Private Student Loan Collections Reform Act: collection actions.

Existing law, the Student Loan Servicing Act, provides for the licensure, regulation, and oversight of student loan servicers by the Commissioner of Financial Protection and Innovation, who is the head of the Department of Financial Protection and Innovation. The act prohibits a person from engaging in the business of servicing a student loan in this state without a license, unless the person falls within certain exceptions. Existing law, the Student Borrower Bill of Rights, imposes requirements on a student loan servicer, including, among others, the timely posting, processing, and crediting of student loan payments, and applying overpayments consistent with the best financial interest of a student loan borrower. Existing law also prohibits 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, and authorizes a person to bring an action for actual damages, injunctive relief, restitution, punitive damages, attorney's fees, and other relief, including treble damages in certain circumstances. This bill would enact the Private Student Loan Collections Reform Act, which would become operative July 1, 2022. The act would prohibit a private education lender or a private education loan collector, as defined, from making any written statement to a debtor in an attempt to collect a private education loan unless the private education lender or private education loan collector possesses certain information regarding the loan and provides this information to the debtor, as specified. The act would require all settlement agreements between a private education lender or private education loan collector and a debtor to be documented in open court or otherwise reduced to writing, as specified. The act would also require a private education lender or private education loan collector that accepts a payment as payment in full or as a full and final compromise of a private education loan, within 30 calendar days, to provide specified information to the debtor regarding the loan. The act would also prohibit a private education lender or private education loan collector from bringing suit or initiating an arbitration or other legal proceeding to collect a private education loan if the applicable statute of limitations on the claim has expired. The act would require a complaint, with respect to an action brought by a private education lender or private education loan collector to collect a private education loan, to contain specified information and would prohibit a default or other judgment from being entered against a defendant unless documents submitted to the court establish the facts alleged. The act would require a plaintiff seeking an exemption, as an exempt entity, from those requirements to attach to the complaint a declaration or affidavit, signed under penalty of perjury, stating certain information. By expanding the scope of the crime of perjury, the bill would create a state-mandated local program. The act would also authorize a person to bring a cause of action against a creditor, private education lender, or private education loan collector for violating the act for actual damages, statutory damages, restitution, and other specified relief. 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.