The Student Borrower Bill of Rights, or Assembly Bill 376, was signed into law by Governor of California Gavin Newsom on Sept. 25. The Bill was one of several recent progressive bills passed by the California state legislature and presented to Newsom the month prior. Some of the most publicized bills were a slew of criminal justice reform proposals passed in the wake of George Floyd’s death and Newsom’s veto of the CRISES Act, which would have set up pilot programs to send out social workers to certain 911 calls instead of police. However, buried under the media attention of these new criminal justice laws is the ‘Student Borrower Bill of Rights,’ which aims to protect college students like the Poets.
Assembly Bill (AB) 376, aptly given its nickname as a ‘Student Borrower Bill of Rights,’ was first introduced in the state legislature by Assemblymember Mark Stone of Santa Cruz. Several states around the country have already proposed or passed similar ‘bill of rights’ laws regarding protecting college students from “abusive student loan servicing practices that take unreasonable advantage” of borrowers, but Stone’s bill was largely considered the strongest and most comprehensive proposal to date. AB 376 was quickly endorsed by several major consumer advocates and student loan activists, including Consumer Reports, Student Loan Crisis, and the Student Borrower Protection Center. The press release endorsed by these organizations, which was published by the Student Borrower Protection Center, gives further details of the Bill’s mission.
“AB 376, the California Student Borrower Bill of Rights, will create new rights for all California borrowers, and establish special protections for military families, nurses, teachers, and other public service workers. The legislation would require student loan companies to train their staff to understand these rights and creates strong new protections to prevent companies from deceiving teachers and public service workers and misleading military borrowers. This bill also creates new penalties for companies that trick borrowers out of their repayment rights and, for the first time, gives individual borrowers new legal tools to seek justice for these abuses in the courts,” according to the Student Borrower Protection Center.
Overall, the Bill creates uniform standards and regulations for the student debt industry, as well as gives students and borrowers a straightforward way to report unfair practices. Specifically, it requires loan servicers to keep much more accurate and updated records on borrowers, limits extra fees, and requires servicers to give accurate and upfront information to borrowers, instead of historically trying to profit off of borrowers’ confusion over the terms of their loan.
While the fact that Newsom did not sign into law the new bills until the final possible week had many worried he would end up vetoing the majority of the reforms, Newsom did end up signing the Student Borrower Bill of Rights into law. Newsom approved this alongside AB 1864, creating the Department of Financial Protection and Innovation in the state government, which will directly regulate student loan servicers and, at times, colleges themselves to oversee that institutions conform to new regulations, giving the state and students to seek damages and compensation if they do not comply. Also passed at the same time was Senate Bill 908, which requires some loan collectors in California to be licensed in order to work. Combined, these new financial protections were praised around the country as being some of the “strongest” state laws on financial protections for consumers.
Speaking on behalf of Student Debt Crisis, Executive Director Natalia Abrams said, “For years, thousands of California student loan borrowers told us about problems with student loan companies. These problems that have cheated people out of millions of dollars and caused real stress for families who had no recourse. Now, with the Student Borrower Bill of Rights, Californians have real, enforceable rights and can take action when they are harmed.”
While it is yet to be seen if this will have any substantial impact or relief on the student loan crisis in America, students and borrowers in California can expect more transparency within the student debt industry. Given that these are the strongest protections yet given to students, and that it impacts students in the most populous, and one of the most expensive, states in the U.S. no less, a large portion of the student borrower population can look forward to next year as the law goes into effect.
With the law going into effect July 1, 2021, this leaves good reason for Whittier students, as well as college students around California in general, relieved of at least some regulation and protection from a notoriously overbearing student loan industry.
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