II 

118TH CONGRESS 

1ST SESSION S. 3404 

To require certain protections for student loan borrowers, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 5, 2023 

Mr. DURBIN (for himself, Ms. KLOBUCHAR, Mr. REED, Ms. SMITH, Mr. 

WELCH, Ms. DUCKWORTH, and Ms. WARREN) introduced the following 

bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To require certain protections for student loan borrowers, 

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 Bor5 rower Bill of Rights’’. 

6 SEC. 2. HIGHER EDUCATION ACT OF 1965 AMENDMENTS. 

7 (a) STUDENT LOAN INFORMATION BY ELIGIBLE

8 LENDERS.—Section 433 of the Higher Education Act of 

9 1965 (20 U.S.C. 1083) is amended— 

2 

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1 (1) in subsection (b)— 

2 (A) in paragraph (12), by striking ‘‘and’’ 

3 after the semicolon; 

4 (B) in paragraph (13), by striking the pe5 riod at the end and inserting ‘‘; and’’; and 

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

7 ‘‘(14) a statement that— 

8 ‘‘(A) the borrower may be entitled to serv9 icemember and veteran benefits under the 

10 Servicemembers Civil Relief Act (50 U.S.C. 

11 3901 et seq.) and other Federal or State laws; 

12 and 

13 ‘‘(B) a Servicemember and Veterans Liai14 son designated under section 128(e)(16)(K)(i) 

15 of the Truth in Lending Act (15 U.S.C. 

16 1638(e)(16)(K)(i)) is available to answer in17 quiries about servicemember and veteran bene18 fits, including the toll-free telephone number 

19 and email address to contact the Liaison pursu20 ant to such section.’’; and 

21 (2) in subsection (e)— 

22 (A) in paragraph (2), by adding at the end 

23 the following: 

24 ‘‘(D) A statement that— 

3 

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1 ‘‘(i) the borrower may be entitled to 

2 servicemember and veteran benefits under 

3 the Servicemembers Civil Relief Act (50 

4 U.S.C. 3901 et seq.) and other Federal or 

5 State laws; and 

6 ‘‘(ii) a Servicemember and Veterans 

7 Liaison designated under section 

8 128(e)(16)(K)(i) of the Truth in Lending 

9 Act (15 U.S.C. 1638(e)(16)(K)(i)) is avail10 able to answer inquiries about servicemem11 ber and veteran benefits, including the toll12 free telephone number and email address 

13 to contact the Liaison pursuant to such 

14 section. 

15 ‘‘(E) A statement that a repayment spe16 cialist office or unit designated under section 

17 128(e)(16)(J)(i) of the Truth in Lending Act 

18 (15 U.S.C. 1638(e)(16)(J)(i)) is available to 

19 answer inquiries related to alternative repay20 ment options, including the toll-free telephone 

21 number and email address to contact the spe22 cialist pursuant to section 128(e)(16)(J)(iii) of 

23 such Act.’’; and 

24 (B) in paragraph (3), by adding at the end 

25 the following: 

4 

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1 ‘‘(F) A statement that— 

2 ‘‘(i) the borrower may be entitled to 

3 servicemember and veteran benefits under 

4 the Servicemembers Civil Relief Act (50 

5 U.S.C. 3901 et seq.) and other Federal or 

6 State laws; and 

7 ‘‘(ii) a Servicemember and Veterans 

8 Liaison designated under section 

9 128(e)(16)(K)(i) of the Truth in Lending 

10 Act (15 U.S.C. 1638(e)(16)(K)(i)) is avail11 able to answer inquiries about servicemem12 ber and veteran benefits, including the toll13 free telephone number and email address 

14 to contact the Liaison pursuant to such 

15 section. 

16 ‘‘(G) A statement that a repayment spe17 cialist office or unit designated under section 

18 128(e)(16)(J)(i) of the Truth in Lending Act 

19 (15 U.S.C. 1638(e)(16)(J)(i)) is available to 

20 answer inquiries related to alternative repay21 ment options, including the toll-free telephone 

22 number and email address to contact the spe23 cialist pursuant to section 128(e)(16)(J)(iii) of 

24 such Act.’’. 

5 

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1 (b) TERMS AND CONDITIONS OF LOANS.—Section 

2 455 of the Higher Education Act of 1965 (20 U.S.C. 

3 1087e) is amended by adding at the end the following: 

4 ‘‘(r) PREPAYMENT, PAYMENT APPLICATION, AND

5 PAYMENT ALLOCATION.— 

6 ‘‘(1) IN GENERAL.—A borrower may prepay all 

7 or part of a loan made under this part at any time 

8 without penalty. 

9 ‘‘(2) PREPAYMENT.— 

10 ‘‘(A) IN GENERAL.—If a borrower pays 

11 any amount in excess of the amount due for a 

12 loan made under this part, the excess amount 

13 shall be a prepayment. 

14 ‘‘(B) APPLICATION OF PREPAYMENT.—If a 

15 borrower makes a prepayment, the Secretary 

16 shall— 

17 ‘‘(i) apply the prepaid amount accord18 ing to the terms of the promissory note 

19 signed by the borrower; 

20 ‘‘(ii) upon request of the borrower, 

21 apply the prepaid amount to the out22 standing loan principal; or 

23 ‘‘(iii) upon request of the borrower, 

24 advance the due date of the next payment 

6 

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1 and notify the borrower of any revised due 

2 date for the next payment. 

