DFPI: providers of education financing, including unpaid tuition plans and income-sharing agreements, must register under new state rule

Representatives of the California Department of Financial Protection and Innovation (DFPI) told the advisory committee that a registration program for certain consumer-finance products took effect in February 2025 and that providers of education financing must register unless exempt.

Markel Kelly, Deputy Commissioner for Supervision and Registration at DFPI, summarized the California Consumer Financial Protection Law (CCFPL) and the DFPI's registration authority. Kelly said the DFPI's first registration rulemaking package required registration for four product categories including education financing. The DFPI's registration rules were approved by the Office of Administrative Law with an effective date of February 15, 2025.

DFPI staff said education financing is defined to include credit extended to fund postsecondary education costs such as tuition, fees, books and supplies, room and board and other attendance expenses. DFPI representatives told the committee that tuition-only payment plans with no interest or fees meet the definition of education financing and therefore require registration, as do income-sharing agreements and similar products with a repayment obligation. Third-party partners that provide education financing on behalf of institutions are also subject to registration unless an exemption applies.

Exemptions noted by DFPI include providers operating under another state or federal license that covers the activity, banks and credit unions operating under federal charters and public or nonprofit postsecondary institutions. Kelly pointed to a merchant-exemption that may apply to sellers of nonfinancial goods or services that extend limited credit under specific conditions (a cap of 25 transactions per year, among other criteria).

DFPI staff said registration uses the Nationwide Multistate Licensing System and Registry (NMLS) and that providers should have submitted registrations or pending applications by February 15, 2025. The DFPI cautioned that offering education financing without registering could lead to enforcement; the agency said it will consider individual circumstances when deciding whether to pursue penalties and indicated a willingness to be lenient in cases where applicants lacked prior notice.

DFPI said it will publish an education-financing resource page and distribute notices to BPPE-approved schools; staff also provided contact points for questions and a web-based registry search for registrants and pending applications.