Budget Proposal Would Allocate $10 Million to Department of Financial Protection and Innovation to Help Student Loan Borrowers ahead of Repayment and Public Service Loan Forgiveness Waiver Deadlines

State Financial Regulator Would Work with Community Partners to Educate, Assist, and Empower California Students

In California, close to 4 million student borrowers owe $147 billion in student loan debt, according to the Student Borrower Protection Center. More than half a million-student loan borrowers are believed to be delinquent or in default.

A report by the California Student Loan and Debt Service Review Workgroup reports that Black and Latino residents have higher default and delinquency rates than others. Crucial to an equitable economic recovery is ensuring that student borrowers who have fallen behind on payments have access to the tools and resources needed to get back on track. That’s where the Department of Financial Protection and Innovation (DFPI) comes in. The Department regulates student loan servicers, recently hired a Student Loan Ombudsperson to help triage specific student borrower issues and may soon have funding to launch a comprehensive education campaign and grant program that would fund legal aid groups and other organizations throughout the state working directly to assist student borrowers.

In January, Gov. Gavin Newsom announced a $10 million proposal for student loan borrower assistance for the 2022-23 fiscal year. If approved, the campaign would inform, educate, and assist student borrowers who are scheduled to start making student loan payments again in May following a two-year pause due to the COVID-19 pandemic. Funding would also be used to educate student borrowers working in public service of the Public Service Loan Forgiveness Waiver, which makes it easier to qualify for loan forgiveness. The waiver ends on Oct. 31, 2022.

It is crucial that prospective and current student loan borrowers understand their rights and, for borrowers in repayment, to understand their options, as well as spot scams and report troubling loan servicer behavior to the DFPI. To learn more, visit the DFPI student borrower resource page: https://dfpi.ca.gov/studentborrower-resources/. If you would like to stay up to date with this campaign and other consumer alerts, can sign up for updates. For more information on how to partner with the Department or receive educational materials, reach out to Sally Westlake at Sally.Westlake@dfpi.ca.gov