3 ‘‘(3) PAYMENT ALLOCATION.—If a borrower 

4 has more than 1 loan made under this part, the Sec5 retary shall allocate any prepayment or other partial 

6 payment in the same manner as amounts are allo7 cated under section 128(e)(16)(G)(i) of the Truth in 

8 Lending Act (15 U.S.C. 1638(e)(16)(G)(i)).’’. 

9 (c) CONTRACTS.—Section 456 of the Higher Edu10 cation Act of 1965 (20 U.S.C. 1087f) is amended— 

11 (1) in subsection (a), by striking paragraph (3) 

12 and inserting the following: 

13 ‘‘(3) RULES OF CONSTRUCTION.— 

14 ‘‘(A) CONSORTIA.—Nothing in this section 

15 shall be construed as a limitation of the author16 ity of any State agency to enter into an agree17 ment for the purposes of this section as a mem18 ber of a consortium of State agencies. 

19 ‘‘(B) COMPLIANCE WITH STATE AND FED20 ERAL LAWS.—Nothing in this section shall be 

21 construed as altering, limiting, or affecting any 

22 obligation by an entity with which the Secretary 

23 enters into a contract under this section to 

24 comply with any applicable Federal or State 

25 law, including any Federal consumer financial 

7 

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1 law, as defined in section 1002(14) of the Con2 sumer Financial Protection Act of 2010 (12 

3 U.S.C. 5481(14)). 

4 ‘‘(C) AUTHORITIES.—Nothing in this sec5 tion shall be construed as altering, limiting, or 

6 affecting the authority of a State attorney gen7 eral or any other State regulatory or enforce8 ment agency or authority to bring an action or 

9 other regulatory proceeding arising solely under 

10 the law of such State.’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(c) APPLICABILITY OF PROVISIONS UNDER THE

13 CONSUMER FINANCIAL PROTECTION ACT OF 2010.— 

14 ‘‘(1) CONSUMER FINANCIAL PRODUCT OR SERV15 ICE.—A consumer financial product or service of16 fered by an entity with which the Secretary enters 

17 into a contract under this section for origination, 

18 servicing, or collection described in subsection (b), as 

19 part of such contract, shall have the meaning given 

20 the term in section 1002 of the Consumer Financial 

21 Protection Act of 2010 (12 U.S.C. 5481). 

22 ‘‘(2) COVERED PERSON.—Any entity with which 

23 the Secretary enters into a contract under this sec24 tion for origination, servicing, or collection described 

25 in subsection (b) shall be considered a ‘covered perVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
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1 son’ (as defined in section 1002 of the Consumer Fi2 nancial Protection Act of 2010 (12 U.S.C. 5481)) 

3 and subject to the provisions of the Consumer Fi4 nancial Protection Act of 2010 (12 U.S.C. 5481 et 

5 seq.). 

6 ‘‘(3) POSTSECONDARY EDUCATIONAL LENDER

7 OR SERVICER.—Any entity with which the Secretary 

8 enters into a contract under this section for origina9 tion, servicing, or collection, as described in sub10 section (b), and is engaged in the provision of, or of11 fering, servicing shall be considered a ‘postsecondary 

12 educational lender or servicer’ (as defined in section 

13 128(e) of the Truth in Lending Act (15 U.S.C. 

14 1638(e)), and subject to the provisions of section 

15 128(e) of the Truth in Lending Act (12 U.S.C. 

16 1638(e)). 

17 ‘‘(d) COMPLAINTS FROM STUDENT LOAN BOR18 ROWERS.—In awarding any contract under this section for 

19 origination, servicing, or collection described in subsection 

20 (b), the Secretary shall require, as part of such contract, 

21 any entity receiving such an award— 

22 ‘‘(1) to respond to consumer complaints sub23 mitted to any Federal, State, or local agency that 

24 accepts complaints from student loan borrowers, in25 cluding the Bureau of Consumer Financial ProtecVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
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1 tion, by borrowers who owe loans made under this 

2 part; and 

3 ‘‘(2) to share information about consumer com4 plaints with the Secretary, the Bureau of Consumer 

5 Financial Protection, the Federal Trade Commis6 sion, the Department of Veterans Affairs, any State 

7 attorney general, or any other Federal or State reg8 ulatory or enforcement agency that compiles infor9 mation about such complaints. 

10 ‘‘(e) LIMITATIONS ON CONTRACTS.—Any entity with 

11 which the Secretary enters into a contract under this sec12 tion shall be prohibited, as part of such contract, from 

13 marketing to the borrower of a loan made, insured, or 

14 guaranteed under this title a financial product or serv15 ice— 

16 ‘‘(1) using data obtained as a result of the con17 tract or the relationship with the borrower stemming 

18 from the contract; 

19 ‘‘(2) during any outreach or contact with the 

20 borrower resulting from the contract or the relation21 ship with the borrower stemming from the contract; 

22 or 

23 ‘‘(3) on any platform or through any method 

24 resulting from the contract or the relationship with 

25 the borrower stemming from the contract. 

10 

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1 ‘‘(f) STUDENT LOAN SERVICING INTERAGENCY

2 WORKING GROUP.— 

3 ‘‘(1) IN GENERAL.—Not later than 30 days 

4 after the date of enactment of the Student Loan 

5 Borrower Bill of Rights, the Secretary shall establish 

6 a student loan servicing interagency working group 

7 co-chaired by the Secretary and the Director of the 

8 Bureau of Consumer Financial Protection and in9 cluding the Chief Operating Officer of the Office of 

10 Federal Student Aid, the Director of the Office of 

11 Management and Budget, the Secretary of the 

12 Treasury, and the heads of any other relevant Fed13 eral departments or agencies. 

14 ‘‘(2) ADVISORY REPORT ON RULEMAKING.— 

15 ‘‘(A) IN GENERAL.—Not later than 120 

16 days after the date the working group under 

17 paragraph (1) is established, the working group 

18 shall publish an advisory report making rec19 ommendations to the Director of the Bureau of 

20 Consumer Financial Protection related to the 

21 promulgation of regulations under section 

22 128(e)(17)(A) of the Truth in Lending Act (15 

23 U.S.C. 1638(e)(17)(A)) with respect to entities 

24 with which the Secretary has entered into a 

25 contract under this section. 

