I 

114TH CONGRESS 

1ST SESSION H. R. 3948 

To amend the Truth in Lending Act to include requirements for the transfer 

of servicing of postsecondary education loans, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 5, 2015 

Mr. DEUTCH introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by 

the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Truth in Lending Act to include requirements 

for the transfer of servicing of postsecondary education 

loans, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Student Loan Trans5 fers Disclosure Act of 2015’’. 


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1 SEC. 2. IMPROVED CONSUMER PROTECTIONS FOR STU2 DENT LOAN SERVICING. 

3 (a) IN GENERAL.—Chapter 2 of title I of the Truth 

4 in Lending Act (15 U.S.C. 1601 et seq.) is amended by 

5 adding at the end the following new section: 

6 ‘‘§ 140B. Transfer of servicing of postsecondary edu7 cation loans 

8 ‘‘(a) TRANSFER OF SERVICING.— 

9 ‘‘(1) DISCLOSURE REQUIRED.—A postsecondary 

10 education lender shall disclose to each person who 

11 applies for a postsecondary education loan, at the 

12 time of application for such loan, whether there may 

13 be a transfer of servicing of such loan at any time 

14 during which a balance is due on such loan. 

15 ‘‘(2) NO LIABILITY.—A postsecondary edu16 cation lender shall not be liable to a borrower for 

17 failure to comply with paragraph (1) if the applica18 tion for a postsecondary education loan was made 

19 before the rules or regulations established under 

20 subsection (f) take effect. 

21 ‘‘(b) NOTICE BY TRANSFEROR SERVICER AT TIME OF

22 TRANSFER OF SERVICING.— 

23 ‘‘(1) IN GENERAL.—A transferor servicer shall 

24 notify the borrower under a postsecondary education 

25 loan of any transfer of student loan servicing for the 


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1 postsecondary education loan. Such notice shall be 

2 made to the borrower— 

3 ‘‘(A) not later than 15 days before the ef4 fective date of transfer of the student loan serv5 icing; or 

6 ‘‘(B) not more than 30 days after the ef7 fective date of transfer of the student loan serv8 icing, if the transfer of such servicing is pre9 ceded by— 

10 ‘‘(i) termination of the contract for 

11 such servicing for cause; 

12 ‘‘(ii) commencement of bankruptcy 

13 proceedings of the transferor servicer; or 

14 ‘‘(iii) any other situation in which the 

15 Bureau determines that such exception is 

16 warranted. 

17 ‘‘(2) CONTENTS OF NOTICE.—The notice re18 quired under paragraph (1) shall be made in writing 

19 and, if the transferor servicer has an email address 

20 for the borrower, sent by email, and shall include— 

21 ‘‘(A) the effective date of the transfer; 

22 ‘‘(B) the name, address, website, and toll23 free or collect-call telephone number of the 

24 transferee servicer; 


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1 ‘‘(C) a toll-free or collect-call telephone 

2 number for an individual employed by the 

3 transferor servicer, or the office or department 

4 of, the transferor servicer that the borrower 

5 may contact for inquiries relating to the trans6 fer of servicing; 

7 ‘‘(D) the name and toll-free or collect-call 

8 telephone number for an individual employed by 

9 the transferee servicer, or the office or depart10 ment of, the transferee servicer that the bor11 rower may contact for inquiries relating to the 

12 transfer of servicing; 

13 ‘‘(E) the date on which the transferor 

14 servicer will stop accepting payments relating to 

15 the postsecondary education loan to be trans16 ferred and the date on which the transferee 

17 servicer will begin to accept such payments; 

18 ‘‘(F) a statement that the transfer of stu19 dent loan servicing of the postsecondary edu20 cation loan does not affect any term or condi21 tion of the postsecondary education loan other 

22 than terms directly related to such student loan 

23 servicing; 

24 ‘‘(G) a statement disclosing— 


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1 ‘‘(i) whether borrower authorization 

2 for recurring electronic funds transfers will 

3 be transferred to the transferee servicer; 

4 and 

5 ‘‘(ii) if any such recurring electronic 

6 funds transfers cannot be transferred, in7 formation as to how the borrower may es8 tablish new recurring electronic funds 

9 transfers in connection with transfer of 

10 servicing to the transferee servicer; 

11 ‘‘(H) a statement disclosing— 

12 ‘‘(i) the application of all payments 

13 and charges relating to the postsecondary 

14 education loan to be transferred as of the 

15 effective date of the transfer, including— 

16 ‘‘(I) the date the last payment of 

17 the borrower was received; 

