The bill would affect only student loans that are not made, insured, or guaranteed by the federal government.
Assemblymember Bob Wieckowski says his bill should relieve some of the pressure of students who are struggling financially.
"We have a trillion dollars worth of student loan debt right now," he says. "I think some of the people who aren't going to be able to make the payments, 25-percent of your take home pay is too much."
Wieckowski, who is a bankruptcy attorney, says students with federal loans are offered a number of repayment options and deferrals when struggling.
He says private loans often lack those safeguards.
Wieckowski also plans to require entrance and exit loan counseling for students receiving private loans as part of his "Student Bill of Rights" legislative package.