11 

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1 ‘‘(B) PUBLIC FEEDBACK.—Following the 

2 publication of the advisory report required 

3 under subparagraph (A), the Secretary shall ac4 cept, for not less than 60 days, from the public 

5 specific feedback on the recommendations in6 cluded in the report. 

7 ‘‘(3) PUBLICATION OF FINAL RECOMMENDA8 TIONS.—Not later than 30 days following the con9 clusion of the public feedback process described in 

10 paragraph (2)(B), the Secretary shall publish final 

11 recommendations for the Director of the Bureau of 

12 Consumer Financial Protection related to the pro13 mulgation of regulations under section 

14 128(e)(17)(A) of the Truth in Lending Act (15 

15 U.S.C. 1638(e)(17)(A)). 

16 ‘‘(4) POLICY DIRECTION TO FEDERAL STUDENT

17 AID.—The working group shall develop policy direc18 tion for the Office of Federal Student Aid to incor19 porate, into contracts awarded under this section, 

20 applicable requirements and standards promulgated 

21 under section 128(e)(17)(A) of the Truth in Lending 

22 Act (15 U.S.C. 1638(e)(17)(A)) or described in sec23 tion 128(e)(17)(B)(i)(II) of such Act. 

24 ‘‘(5) MEETINGS.—After the Secretary publishes 

25 final recommendations under paragraph (3), the 

12 

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1 working group shall meet not less often than once 

2 per year including to— 

3 ‘‘(A) evaluate the application of regulations 

4 promulgated under section 128(e)(17)(A) of the 

5 Truth in Lending Act (15 U.S.C. 

6 1638(e)(17)(A)) on entities with which the Sec7 retary has entered into a contract under this 

8 section; 

9 ‘‘(B) evaluate the Office of Federal Stu10 dent Aid’s implementation of policy direction 

11 developed pursuant to paragraph (4); 

12 ‘‘(C) develop and implement an oversight 

13 plan to ensure compliance by entities with 

14 which the Secretary has entered into a contract 

15 under this section with policy direction devel16 oped under paragraph (4) and regulations pro17 mulgated under section 128(e)(17)(A) of the 

18 Truth in Lending Act (15 U.S.C. 

19 1638(e)(17)(A)) or described in section 

20 128(e)(17)(B)(i)(II) of such Act; and 

21 ‘‘(D) undertake other activities to improve 

22 coordination among the members of the work23 ing group as it relates to the Secretary’s admin24 istration of loans made, insured, or guaranteed 

25 under this title. 

13 

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1 ‘‘(6) INVESTIGATIONS.—In order to carry out 

2 its duties under this subsection, the working group 

3 may engage in investigations of entities with which 

4 the Secretary has entered into a contract under this 

5 section. 

6 ‘‘(7) RULE OF CONSTRUCTION.—Nothing in 

7 this subsection shall be considered to alter, limit, or 

8 restrict the Bureau of Consumer Financial Protec9 tion’s obligations under chapter 5 of title 5, United 

10 States Code (commonly known as the ‘Administra11 tive Procedures Act’), including the Director’s obli12 gation to provide notice, solicit public comment, and 

13 respond to such comment when issuing regula14 tions.’’. 

15 (d) REMOVAL OF RECORD OF DEFAULT.—Part G of 

16 title IV of the Higher Education Act of 1965 (20 U.S.C. 

17 1088 et seq.) is amended by adding at the end the fol18 lowing: 

19 ‘‘SEC. 494. REMOVAL OF RECORD OF DEFAULT. 

20 ‘‘Upon repaying in full the amount due on a defaulted 

21 loan made, insured, or guaranteed under this title, the 

22 Secretary, guaranty agency, or other holder of the loan 

23 shall request any consumer reporting agency to which the 

24 Secretary, guaranty agency, or holder, as applicable, re25 ported the default of the loan, to remove any adverse item 

14 

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1 of information relating to such loan from the borrower’s 

2 credit history.’’. 

3 (e) REMOVAL OF RECORD OF DEFAULT FROM CRED4 IT HISTORY.—Section 455(g) of the Higher Education 

5 Act of 1965 (20 U.S.C. 1087e(g)) is amended by adding 

6 at the end the following: 

7 ‘‘(3) CONSUMER REPORTING AGENCIES.—Upon 

8 obtaining a Federal Direct Consolidation Loan that 

9 discharges the liability on a defaulted loan made, in10 sured, or guaranteed under this title, the Secretary, 

11 guaranty agency, or other holder of the loan shall 

12 request any consumer reporting agency to which the 

13 Secretary, guaranty agency or holder, as applicable, 

14 reported the default of the loan, to remove any ad15 verse item of information relating to such loan from 

16 the borrower’s credit history.’’. 

17 (f) DEFAULT REDUCTION PROGRAM.—Section 

18 428F(a)(1)(C) of the Higher Education Act of 1965 (20 

19 U.S.C. 1078–6(a)(1)(C)) is amended by striking ‘‘to re20 move the record of the default from the borrower’s credit 

21 history’’ and inserting ‘‘to remove any adverse item of in22 formation relating to such loan from the borrower’s credit 

23 history’’. 

15 

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1 SEC. 3. TRUTH IN LENDING ACT AMENDMENTS. 

