For purposes of this title, the following definitions apply:

(a) “Borrower” or “student loan borrower” means a person who has received or agreed to pay a private education loan.

Terms Used In California Civil Code 1788.201

  • Contract: A legal written agreement that becomes binding when signed.
  • Fair Credit Reporting Act: A federal law, established in 1971 and revised in 1997, that gives consumers the right to see their credit records and correct any mistakes. Source: OCC
  • Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
  • Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Open-end credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or revolving credit.) Source: OCC
  • Plaintiff: The person who files the complaint in a civil lawsuit.
  • Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
  • spouse: includes a registered domestic partner, as required by §. See California Civil Code 14
  • will: includes codicil. See California Civil Code 14

(b) “Consumer report” and “consumer reporting agency” shall each have the same meaning that these terms have under the federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.).

(c) (1) “Cosigner” means any individual who is liable for the obligation of another without compensation, regardless of how the individual is designated in the contract or instrument with respect to that obligation, including an obligation under a private education loan extended to consolidate a borrower’s preexisting private education loans, and shall include any person whose signature is requested as a condition to grant credit or to forbear on collection.

(2) “Cosigner” does not include a spouse of an individual described in paragraph (1), the signature of whom is needed to perfect the security interest in a loan.

(d) “Creditor” means any of the following:

(1) The original creditor, where ownership of a private education loan has not been sold, assigned, or transferred.

(2) The person or entity that owned the private education loan at the time the private education loan defaulted, even if that person or entity did not originate the private education loan, and where such a private education loan has not subsequently been sold, transferred, or assigned.

(3) A person or entity that purchased a defaulted private education loan, whether it collects the private education loan itself or hires a third party for collection, or hires an attorney for collection litigation.

(e) “Debtor” means a borrower, cosigner, or other person that owes or is alleged to owe an unpaid amount on a private education loan.

(f) (1) “Exempt entity” means an entity that meets both of the following requirements:

(A) It is a depository institution as defined in § 1420 of the Financial Code.

(B) It, together with its affiliates, will be, in the aggregate, a plaintiff in 35 or fewer private student loan collection actions in the current calendar year. Private education loans assigned to a third party for the purposes of collection shall count towards the numerical limit set forth in this subparagraph.

(2) For purposes of this subdivision, an entity is an “affiliate” of another specified entity if it directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the other specified entity.

(g) “Original creditor” means the private education lender identified in a promissory note, loan agreement, or loan contract entered into with a student loan borrower or cosigner.

(h) “Private education lender” means either of the following:

(1) Any person or entity engaged in the business of securing, making, or extending private education loans.

(2) Any holder of a private education loan.

(i) “Private education loan” means an extension of credit that meets all of the following conditions:

(1) Is not made, insured, or guaranteed under Title IV of the Higher Education Act of 1965 (20 U.S.C. § 1070 et seq.).

(2) Is extended to a consumer expressly, in whole or in part, for postsecondary educational expenses, regardless of whether the loan is provided by the educational institution that the student attends.

(3) Does not include open-end credit or any loan that is secured by real property or a dwelling.

(4) Does not include an extension of credit in which the covered educational institution is the original creditor if either:

(A) The term of the extension of credit is 90 days or less.

(B) An interest rate will not be applied to the credit balance and the term of the extension of credit is one year or less, even if the credit is payable in more than four installments.

(j) “Private education loan collection action” means any suit, arbitration, or other legal proceeding in which a claim is asserted to collect a private education loan.

(k) “Private education loan collector” means a person, other than a private education lender, collecting or attempting to collect on a defaulted private education loan.

(Added by Stats. 2021, Ch. 559, Sec. 1. (AB 424) Effective January 1, 2022. Operative July 1, 2022, pursuant to Section 1788.211.)

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