On September 9, 2022, the California Department of Financial Protection and Innovation (DFPI) proposed to amend its student loan servicing regulations, which we previously covered here. After reviewing public comments, on January 6, 2023, the DFPI released a Notice requesting an additional round of public comments on a modified set of regulations.
Among other things, as modified, the proposed regulations would now:
- Mandate an 11:59 p.m. Pacific Standard Time cutoff for receipt of payments, regardless of the servicer’s location.
- Expand the definition of “income share agreement” to include any percentage or amount that the student has agreed to pay from future income, regardless if that agreement is for expense related to tuition, fees, books, supplies, room & board, transportation, or miscellaneous personal expenses. Further, income share agreements that go beyond the advancing of funds would also now be covered under the definition, including any agreements that credit or defer costs.
- Require servicers to acknowledge receipt of and respond to qualified written requests, in writing, using the borrower’s preferred method of communication. Where there is no preferred method specified, servicers must send acknowledgements to the borrower’s last address of record and to all email addresses of record.
- Require servicers to include in their reporting a date of origination for each of the products they service (referred to, variously, as the date the education financing products, income share agreements, or installment contracts were advanced, covered, credited, deferred or funded).
- Revise defined terms to better mirror existing terminology contained in the Truth in Lending Act and Higher Education Act, for instance, modifying the definition of “education financing products,” to now include “private education loans” (previously, “private loans”), as that term is defined under the Truth in Lending Act.
The modifications are subject to a 15-day comment period, ending January 26, 2023.