2 (a) IN GENERAL.—The Truth in Lending Act (15 

3 U.S.C. 1601 et seq.) is amended— 

4 (1) in section 128 (15 U.S.C. 1638)— 

5 (A) in subsection (e)— 

6 (i) in the subsection heading, by strik7 ing ‘‘PRIVATE’’; 

8 (ii) in paragraph (1)(O), by striking 

9 ‘‘paragraph (6)’’ and inserting ‘‘paragraph 

10 (10)’’; 

11 (iii) in paragraph (2)(L), by striking 

12 ‘‘paragraph (6)’’ and inserting ‘‘paragraph 

13 (10)’’; 

14 (iv) in paragraph (4)(C), by striking 

15 ‘‘paragraph (7)’’ and inserting ‘‘paragraph 

16 (11)’’; 

17 (v) by redesignating paragraphs (5) 

18 through (11) as paragraphs (9) through 

19 (15), respectively; 

20 (vi) by inserting after paragraph (4) 

21 the following: 

22 ‘‘(5) DISCLOSURES BEFORE FIRST FULLY AM23 ORTIZED PAYMENT.—Not fewer than 30 days and 

24 not more than 150 days before the first fully amor25 tized payment on a postsecondary education loan is 

26 due from the borrower, the postsecondary eduVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
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1 cational lender or servicer shall disclose to the bor2 rower, clearly and conspicuously— 

3 ‘‘(A) the information described in— 

4 ‘‘(i) paragraph (2)(A) (adjusted, as 

5 necessary, for the rate of interest in effect 

6 on the date the first fully amortized pay7 ment on a postsecondary education loan is 

8 due); 

9 ‘‘(ii) subparagraphs (B) through (G) 

10 of paragraph (2); 

11 ‘‘(iii) paragraph (2)(H) (adjusted, as 

12 necessary, for the rate of interest in effect 

13 on the date the first fully amortized pay14 ment on a postsecondary education loan is 

15 due); 

16 ‘‘(iv) paragraph (2)(K); and 

17 ‘‘(v) subparagraphs (O) and (P) of 

18 paragraph (2); 

19 ‘‘(B) the scheduled date upon which the 

20 first fully amortized payment is due; 

21 ‘‘(C) the name of the postsecondary edu22 cational lender and servicer, and the address to 

23 which communications and payments should be 

24 sent including a telephone number, email adVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
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1 dress, and website where the borrower may ob2 tain additional information; 

3 ‘‘(D) a description of all alternative repay4 ment options, including applicable repayment 

5 plans and options for loan consolidation, loan 

6 forgiveness, and loan repayment; and 

7 ‘‘(E) a statement that a Servicemember 

8 and Veterans Liaison designated under para9 graph (16)(K) is available to answer inquiries 

10 about servicemember and veteran benefits re11 lated to postsecondary education loans, includ12 ing the toll-free telephone number and email 

13 address to contact the Liaison pursuant to 

14 paragraph (16)(K). 

15 ‘‘(6) DISCLOSURES WHEN BORROWER IS AT16 RISK.— 

17 ‘‘(A) IN GENERAL.—Not more than 5 days 

18 after a postsecondary educational lender or 

19 servicer determines that a borrower meets the 

20 criteria established in paragraph (16)(J)(i), the 

21 postsecondary educational lender or servicer 

22 shall— 

23 ‘‘(i) disclose to the borrower, in writ24 ing, clearly and conspicuously that a repay25 ment specialist office or unit is available to 

18 

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1 discuss alternative repayment options and 

2 answer borrower inquiries related to their 

3 postsecondary educational loan, including 

4 the toll-free number to contact the office or 

5 unit pursuant to paragraph (16)(J)(iii); 

6 and 

7 ‘‘(ii) inform the borrower, in writing, 

8 of the existence of discharge programs, the 

9 criteria required to qualify for discharge 

10 under each of such programs, and how to 

11 apply. 

12 ‘‘(B) OUTREACH TO AT-RISK BOR13 ROWERS.—The Director, in accordance with 

14 paragraph (17)(A), shall promulgate rules to 

15 establish a timeline for additional live outreach 

16 by the repayment specialist office or unit to at17 risk borrowers. 

18 ‘‘(7) ACTIONS WHEN BORROWER IS 30 DAYS DE19 LINQUENT.— 

20 ‘‘(A) IN GENERAL.—Not more than 5 days 

21 after a borrower becomes 30 days delinquent on 

22 a postsecondary education loan, the repayment 

23 specialist office or unit designated under para24 graph (16)(J) shall— 

19 

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1 ‘‘(i) make a good faith effort to estab2 lish live contact with the borrower to dis3 cuss alternative repayment options and 

4 other options available to avoid default; 

5 and 

6 ‘‘(ii) disclose to the borrower, in writ7 ing, clearly and conspicuously— 

8 ‘‘(I) of the availability of income9 driven repayment plans under sections 

10 455 and 493C of the Higher Edu11 cation Act of 1965 (20 U.S.C. 1087e 

12 and 1098e) and the public service 

13 loan forgiveness program under sec14 tion 455(m) of the Higher Education 

15 Act of 1965 (20 U.S.C. 1087e(m)) 

16 and how to apply; 

17 ‘‘(II) the minimum payment that 

18 the borrower must make to bring the 

19 loan current; 

20 ‘‘(III) a statement, related to po21 tential charge off (as defined in para22 graph (16)(A)) or assignment to col23 lections as appropriate, to include— 

24 ‘‘(aa) the date on which the 

25 loan will be charged-off or asVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
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1 signed to collections if no pay2 ment is made or the minimum 

3 payment required to be disclosed 

4 pursuant to item (bb) is not 

5 made; 

6 ‘‘(bb) the minimum payment 

7 that must be made to avoid the 

8 loan being charged off or as9 signed to collection; and 

10 ‘‘(cc) the consequences to 

11 the borrower of charge off or as12 signment to collections; 

13 ‘‘(IV) a statement that a Service14 member and Veterans Liaison des15 ignated under paragraph (16)(K) is 

16 available to answer inquiries about 

17 servicemember and veteran benefits 

18 related to postsecondary education 

19 loans, including the toll-free telephone 

20 number and email address to contact 

21 the Liaison pursuant to paragraph 

22 (16)(K); and 

23 ‘‘(V) a statement that a repay24 ment specialist office or unit des25 ignated under paragraph (16)(J) is 

21 

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1 available to answer inquiries related to 

2 alternative repayment options, includ3 ing the toll-free telephone number and 

4 email address to contact the specialist 

5 pursuant to paragraph (16)(J)(iii). 