18 ‘‘(II) the date the last late fee, 

19 arrearage, or other charge was ap20 plied; and 

21 ‘‘(III) the amount of the last 

22 payment allocated to principal, inter23 est, and other charges; 

24 ‘‘(ii) the status of such loan as of the 

25 effective date of the transfer, including 


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1 whether the borrower is in default on the 

2 loan; 

3 ‘‘(iii) whether any application for an 

4 alternative repayment arrangement sub5 mitted by the borrower is pending; and 

6 ‘‘(iv) an itemization and explanation 

7 for all arrearages claimed to be due as of 

8 the effective date of the transfer; 

9 ‘‘(I) a detailed description of any benefit, 

10 alternative repayment arrangement, or other 

11 term or condition arranged between the trans12 feror servicer and the borrower that is not in13 cluded in the terms of the loan agreement; 

14 ‘‘(J) a detailed description of any item 

15 under subparagraph (H) that will not apply 

16 upon transfer, including an explanation of why 

17 such item will not apply; and 

18 ‘‘(K) information on how to file a com19 plaint against the transferor servicer with the 

20 Bureau. 

21 ‘‘(3) NOTICE BY TRANSFEREE SERVICER AT

22 TIME OF TRANSFER OF SERVICING.— 

23 ‘‘(A) IN GENERAL.—A transferee servicer 

24 shall notify the borrower under a postsecondary 

25 education loan, in writing, of any transfer of 


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1 student loan servicing of a postsecondary edu2 cation loan. Such notice shall be made to the 

3 borrower— 

4 ‘‘(i) not later than 15 days before the 

5 effective date of transfer of the student 

6 loan servicing; or 

7 ‘‘(ii) not more than 30 days after the 

8 effective date of transfer of the student 

9 loan servicing, if the transfer of such serv10 icing is preceded by— 

11 ‘‘(I) termination of the contract 

12 for such servicing for cause; 

13 ‘‘(II) commencement of bank14 ruptcy proceedings of the transferor 

15 servicer; or 

16 ‘‘(III) any other situation in 

17 which the Bureau determines that 

18 such exception is warranted. 

19 ‘‘(B) CONTENTS OF NOTICE.—The notice 

20 required under subparagraph (A) shall be made 

21 in the same manner and include the same infor22 mation, as applicable, as described in paragraph 

23 (2). 

24 ‘‘(c) TREATMENT OF IMPROPERLY RECEIVED LOAN

25 PAYMENTS DURING TRANSFER PERIOD.— 


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1 ‘‘(1) IN GENERAL.—During the 60-day period 

2 beginning on the effective date of transfer relating 

3 to a postsecondary education loan to be transferred, 

4 a late fee may not be imposed on the borrower with 

5 respect to any payment on such loan, and no such 

6 payment may be treated as late for any other pur7 poses if— 

8 ‘‘(A) the payment is received by the trans9 feror servicer instead of the transferee servicer 

10 (who should properly receive payment) before 

11 the due date applicable to such payment; or 

12 ‘‘(B) the payment is received by the trans13 feree servicer instead of the transferor servicer 

14 (who should properly receive payment) before 

15 the transfer is complete. 

16 ‘‘(2) NOTICE.—To the maximum extent prac17 ticable, a transferor servicer shall notify a borrower, 

18 both in writing and by telephone, regarding any pay19 ment described in paragraph (1). 

20 ‘‘(d) ELECTRONIC FUND TRANSFER AUTHORITY.— 

21 A transferee servicer shall make available to a borrower 

22 whose student loan servicing is transferred to the trans23 feree servicer a simple, online process through which the 

24 borrower may transfer to the transferee servicer any existVerDate Sep 11 2014 23:09 Nov 07, 2015 Jkt 059200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3948.IH H3948

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1 ing authority for an electronic fund transfer that the bor2 rower had provided to the transferor servicer. 

3 ‘‘(e) SERVICER LIABILITY.— 

4 ‘‘(1) EFFECTIVE DATE OF REGULATIONS.—A 

5 student loan servicer shall not be liable to a bor6 rower for failure to comply with the requirements of 

7 subsection (b) with respect to a transfer of student 

8 loan servicing before the regulations under sub9 section (f) take effect. 

10 ‘‘(2) MITIGATING ACTION.—A student loan 

11 servicer or a postsecondary education lender shall 

12 not be liable to a borrower for failure to comply with 

13 a requirement under this section if, not later than 

14 60 days after discovering an error and before the 

15 commencement of an action under section 130 or 

16 the receipt of written notice of the error from the 

17 borrower, the student loan servicer notifies the bor18 rower of the error and makes any adjustments in the 

19 appropriate account that are necessary to ensure 

20 that the borrower will not be required to pay an 

21 amount greater than the amount that the borrower 

22 otherwise would have paid. 

