The bill’s approval was part of several higher education reform initiatives and will take effect July 1, 2022.
Legislation placing new documentation requirements on private student loan lenders before initiating any collection activity is now final in California.
Gov. Gavin Newsom signed A.B. 424, the Private Student Loan Collection Reform Act, sponsored by State Assemblymember Mark Stone, D-Monterey Bay, last week. The governor also signed a package of bills to improve college affordability and increase access to higher education, according to a news release. Overall, California’s higher education legislation includes $47.1 billion in funding.
A.B. 424 places new documentation requirements on private student loan lenders before initiating any collection activity. It also requires student loan settlements by private student loan lenders and debt collectors to be done in open court.
The Private Student Loan Collections Reform Act will become operative July 1, 2022.
The bill summary states, “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.”
Gov. Newsom also recently signed legislation on consumer notification requirements for debt collectors and debt settlements, ACA International previously reported.
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