6 ‘‘(B) MODIFICATIONS.—The disclosures 

7 described in subparagraph (A)(ii) may be modi8 fied subject to regulations promulgated by the 

9 Director, based on consumer testing and in ac10 cordance with paragraph (17)(A). 

11 ‘‘(8) ACTIONS WHEN BORROWER IS HAVING

12 DIFFICULTY MAKING PAYMENT OR IS 60 DAYS DE13 LINQUENT.— 

14 ‘‘(A) IN GENERAL.—Not more than 5 days 

15 after a borrower notifies a postsecondary edu16 cational lender or servicer that the borrower is 

17 having difficulty making payment or a borrower 

18 becomes 60 days delinquent on a postsecondary 

19 education loan, the repayment specialist office 

20 or unit designated under paragraph (16)(J) 

21 shall— 

22 ‘‘(i) complete a full review of the bor23 rower’s postsecondary education loan and 

24 make a reasonable effort to obtain the in25 formation necessary to determine— 

22 

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1 ‘‘(I) if the borrower is eligible for 

2 any alternative repayment option, in3 cluding Federal Direct Consolidation 

4 Loans under part D of title IV of the 

5 Higher Education Act of 1965 (20 

6 U.S.C. 1087a et seq.), as applicable, 

7 or the public service loan forgiveness 

8 program under section 455(m) of the 

9 Higher Education Act of 1965 (20 

10 U.S.C. 1087e(m)); 

11 ‘‘(II) if the borrower is eligible 

12 for servicemember or veteran benefits 

13 under the Servicemembers Civil Relief 

14 Act (50 U.S.C. 3901 et seq.) or other 

15 Federal or State law related to post16 secondary education loans; and 

17 ‘‘(III) if the postsecondary edu18 cation loan, if a loan made, insured, 

19 or guaranteed under part B, D, or E 

20 of title IV of the Higher Education 

21 Act of 1965 (20 U.S.C. 1071 et seq., 

22 1087a et seq., and 1087aa et seq.), is 

23 eligible for discharge by the Secretary; 

24 ‘‘(ii) make a good faith effort to es25 tablish live contact with the borrower to 

23 

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1 provide the borrower information about al2 ternative repayment options and benefits 

3 for which the borrower is eligible, including 

4 all terms, conditions, and fees or costs as5 sociated with such repayment plan, pursu6 ant to paragraph (9)(D); 

7 ‘‘(iii) provide to the borrower in writ8 ing, in simple and understandable terms, 

9 such information required by clause (ii); 

10 ‘‘(iv) allow the borrower a reasonable 

11 amount of time to apply for an alternative 

12 repayment option or benefits, if eligible, 

13 before the loan is placed in default; 

14 ‘‘(v) notify the borrower that a Serv15 icemember and Veterans Liaison des16 ignated under paragraph (16)(K) is avail17 able to answer inquiries about servicemem18 ber and veteran benefits related to postsec19 ondary education loans, including the toll20 free telephone number and email address 

21 to contact the Liaison pursuant to para22 graph (16)(K); and 

23 ‘‘(vi) notify the borrower that a repay24 ment specialist office or unit designated 

25 under paragraph (16)(J) is available to anVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
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1 swer inquiries related to alternative repay2 ment options, including the toll-free tele3 phone number and email address to con4 tact the specialist pursuant to paragraph 

5 (16)(J)(iii). 

6 ‘‘(B) FORBEARANCE OR DEFERMENT.—If, 

7 after receiving information about alternative re8 payment options from the repayment specialist, 

9 a borrower notifies the postsecondary edu10 cational lender or servicer that a long-term al11 ternative repayment option is not appropriate, 

12 the postsecondary educational lender or servicer 

13 may comply with this paragraph by providing 

14 the borrower, in writing, in simple and under15 standable terms, information about short-term 

16 options to address an anticipated short-term 

17 difficulty in making payments, such as forbear18 ance or deferment options, including all terms, 

19 conditions, and fees or costs associated with 

20 such options pursuant to paragraph (9)(D). 

21 ‘‘(C) NOTIFICATION PROCESS.— 

22 ‘‘(i) IN GENERAL.—Each postsec23 ondary educational lender or servicer shall 

24 establish a process, in accordance with 

25 

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1 subparagraph (A), for a borrower to notify 

2 the lender that— 

3 ‘‘(I) the borrower is having dif4 ficulty making payments on a postsec5 ondary education loan; and 

6 ‘‘(II) a long-term alternative re7 payment option is not appropriate. 

8 ‘‘(ii) CONSUMER FINANCIAL PROTEC9 TION BUREAU REQUIREMENTS.—The Di10 rector shall, based on consumer testing, 

11 and in accordance with paragraph (17)(A), 

12 promulgate rules establishing minimum 

13 standards for postsecondary educational 

14 lender or servicers in carrying out the re15 quirements of this paragraph and a model 

16 form for borrowers to notify postsecondary 

17 educational lender or servicers of the infor18 mation under this paragraph.’’; 

19 (vii) in paragraph (9), as redesignated 

20 by clause (v), by adding at the end the fol21 lowing: 

22 ‘‘(D) MODEL DISCLOSURE FORM FOR AL23 TERNATIVE REPAYMENT OPTIONS, FORBEAR24 ANCE, AND DEFERMENT OPTIONS.—Not later 

25 than 2 years after the date of enactment of the 

26 

•S 3404 IS

1 Student Loan Borrower Bill of Rights, the Di2 rector shall, based on consumer testing and 

3 through regulations promulgated in accordance 

4 with paragraph (17)(A), develop and issue 

5 model forms to allow borrowers to compare al6 ternative repayment options, forbearance, and 

7 deferment options with the borrower’s existing 

8 repayment plan with respect to a postsecondary 

9 education loan. In developing such forms, the 

10 Director shall consider and evaluate the fol11 lowing for inclusion: 

12 ‘‘(i) The total amount to be paid over 

13 the life of the loan. 