23 ‘‘(f) RULEMAKING.—The Bureau, in consultation 

24 with the Secretary of Education, is authorized to prescribe 

25 such rules and regulations, make such interpretations, and 


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1 grant such reasonable exemptions, in accordance with, and 

2 as may be necessary to achieve the purposes of, this chap3 ter. 

4 ‘‘(g) DEFINITIONS.—In this section, the following 

5 definitions shall apply: 

6 ‘‘(1) ALTERNATIVE REPAYMENT ARRANGE7 MENT.—The term ‘alternative repayment arrange8 ment’ means an agreed upon arrangement between 

9 a loan holder (or, for a Federal Direct Loan or a 

10 Federal Perkins Loan, the Secretary of Education or 

11 the institution of higher education that made such 

12 loan, respectively) or student loan servicer and a 

13 borrower— 

14 ‘‘(A) that is different than the terms of an 

15 existing postsecondary education loan arrange16 ment or agreement; and 

17 ‘‘(B) pursuant to which remittance of a 

18 monthly payment— 

19 ‘‘(i) satisfies the terms of the postsec20 ondary education loan; or 

21 ‘‘(ii) is not required for a period of 1 

22 or more months in order to satisfy the 

23 terms of the postsecondary education loan 

24 arrangement or agreement. 


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1 ‘‘(2) EFFECTIVE DATE OF TRANSFER.—The 

2 term ‘effective date of transfer’ means the date on 

3 which the first payment is due to a transferee 

4 servicer from a borrower under a postsecondary edu5 cation loan. 

6 ‘‘(3) FEDERAL DIRECT LOAN.—The term ‘Fed7 eral Direct Loan’ means a loan made under part D 

8 of title IV of the Higher Education Act of 1965 (20 

9 U.S.C. 1087a et seq.). 

10 ‘‘(4) FEDERAL PERKINS LOAN.—The term 

11 ‘Federal Perkins Loan’ means a loan made under 

12 part E of title IV of the Higher Education Act of 

13 1965 (20 U.S.C. 1087aa et seq.). 

14 ‘‘(5) INSTITUTION OF HIGHER EDUCATION.— 

15 The term ‘institution of higher education’ has the 

16 meaning given that term in section 102 of the High17 er Education Act of 1965 (20 U.S.C. 1002). 

18 ‘‘(6) LATE FEE.—The term ‘late fee’ means a 

19 late fee, penalty, or adjustment to principal, imposed 

20 because of a late payment or delinquency by the bor21 rower under a postsecondary education loan. 

22 ‘‘(7) LOAN HOLDER.—The term ‘loan holder’ 

23 means a person who owns the title to or promissory 

24 note for a postsecondary education loan (except for 

25 a Federal Direct Loan or a Federal Perkins Loan). 


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1 ‘‘(8) POSTSECONDARY EDUCATION EXPENSE.— 

2 The term ‘postsecondary education expense’ means 

3 any expense that is included as part of the cost of 

4 attendance (as that term is defined in section 472 

5 of the Higher Education Act of 1965 (20 U.S.C. 

6 1087ll)) of a student. 

7 ‘‘(9) POSTSECONDARY EDUCATION LENDER.— 

8 The term ‘postsecondary education lender’— 

9 ‘‘(A) means— 

10 ‘‘(i) a financial institution, as defined 

11 in section 3 of the Federal Deposit Insur12 ance Act (12 U.S.C. 1813) that solicits, 

13 makes, or extends postsecondary education 

14 loans; 

15 ‘‘(ii) a Federal credit union, as de16 fined in section 101 of the Federal Credit 

17 Union Act (12 U.S.C. 1752) that solicits, 

18 makes, or extends postsecondary education 

19 loans; and 

20 ‘‘(iii) any other person engaged in the 

21 business of soliciting, making, or extending 

22 postsecondary education loans; and 

23 ‘‘(B) does not include— 

24 ‘‘(i) the Secretary of Education; or 


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1 ‘‘(ii) an institution of higher education 

2 with respect to any Federal Perkins Loan 

3 made by the institution. 

4 ‘‘(10) POSTSECONDARY EDUCATION LOAN.— 

5 The term ‘postsecondary education loan’ means a 

6 loan that is— 

7 ‘‘(A) made, insured, or guaranteed under 

8 part B, D, or E of title IV of the Higher Edu9 cation Act of 1965 (20 U.S.C. 1071 et seq., 

10 1087a et seq., 1087aa et seq.); 

11 ‘‘(B) issued or made by a postsecondary 

12 education lender and is— 

13 ‘‘(i) extended to a borrower with the 

14 expectation that the amounts extended will 

15 be used in whole or in part to pay postsec16 ondary education expenses; or 

17 ‘‘(ii) extended for the purpose of refi18 nancing or consolidating 1 or more loans 

19 described in subparagraph (A); or 

20 ‘‘(C) a private education loan (as defined 

21 in section 140(a)). 

