General ProvisionsRequirement for License

Section § 28102

Explanation

If you want to run a student loan servicing business in California, you need to get a license first. This license can't be given to someone else or transferred. However, some businesses like banks, federal credit unions, certain educational institutions, and nonprofit services are exempt from this requirement because they're already regulated under other rules. Also, if a student loan is being serviced by a company that is already helping under a servicing agreement, the original lender doesn't need a separate license.

(a)CA Financial Code § 28102(a) No person shall engage in the business of servicing a student loan in this state without first obtaining a license pursuant to this division. A license shall not be transferable or assignable.
(b)CA Financial Code § 28102(b) This division shall not apply to any of the following:
(1)CA Financial Code § 28102(b)(1) A bank, trust company, or industrial loan company doing business under the authority of, or in accordance with, a license, certificate, or charter issued by the United States or any state, district, territory, or commonwealth of the United States that is authorized to transact business in this state.
(2)CA Financial Code § 28102(b)(2) A federally chartered savings and loan association, federal savings bank, or federal credit union that is authorized to transact business in this state.
(3)CA Financial Code § 28102(b)(3) A savings and loan association, savings bank, or credit union organized under the laws of this or any other state that is authorized to transact business in this state.
(4)CA Financial Code § 28102(b)(4) A public postsecondary educational institution or a private nonprofit postsecondary educational institution servicing a student loan it extended to the borrower.
(5)CA Financial Code § 28102(b)(5) A nonprofit community service organization that meets all the criteria of Section 12104.
(6)CA Financial Code § 28102(b)(6) 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 Section 428(b) of the Higher Education Act of 1965 (20 U.S.C. Sec. 1078(b)).
(c)CA Financial Code § 28102(c) A private postsecondary educational institution not exempted from the requirements of this division pursuant to subdivision (b) shall not be required to comply with this division for the servicing of a student loan it extended to a borrower that a licensee is servicing pursuant to a servicing agreement with the private postsecondary educational institution for that student loan.
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