14 ‘‘(ii) The total amount in interest to 

15 be paid over the life of the loan. 

16 ‘‘(iii) The monthly payment amount. 

17 ‘‘(iv) The expected pay-off date. 

18 ‘‘(v) Other related fees and costs, as 

19 applicable. 

20 ‘‘(vi) Eligibility requirements, and 

21 how the borrower can apply for an alter22 native repayment option, forbearance, or 

23 deferment option. 

24 ‘‘(vii) Any relevant consequences due 

25 to action or inaction, such as default, inVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
27 

•S 3404 IS

1 cluding any actions that would result in 

2 the loss of eligibility for alternative repay3 ment options, forbearance, deferment, or 

4 discharge options.’’; 

5 (viii) in paragraph (12), as redesig6 nated by clause (v), by striking ‘‘paragraph 

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

8 (ix) by striking paragraph (14), as re9 designated by clause (v), and inserting the 

10 following: 

11 ‘‘(14) DEFINITIONS.—In this subsection— 

12 ‘‘(A) the terms ‘covered educational insti13 tution’, ‘private educational lender’, and ‘pri14 vate education loan’ have the same meanings as 

15 in section 140; 

16 ‘‘(B) the term ‘postsecondary education 

17 loan’ means— 

18 ‘‘(i) a private education loan; 

19 ‘‘(ii) a loan made, insured, or guaran20 teed under part B, D, or E of title IV of 

21 the Higher Education Act of 1965 (20 

22 U.S.C. 1071 et seq., 1087a et seq., and 

23 1087aa et seq.); or 

24 ‘‘(iii) a loan made, insured, or guaran25 teed under title VII or title VIII of the 

28 

•S 3404 IS

1 Public Health Service Act (42 U.S.C. 292 

2 et seq. and 296 et seq.); 

3 ‘‘(C) the term ‘postsecondary educational 

4 lender or servicer’ means— 

5 ‘‘(i) an eligible lender of a loan made, 

6 insured, or guaranteed under part B of the 

7 Higher Education Act of 1965 (20 U.S.C. 

8 1071 et seq.); 

9 ‘‘(ii) any entity with which the Sec10 retary enters into a contract under section 

11 456 of the Higher Education Act of 1965 

12 (20 U.S.C. 1087f) for origination, serv13 icing, or collection described in subsection 

14 (b) of such section 456 and is engaged in 

15 the provision of, or offering, servicing, as 

16 defined in paragraph (16)(A)(iv), or collec17 tions regardless of whether the Secretary 

18 identifies the entity as a ‘servicer’ in such 

19 contract; 

20 ‘‘(iii) a private educational lender; 

21 ‘‘(iv) any other person or entity en22 gaged in the business of securing, making, 

23 or extending postsecondary education loans 

24 on behalf of a person or entity described in 

25 clause (i) or (iii); or 

29 

•S 3404 IS

1 ‘‘(v) any other holder of a postsec2 ondary education loan other than the Sec3 retary; 

4 ‘‘(D) the term ‘Director’ means the Direc5 tor of the Bureau; and 

6 ‘‘(E) the term ‘Secretary’ means the Sec7 retary of Education.’’; 

8 (x) in paragraph (15), as redesignated 

9 by clause (v), by striking ‘‘paragraph (5)’’ 

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

11 (xi) by adding at the end the fol12 lowing: 

13 ‘‘(16) STUDENT LOAN BORROWER BILL OF

14 RIGHTS.— 

15 ‘‘(A) DEFINITIONS.—In this paragraph: 

16 ‘‘(i) BORROWER.—The term ‘bor17 rower’ means the person to whom a post18 secondary education loan is extended. 

19 ‘‘(ii) CHARGE OFF.—The term ‘charge 

20 off’ means charge to profit and loss, or 

21 subject to any similar action. 

22 ‘‘(iii) QUALIFIED WRITTEN RE23 QUEST.— 

24 ‘‘(I) IN GENERAL.—The term 

25 ‘qualified written request’ means a 

30 

•S 3404 IS

1 written correspondence of a borrower 

2 (other than notice on a payment me3 dium supplied by the postsecondary 

4 educational lender or servicer) trans5 mitted by mail, facsimile, or electroni6 cally through an email address or 

7 website designated by the postsec8 ondary educational lender or servicer 

9 to receive communications from bor10 rowers that— 

11 ‘‘(aa) includes, or otherwise 

12 enables the postsecondary edu13 cational lender or servicer to 

14 identify, the name and account of 

15 the borrower; and 

16 ‘‘(bb) includes, to the extent 

17 applicable— 

18 ‘‘(AA) sufficient detail 

19 regarding the information 

20 sought by the borrower; or 

21 ‘‘(BB) a statement of 

22 the reasons for the belief of 

23 the borrower that there is 

24 an error regarding the ac25 count of the borrower. 

31 

•S 3404 IS

1 ‘‘(II) CORRESPONDENCE DELIV2 ERED TO OTHER ADDRESSES.— 

3 ‘‘(aa) IN GENERAL.—A writ4 ten correspondence of a borrower 

5 is a qualified written request if 

6 the written correspondence is 

7 transmitted to and received by a 

8 postsecondary educational lender 

9 or servicer at a mailing address, 

10 facsimile number, email address, 

11 or website address other than the 

12 address or number designated by 

13 that postsecondary educational 

14 lender or servicer to receive com15 munications from borrowers but 

16 the written correspondence meets 

17 the requirements under items 

18 (aa) and (bb) of subclause (I). 

