applies:
(i)CA Civil Law Code § 1788.100(q)(2)(A)(B)(i) The term of the extension of credit is no longer than the borrower’s education program.
(ii)CA Civil Law Code § 1788.100(q)(2)(A)(B)(ii) The remaining, unpaid principal balance of the extension of credit is less than one thousand five hundred dollars ($1,500) at the time of the borrower’s graduation or completion of the program.
(iii)CA Civil Law Code § 1788.100(q)(2)(A)(B)(iii) The borrower fails to graduate or successfully complete their education program and has a balance due at the time of their disenrollment from the postsecondary institution.
(r)CA Civil Law Code § 1788.100(r) “Student loan account” means student loans owed by a borrower grouped together for billing purposes by a student loan servicer.
(s)CA Civil Law Code § 1788.100(s) “Student loan servicer” means any person engaged in the business of servicing student loans in this state. A “student loan servicer” does not include any of the following:
(1)CA Civil Law Code § 1788.100(s)(1) A debt collector, as defined in subdivision (c) of Section 1788.2, whose student loan debt collection business, and business operations, involve collecting, or attempting to collect, on defaulted student loans, that is, federal student loans for which no payment has been received for 270 days or more, or private student loans, in default, according to the terms of the loan documents. Debt collectors who also service nondefaulted student loans as part of their business and business operations are “student loan servicers.”
(2)CA Civil Law Code § 1788.100(s)(2) In connection with its responsibilities as a guaranty agency engaged in default aversion, a state or nonprofit private institution or organization having an agreement with the United States Secretary of Education under the Higher Education Act of 1965 (20 U.S.C. Sec. 1078(b)).
(3)CA Civil Law Code § 1788.100(s)(3) A federally chartered credit union.
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Section § 1788.101

Explanation

This section of the law prohibits anyone from behaving abusively when managing student loan services in California. It considers actions abusive if they confuse borrowers about their loan terms or exploit their lack of understanding. Loan servicers cannot deceive borrowers, apply payments incorrectly, give false information, or mislead borrowers about loan costs, terms, or protections. They must report accurate payment records, communicate with authorized borrower representatives, and not mislead while servicing loans for special groups like military members, public service workers, older individuals, or those with disabilities.

