AB 866: Student loan servicing.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

Existing law, the Student Loan Servicing Act, prohibits a person from engaging in the business of servicing a student loan in California without first obtaining a license. Existing law commits the administration of these provisions to the Commissioner of Financial Protection and Innovation and grants the commissioner various powers in this regard, including the authority to conduct investigations of applicants and licensees.

Existing law, the Unfair Competition Law (UCL), makes various practices unlawful and makes a person who engages, has engaged, or proposes to engage in unfair competition liable for a civil penalty, as specified. Existing law authorizes actions for relief prosecuted under the UCL to be brought by certain public attorneys and requires the penalty collected from those actions to be paid to the treasurer of the county or city in which the judgment is entered, as specified.

This bill would specify that a student loan servicer under the Student Loan Servicing Act, is subject to the UCL.

Existing law, the Rosenthal Fair Debt Collection Practices Act, regulates the collection of consumer debts by debt collectors, as defined. Under existing law, a debt collector who violates the act is liable to a debtor for actual damages resulting from the violation, and is subject to additional civil penalties for any willful or knowing violation of the act, and other specified remedies. Existing law also makes certain violations of the act punishable as a crime.

The bill would specify that a student loan is a debt that is subject to the Rosenthal Fair Debt Collection Practices Act. The bill would further specify that a transaction giving rise to a student loan is a consumer credit transaction for purposes of the Rosenthal Fair Debt Collection Practices Act. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.

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.

Sponsors

Sponsors by party (alphabetical): Democratic 1

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. August 29, 2025In committee: Held under submission.
2. August 18, 2025In committee: Referred to suspense file.
3. July 16, 2025From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 13. Noes 0.) (July 15). Re-referred to Com. on APPR.
4. July 3, 2025From committee: Do pass and re-refer to Com. on JUD. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (July 2). Re-referred to Com. on JUD.
5. June 11, 2025Referred to Coms. on B. & F.I. and JUD.
6. June 3, 2025In Senate. Read first time. To Com. on RLS. for assignment.
7. June 2, 2025Read third time. Passed. Ordered to the Senate. (Ayes 79. Noes 0. Page 1860.)
8. May 27, 2025Read second time. Ordered to third reading.
9. May 23, 2025From committee: Do pass. (Ayes 14. Noes 0.) (May 23).
10. May 14, 2025In committee: Set, first hearing. Referred to APPR. suspense file.
11. April 29, 2025From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (April 28). Re-referred to Com. on APPR.
12. April 28, 2025Joint Rule 62(a) suspended. (Page 1307.)