"I recently was notified by a collection agency that is now threatening me to pay on my private student loan that was sent to them by Access group. I was in a payment plan with them and when it ended they put the loan in default without notifying me. I received a call from them harassing me to pay the entire debt of the loan which totals approximately $8900. There was no attempt from Access to contact me. I can enter into a payment arrangement or possibly a forbearance. I have experienced hardship during Covid-19 and was able to make arrangements with my other student loans, I cannot believe that they would send a student loan to a collection agency during this time."

Anonymous / Anaheim, CA

With the passage of AB 424 in 2021, Californians struggling with private student loans are now protected against predatory debt collection practices and unfair court procedures.

For more than a decade, private student loan borrowers, particularly those who went to for-profit schools, have been targeted with debt collection lawsuits, often for debts or amounts that they may not owe and cannot be proven in court. These loans were made by some of the biggest banks in the country, including US Bank, JP Morgan Chase, and Bank of America, along with student loan giants like Sallie Mae. Although borrowers with these private loans have not benefited from new protections granted to those with federal student loans, states across the country have considered or passed new borrower protections in Washington’s absence. 
 
The risks and harm to borrowers are not hypothetical.

Dual-tracking. Robo-signing. Lost paperwork. Sound familiar?

More than 650,000 Californians owe approximately $10.3 billion in private student loan debt. This debt is made by banks, for-profit schools, and other private institutions without any involvement from the federal government. As a result, these borrowers lack the same protections available to borrowers with private student loans. And companies often exploit the lack of protections in this market to make a quick buck. 

For years, companies collecting on private student loan debt have been pulling from the same predatory playbook used during the mortgage crisis. After saddling borrowers with student loans "designed to fail," these companies slice and dice borrowers' loans into some of the "worst-performing student loan investment vehicles ever created." When borrowers try to obtain relief, these companies repeatedly lose paperwork or transfer the loan to a new company. 

 

Then, when borrowers default on these loans, companies hound them with collection lawsuits designed to garnish their wages indefinitely. These companies intentionally target the lawsuits in communities with the least access to legal representation because when borrowers do have representation, these lawsuits don't stick. 

With AB 424, Californians finally have the protections they deserve.​

Borrowers shouldn't need an attorney to fight off illegal collection lawsuits.

The Campaign for California Borrowers' Rights fought to end the abusive and predatory collection lawsuits that are clogging up California's courts. Thanks to AB 424, authored by Assembly Member Mark Stone, student loan companies have to prove they have a lawful right to collect on a debt before they can file a lawsuit against a borrower.

 

AB 424 closed critical caps in California's collection laws, including:

  • Requiring that collectors provide the chain of ownership for the loan; 
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  • Detailing the borrower's payment history, including any attempts to enter into a payment modification;​
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  • Proving that the debt is within the statute of limitations; and
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  • Providing the borrower with a private right of action in the event that the collector illegally pursues a debt.