AB 2251 Summary: Student Loan Servicing Act

• Requires student loan servicers to obtain a license from the Commissioner of Business Oversight, with exemptions for banks, credit unions, and public/nonprofit educational institutions.

• Licensees must maintain minimum net worth of $250,000, obtain a $25,000 surety bond, and file annual audited financial statements and reports with the commissioner.

• Establishes borrower protections including responding to qualified written requests within 30 days, disclosing repayment/forgiveness options, honoring borrower overpayment instructions, and providing 15-day notice before transferring servicing to another party.

• Authorizes the commissioner to investigate applicants, conduct examinations, issue citations with penalties up to $2,500, and suspend or revoke licenses for violations, fraud, or unsafe practices.

• Becomes operative July 1, 2018, though the commissioner may begin preparatory actions on January 1, 2017.