19 ‘‘(bb) DUTY TO TRANS20 FER.—A postsecondary edu21 cational lender or servicer shall, 

22 within a reasonable period of 

23 time, transfer a written cor24 respondence of a borrower re25 ceived by the postsecondary eduVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
32 

•S 3404 IS

1 cational lender or servicer at a 

2 mailing address, facsimile num3 ber, email address, or website ad4 dress other than the address or 

5 number designated by that post6 secondary educational lender or 

7 servicer to receive communica8 tions from borrowers to the cor9 rect address or appropriate office 

10 or other unit of the postsec11 ondary educational lender or 

12 servicer. 

13 ‘‘(cc) DATE OF RECEIPT.—A 

14 written correspondence of a bor15 rower transferred in accordance 

16 with item (bb) shall be deemed to 

17 be received by the postsecondary 

18 educational lender or servicer on 

19 the date on which the written 

20 correspondence is transferred to 

21 the correct address or appro22 priate office or other unit of the 

23 postsecondary educational lender 

24 or servicer. 

33 

•S 3404 IS

1 ‘‘(iv) SERVICING.—The term ‘serv2 icing’ means 1 or more of the following: 

3 ‘‘(I) Receiving any scheduled 

4 periodic payments from a borrower or 

5 notification of such payments pursu6 ant to the terms of a postsecondary 

7 education loan or contract governing 

8 the servicing. 

9 ‘‘(II) Applying payments to the 

10 borrower’s account pursuant to the 

11 terms of the postsecondary education 

12 loan or the contract governing the 

13 servicing. 

14 ‘‘(III) Maintaining account 

15 records for a postsecondary education 

16 loan. 

17 ‘‘(IV) Communicating with a bor18 rower regarding a postsecondary edu19 cation loan on behalf of the postsec20 ondary educational lender or servicer. 

21 ‘‘(V) Interactions with a bor22 rower, including activities to help pre23 vent default on obligations arising 

24 from postsecondary education loans, 

25 conducted to facilitate the activities 

34 

•S 3404 IS

1 described in subclause (I) or (II) on 

2 behalf of the postsecondary edu3 cational lender or servicer. 

4 ‘‘(B) SALE, TRANSFER, OR ASSIGNMENT.— 

5 If the sale, other transfer, assignment, or trans6 fer of servicing obligations of a postsecondary 

7 education loan results in a change in the iden8 tity of the party to whom the borrower must 

9 send subsequent payments or direct any com10 munications concerning the loan— 

11 ‘‘(i) the transferor shall— 

12 ‘‘(I) notify the borrower, in writ13 ing, in simple and understandable 

14 terms, not fewer than 45 days before 

15 transferring a legally enforceable right 

16 to receive payment from the borrower 

17 on such loan, of— 

18 ‘‘(aa) the sale or other 

19 transfer, assignment, or transfer 

20 of servicing obligations; 

21 ‘‘(bb) the identity of the 

22 transferee; 

23 ‘‘(cc) the name and address 

24 of the party to whom subsequent 

35 

•S 3404 IS

1 payments or communications 

2 must be sent; 

3 ‘‘(dd) the telephone num4 bers, email address, and websites 

5 of both the transferor and the 

6 transferee; 

7 ‘‘(ee) the effective date of 

8 the sale, transfer, or assignment; 

9 ‘‘(ff) the date on which the 

10 transferor will stop accepting 

11 payment; and 

12 ‘‘(gg) the date on which the 

13 transferee will begin accepting 

14 payment; and 

15 ‘‘(II) forward any payment from 

16 a borrower with respect to such post17 secondary education loan to the trans18 feree, immediately upon receiving such 

19 payment, during the 60-day period be20 ginning on the date on which the 

21 transferor stops accepting payment of 

22 such postsecondary education loan; 

23 and 

24 ‘‘(III) provide to the transferee 

25 all borrower information and complete 

36 

•S 3404 IS

1 payment history information for any 

2 such postsecondary education loan, in3 cluding— 

4 ‘‘(aa) an identification of the 

5 repayment plan under which pay6 ments were made; 

7 ‘‘(bb) the number of months 

8 qualifying toward a loan forgive9 ness program and identifying 

10 such program; 

11 ‘‘(cc) the date of enrollment 

12 into any income-driven repay13 ment plan under section 455 or 

14 493C of the Higher Education 

15 Act of 1965 (20 U.S.C. 1087e 

16 and 1098e); 

17 ‘‘(dd) the dates of any for18 bearance or deferment; and 

19 ‘‘(ee) any application for ad20 ministrative relief submitted to 

21 the transferor; and 

22 ‘‘(ii) the transferee shall— 

23 ‘‘(I) notify the borrower, in writ24 ing, in simple and understandable 

25 terms, not fewer than 45 days before 

37 

•S 3404 IS

1 acquiring a legally enforceable right to 

2 receive payment from the borrower on 

3 such loan, of— 

4 ‘‘(aa) the sale or other 

5 transfer, assignment, or transfer 

6 of servicing obligations; 

7 ‘‘(bb) the identity of the 

8 transferor: 

9 ‘‘(cc) the name and address 

10 of the party to whom subsequent 

11 payments or communications 

12 must be sent; 

13 ‘‘(dd) the telephone num14 bers, email address, and websites 

15 of both the transferor and the 

16 transferee; 

17 ‘‘(ee) the effective date of 

18 the sale, transfer, assignment, or 

19 transfer of servicing obligations; 

20 ‘‘(ff) the date on which the 

21 transferor will stop accepting 

22 payment; and 

23 ‘‘(gg) the date on which the 

24 transferee will begin accepting 

25 payment; 

38 

•S 3404 IS

1 ‘‘(II) accept as on-time and may 

2 not impose any late fee or finance 

3 charge for any payment from a bor4 rower with respect to such postsec5 ondary education loan that is for6 warded from the transferor during the 

7 90-day period beginning on the date 

8 on which the transferor stops accept9 ing payment, if the transferor receives 

10 such payment on or before the appli11 cable due date, including any grace 

12 period; 

13 ‘‘(III) provide borrowers a sim14 ple, online process for transferring ex15 isting electronic fund transfer author16 ity; and 

17 ‘‘(IV) honor any promotion or 

18 benefit available or granted to the 

19 borrower or advertised by the previous 

20 owner or transferor of such postsec21 ondary education loan. 

