National student debt currently reaches over $1.2 trillion.
In California, the debt has reached 4.2 million student loan borrowers, leading to $1.2 billion in debt.
According to the Student Loan Servicing Act (Assembly Bill 2251), California student loan servicers are required to post a surety bond. Student loan servicers help manage repayment, process requests for deferment of forbearance, work with loan receivers to collect payments, and determine if recipients are qualified for loan forgiveness. Currently, these servicers are not accountable for certain federal standards, so the AB 2251 plans to revise that within California. In order to receive a license, student loan servicers must manage a $25,000 surety bond.
Materials and fees for the application with the Department of Business Oversight (DBO):
On top of these materials, it is mandatory for student loan servicers to file an annual report with the DBO to present the former year’s business activities.
AB 2251 will ensure that students who borrow money for school have trustworthy information, receive exceptional customer service, and are able to have access to repayment and loan forgiveness programs. The goal for the AB 2251 is to enact policies by requiring servicers that are not banks or credit unions to be licensed so students who take out loans for school are more protected and have extra opportunities to pay them back. AB 2251 will force more accountability for loan servicers which will achieve higher student loan servicing standards. The DBO is protected by AB 2251 which will provide authority to deny, give, suspend, and revoke licenses to any servicers that does not comply with AB 2251 standards.
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