22 ‘‘(11) STUDENT LOAN SERVICER.—The term 

23 ‘student loan servicer’— 

24 ‘‘(A) means a person who performs student 

25 loan servicing; 


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1 ‘‘(B) includes a person performing student 

2 loan servicing for a postsecondary education 

3 loan on behalf of an institution of higher edu4 cation or the Secretary of Education under a 

5 contract or other agreement; 

6 ‘‘(C) does not include the Secretary of 

7 Education to the extent the Secretary directly 

8 performs student loan servicing for a postsec9 ondary education loan; and 

10 ‘‘(D) does not include an institution of 

11 higher education, to the extent that the institu12 tion directly performs student loan servicing for 

13 a Federal Perkins Loan made by the institu14 tion. 

15 ‘‘(12) STUDENT LOAN SERVICING.—The term 

16 ‘student loan servicing’ means, with respect to a 

17 postsecondary education loan, any of the following 

18 activities: 

19 ‘‘(A) Receiving any scheduled periodic pay20 ments, or notification of such payments, from a 

21 borrower under a postsecondary education loan. 

22 ‘‘(B) Applying payments described in sub23 paragraph (A) to an account of the borrower 

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1 cation loan or of the contract governing the 

2 servicing of the postsecondary education loan. 

3 ‘‘(C) During a period in which no payment 

4 is required on the postsecondary education 

5 loan— 

6 ‘‘(i) maintaining account records for 

7 the loan; and 

8 ‘‘(ii) communicating with the borrower 

9 on behalf of the loan holder or, with re10 spect to a Federal Direct Loan or Federal 

11 Perkins Loan, the Secretary of Education 

12 or the institution of higher education that 

13 made the loan, respectively. 

14 ‘‘(D) Interacting with a borrower to facili15 tate the activities described in subparagraphs 

16 (A), (B), and (C), including activities to help 

17 prevent default by the borrower of the obliga18 tions arising from the postsecondary education 

19 loan. 

20 ‘‘(13) TRANSFER OF SERVICING.—The term 

21 ‘transfer of servicing’ means the assignment, sale, or 

22 transfer of any student loan servicing of a postsec23 ondary education loan from a transferor servicer to 

24 a transferee servicer. 


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1 ‘‘(14) TRANSFEREE SERVICER.—The term 

2 ‘transferee servicer’ means the student loan servicer 

3 to whom any student loan servicing of a postsec4 ondary education loan is assigned, sold, or trans5 ferred. 

6 ‘‘(15) TRANSFEROR SERVICER.—The term 

7 ‘transferor servicer’ means the student loan servicer 

8 who assigns, sells, or transfers any student loan 

9 servicing of a postsecondary education loan to an10 other person.’’. 

11 (b) TABLE OF CONTENTS AMENDMENT.—The table 

12 of contents for chapter 2 of title I of the Truth in Lending 

13 Act is amended by inserting after the item relating to sec14 tion 140A the following new item: 

‘‘140B. Transfer of servicing of postsecondary education loans.’’. 

15 SEC. 3. AMENDMENTS TO THE HIGHER EDUCATION ACT OF 

16 1965. 

17 The Higher Education Act of 1965 (20 U.S.C. 1001 

18 et seq.) is amended— 

19 (1) in section 487(a) (20 U.S.C. 1094(a)), by 

20 adding at the end the following: 

21 ‘‘(30) The institution will— 

22 ‘‘(A) comply with the disclosure require23 ments for postsecondary education lenders 

24 under section 140B(a) of the Truth in Lending 

25 Act; and 


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1 ‘‘(B) ensure that each third party servicer 

2 with which the institution has entered into a 

3 contract complies with the applicable require4 ments for student loan servicers under section 

5 140B of such Act.’’; and 

6 (2) in section 463A(b) (20 U.S.C. 1087cc– 

7 1(b))— 

8 (A) by striking ‘‘and’’ at the end of para9 graph (8); 

10 (B) by striking the period at the end of 

11 paragraph (9) and inserting ‘‘; and’’; and 

12 (C) by adding at the end the following: 

13 ‘‘(10) the disclosures for postsecondary edu14 cation lenders and student loan services under sec15 tion 140B of the Truth in Lending Act.’’. 

Æ 


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