(a)Copy CA Civil Law Code § 1788.101(a)
(1)Copy CA Civil Law Code § 1788.101(a)(1) A person shall not engage in abusive acts or practices when servicing a student loan in this state.
(2)CA Civil Law Code § 1788.101(a)(2) An act or practice is abusive in connection with the servicing of a student loan, if the act or practice does either of the following:
(A)CA Civil Law Code § 1788.101(a)(2)(A) Materially interferes with the ability of a borrower to understand a term or condition of a student loan.
(B)CA Civil Law Code § 1788.101(a)(2)(B) Takes unreasonable advantage of any of the following:
(i)CA Civil Law Code § 1788.101(a)(2)(B)(i) A lack of understanding on the part of a borrower of the material risks, costs, or conditions of the student loan.
(ii)CA Civil Law Code § 1788.101(a)(2)(B)(ii) The inability of a borrower to protect the interests of the borrower when selecting or using either of the following:
(I)CA Civil Law Code § 1788.101(a)(2)(B)(ii)(I) A student loan.
(II) A feature, term, or condition of a student loan.
(iii)CA Civil Law Code § 1788.101(a)(2)(B)(iii) The reasonable reliance by the borrower on a person engaged in servicing a student loan to act in the interests of the borrower.
(3)CA Civil Law Code § 1788.101(a)(3) Abusive acts and practices include, but are not limited to, those described in paragraph (2).
(b)CA Civil Law Code § 1788.101(b) A student loan servicer shall not do any of the following:
(1)CA Civil Law Code § 1788.101(b)(1) Directly or indirectly employ a scheme, device, or artifice to defraud or mislead a borrower.
(2)CA Civil Law Code § 1788.101(b)(2) Engage in an unfair or deceptive practice toward a borrower or misrepresent or omit material information in connection with the servicing of a student loan, including, but not limited to, misrepresenting the amount, nature, or terms of a fee or payment due or claimed to be due on a student loan, the terms and conditions of the student loan agreement, or the borrower’s obligations under the student loan.
(3)CA Civil Law Code § 1788.101(b)(3) Misapply payments made by a borrower to the outstanding balance of a student loan.
(4)Copy CA Civil Law Code § 1788.101(b)(4)
(A)Copy CA Civil Law Code § 1788.101(b)(4)(A) If the student loan servicer is required to or voluntarily reports to a consumer reporting agency, fail to accurately report each borrower’s payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis, upon acceptance as a data furnisher by that consumer reporting agency.
(B)CA Civil Law Code § 1788.101(b)(4)(A)(B) For purposes of this paragraph, “consumer reporting agency that compiles and maintains files on consumers on a nationwide basis” has the same meaning as defined in the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a(p)).
(5)CA Civil Law Code § 1788.101(b)(5) Refuse to communicate with an authorized representative of the borrower who provides a written authorization signed by the borrower, provided the student loan servicer may adopt reasonable procedures for verifying that the representative is in fact authorized to act on behalf of the borrower and for protecting the borrower from fraud or abusive practices.
(6)CA Civil Law Code § 1788.101(b)(6) Negligently or intentionally make a false statement or knowingly and willfully make an omission of a material fact in connection with information or reports filed with the department or another governmental agency.
(7)CA Civil Law Code § 1788.101(b)(7) Engage in an unfair or deceptive practice toward a military borrower or misrepresent or omit material information in connection with the servicing of a student loan owed by a military borrower. For purposes of this paragraph, “misrepresent or omit material information” includes, but is not limited to:
(A)CA Civil Law Code § 1788.101(b)(7)(A) Misrepresenting or omitting the availability of a program or protection specific to military borrowers or applicable to military borrowers.
(B)CA Civil Law Code § 1788.101(b)(7)(B) A misrepresentation or omission in violation of paragraph (2) of this subdivision.
(8)CA Civil Law Code § 1788.101(b)(8) Engage in an unfair or deceptive practice toward any borrower working in public service or misrepresent or omit material information in connection with the servicing of a student loan owed by a borrower working in public service. For purposes of this paragraph, “misrepresent or omit material information” includes, but is not limited to:
(A)CA Civil Law Code § 1788.101(b)(8)(A) Misrepresenting or omitting the availability of a program or protection specific to borrowers working in public service or applicable to those borrowers.
(B)CA Civil Law Code § 1788.101(b)(8)(B) A misrepresentation or omission in violation of paragraph (2).
(9)CA Civil Law Code § 1788.101(b)(9) Engage in an unfair or deceptive practice toward an older borrower or older cosigner or misrepresent or omit material information in connection with the servicing of a student loan owed or cosigned by an older borrower. For purposes of this paragraph, “misrepresent or omit material information” includes, but is not limited to:
(A)CA Civil Law Code § 1788.101(b)(9)(A) Misrepresenting or omitting the availability of a program or protection specific to older borrowers or older cosigners or applicable to those borrowers or cosigners.
(B)CA Civil Law Code § 1788.101(b)(9)(B) Misrepresenting or omitting the older borrower’s or older cosigner’s obligations under the student loan.
(C)CA Civil Law Code § 1788.101(b)(9)(C) A misrepresentation or omission in violation of paragraph (2).
(10)CA Civil Law Code § 1788.101(b)(10) Engage in an unfair or deceptive practice toward a borrower with a disability or misrepresent or omit material information in connection with the servicing of a student loan owed by a borrower with a disability. For purposes of this paragraph, “misrepresent or omit material information” includes, but is not limited to:
(A)CA Civil Law Code § 1788.101(b)(10)(A) Misrepresenting or omitting the availability of a program or protection specific to borrowers with disabilities or applicable to those borrowers.
(B)CA Civil Law Code § 1788.101(b)(10)(B) A misrepresentation or omission in violation of paragraph (2) of this subdivision.
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