Surety Bond Requirements for Student Loan Servicers in California
If you service student loans for California borrowers, whether the loans are private or federal, you need a Student Loan Servicing License from the California Department of Financial Protection and Innovation (DFPI), and a surety bond as part of that license.
Your bond amount depends on the dollar amount of student loans you serviced in the prior year:
| Loans Serviced in Prior Year | Bond Amount |
|---|---|
| $0 - $50,000,000 | $25,000 |
| $50,000,001 - $100,000,000 | $50,000 |
| $100,000,001 - $250,000,000 | $75,000 |
| Over $250,000,000 | $100,000 |
Licensees with more than one location in California only need to post one bond.
How Much Does a California Student Loan Servicer Bond Cost?
With Bryant Surety Bonds, the price starts at 0.75% of the required amount. This means for a $25,000 surety bond, your annual cost can be as little as $188. Your personal credit is the biggest factor in calculating your rate. Other factors can be previous experience, financial statements, or liens, previous bankruptcies, and others. Our surety bond cost page walks you through the bond pricing in more depth.
Below are the starting surety bond costs based on the dollar amount of student loans you serviced in the previous year.
| Loans Serviced in Prior Year | Bond Amount | Starting Cost/Year |
|---|---|---|
| $0 - $50,000,000 | $25,000 | $188 |
| $50,000,001 - $100,000,000 | $50,000 | $375 |
| $100,000,001 - $250,000,000 | $75,000 | $563 |
| $250,000,000 | $100,000 | $750 |
Bad credit isn't a dealbreaker here. Our bad credit bond program has a track record of bonding people other sureties turn away.
Get started with our online application, free to submit and with no obligation to buy.
Why Do You Need a Student Loan Servicer Bond in California?
Your bond guarantees your compliance with California's Student Loan Servicing Act. It's available to cover potential expenses, fines, or fees the commissioner assesses against you, and to compensate borrowers for losses tied to your noncompliance. A valid claim against your bond means your surety pays up to the bond's full penal sum, and you are responsible to pay that back.
With Bryant Surety Bonds, in case of a claim against your bond, our claims specialists can work with you to consult and help you with the process.
California also requires you to post a new bond within 10 days of any claim being paid out. Skipping that step is its own grounds for the commissioner to suspend or revoke your license.
Not familiar with how surety bonds work? Our what is a surety bond page breaks it down.
How to Get Bonded
Three steps, start to finish, with Bryant Surety Bonds.
- Fill out our online application. Most people finish it in a few minutes.
- Review your quote and pay. Your application goes out to 20+ A-rated carriers, and your bond is issued upon receiving payment.
- NMLS filing is on us. We submit your Electronic Surety Bond (ESB) straight to your NMLS record.
There's one thing you need to do. Once your quote is approved and paid, you need to grant us authority as your surety inside NMLS. The commissioner won't accept the bond until that's done.
How Do You Renew Your Bond?
Your surety bond needs to be renewed every year with your California Student Loan Servicing License. Based on the amount of student loans serviced in the previous year, your bond amount can increase or decrease as described in the tables above.
Your agent will reach out 1-2 months before your bond is due for renewal, and can help you look at ways to bring the cost down.
How To Apply for a Student Loan Servicing License in California?
The application generally involves:
- Setting up or updating your NMLS account and submitting the Company Form (MU1).
- Gathering your paperwork: formation documents, an ownership chart, company policies addressing borrower notices and complaint handling, and samples of your borrower communications.
- Providing an audited financial statement showing a net worth of at least $250,000.
- Appointing the DFPI commissioner as your agent for service of process, a required form for this license.
- Clearing background checks and credit reports for anyone in a position of control at your company.
- Granting us surety authority in NMLS so your Electronic Surety Bond can be filed to your record.
- Paying the applicable fees (below).
Full documentation requirements are listed on the NMLS website.
California Student Loan Servicer Licensing Fees
| Fee | Amount |
|---|---|
| Application fee | $400 |
| License registration fee | $0 |
| NMLS processing fee | $120 |
Background checks and credit reports are billed separately through NMLS; see the NMLS System Fees page for current pricing.
Multistate Licensing and Bonding
One NMLS account covers all your state licenses, but bonds don't transfer between states, each one sets its own amount and needs its own Electronic Surety Bond filed separately. Student loan servicing licensing is still a newer regulatory area and not every state that licenses servicers requires a bond as part of it.
Wherever you're operating in, Bryant Surety Bonds can be your single point of contact for your surety bond requirements in all 50 states.
Get Bonded With Bryant Surety Bonds
Bryant Surety Bonds holds California license number 0N08760.
Have questions about getting bonded in California? Give us a call at 866.450.3412.
FAQ
Does servicing federal student loans require this license too?
Yes. The license covers servicing of both private and non-private (including federal) student loans for California borrowers.
Do you need a separate bond for each office location?
No. One bond covers your entire operation in California, regardless of how many licensed locations you have.
Does bad credit rule you out from getting bonded?
In most cases no. Your credit history affects your bond rate. Our bad credit bond program routinely bonds applicants with credit issues, helping them get the lowest possible quote.
Can you cancel your bond?
Your bond remains active until canceled. Cancelling it requires at least 30 days' written notice to the commissioner, and your surety stays liable for anything that happened before the cancellation took effect.
What happens if your loan servicing volume changes year to year?
Your required bond amount can move up or down at renewal, since it's based on the dollar amount of loans you serviced in the preceding year.
