Student loan servicing.

Assembly Member Ortega's legislation expands California's consumer protection framework by placing student loan servicers under the jurisdiction of both the Unfair Competition Law (UCL) and the Rosenthal Fair Debt Collection Practices Act. The measure adds Section 28180.5 to the Financial Code, formally classifying student loan servicers as entities subject to UCL oversight and defining student loans as consumer debts under the Rosenthal Act's provisions.

The bill establishes that transactions resulting in student loans constitute consumer credit transactions under the Rosenthal Act, which regulates debt collection practices and provides remedies for violations. Under current law, the Commissioner of Financial Protection and Innovation oversees student loan servicer licensing, while the UCL authorizes civil penalties for unfair business practices, with enforcement authority granted to specified public attorneys. The Rosenthal Act separately enables debtors to pursue damages for improper collection practices and includes criminal penalties for certain violations.

By incorporating student loan servicing into these existing consumer protection mechanisms, the measure creates additional oversight channels and enforcement options. Local agencies may incur costs related to the bill's criminal provisions, though the legislation specifies that state reimbursement is not required under the California Constitution's provisions regarding state-mandated local programs.