22 ‘‘(C) MATERIAL CHANGE IN MAILING AD23 DRESS OR PROCEDURE FOR HANDLING PAY24 MENTS.— 

39 

•S 3404 IS

1 ‘‘(i) IN GENERAL.—If a postsecondary 

2 educational lender or servicer makes a 

3 change in the mailing address, office, or 

4 procedures for handling payments with re5 spect to any postsecondary education loan, 

6 the postsecondary educational lender or 

7 servicer shall notify the borrower in writing 

8 and through the borrower’s preferred or 

9 designated method of communication not 

10 less than 45 calendar days in advance of 

11 such change. 

12 ‘‘(ii) BORROWER PROTECTION WIN13 DOW.—If a change described in clause (i) 

14 causes a delay in the crediting of the ac15 count of the borrower made during the 90- 

16 day period following the date on which 

17 such change took effect, the postsecondary 

18 educational lender or servicer may not im19 pose on the borrower any negative con20 sequences, including negative credit report21 ing, lost eligibility in borrower benefits, 

22 late fees, interest capitalization, or other 

23 financial injury. 

40 

•S 3404 IS

1 ‘‘(D) INTEREST RATE AND TERM CHANGES

2 FOR CERTAIN POSTSECONDARY EDUCATION

3 LOANS.— 

4 ‘‘(i) NOTIFICATION REQUIREMENTS.— 

5 ‘‘(I) IN GENERAL.—Except as 

6 provided in clause (iii), a postsec7 ondary educational lender or servicer 

8 shall provide written notice, in a clear 

9 and conspicuous manner, to a bor10 rower of any material change in the 

11 terms of the postsecondary education 

12 loan, including an increase in the in13 terest rate, not later than 45 days be14 fore the effective date of the change 

15 or increase. 

16 ‘‘(II) MATERIAL CHANGES IN

17 TERMS.—The Director shall, by regu18 lation, establish guidelines for deter19 mining which changes in terms are 

20 material under subclause (I). 

21 ‘‘(ii) LIMITS ON INTEREST RATE AND

22 FEE INCREASES APPLICABLE TO OUT23 STANDING BALANCE.—Except as provided 

24 in clause (iii), a postsecondary educational 

25 lender or servicer may not increase the inVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
41 

•S 3404 IS

1 terest rate or other fee applicable to an 

2 outstanding balance on a postsecondary 

3 education loan. 

4 ‘‘(iii) EXCEPTIONS.—The require5 ments under clauses (i) and (ii) shall not 

6 apply to— 

7 ‘‘(I) an increase based on an ap8 plicable variable interest rate incor9 porated in the terms of a postsec10 ondary education loan that provides 

11 for changes in the interest rate ac12 cording to operation of an index that 

13 is not under the control of the post14 secondary educational lender or 

15 servicer and is published for viewing 

16 by the general public; 

17 ‘‘(II) an increase in interest rate 

18 due to the completion of a workout or 

19 temporary hardship arrangement by 

20 the borrower or the failure of the bor21 rower to comply with the terms of a 

22 workout or temporary hardship ar23 rangement if— 

24 ‘‘(aa) the interest rate appli25 cable to a category of transVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
42 

•S 3404 IS

1 actions following any such in2 crease does not exceed the rate 

3 or fee that applied to that cat4 egory of transactions prior to 

5 commencement of the arrange6 ment; and 

7 ‘‘(bb) the postsecondary edu8 cational lender or servicer has 

9 provided the borrower, prior to 

10 the commencement of such ar11 rangement, with clear and con12 spicuous disclosure of the terms 

13 of the arrangement (including 

14 any increases due to such com15 pletion or failure); and 

16 ‘‘(III) an increase in interest rate 

17 due to a provision included within the 

18 terms of a postsecondary education 

19 loan that provides for a lower interest 

20 rate based on the borrower’s agree21 ment to a prearranged plan that au22 thorizes recurring electronic funds 

23 transfers if— 

24 ‘‘(aa) the borrower with25 draws the borrower’s authorizaVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
43 

•S 3404 IS

1 tion of the prearranged recurring 

2 electronic funds transfer plan; 

3 and 

4 ‘‘(bb) after withdrawal of 

5 the borrower’s authorization and 

6 prior to increasing the interest 

7 rate, the postsecondary edu8 cational lender or servicer has 

9 provided the borrower with clear 

10 and conspicuous disclosure of the 

11 impending change in borrower’s 

12 interest rate and a reasonable op13 portunity to reauthorize the pre14 arranged electronic funds trans15 fers plan. 

16 ‘‘(E) PAYMENT INFORMATION.— 

17 ‘‘(i) STATEMENT REQUIRED WITH

18 EACH BILLING CYCLE.—A postsecondary 

19 educational lender or servicer for each bor20 rower’s account that is being serviced by 

21 the postsecondary educational lender or 

22 servicer and that includes a postsecondary 

23 education loan shall transmit to the bor24 rower, for each billing cycle during which 

25 there is an outstanding balance in that acVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00043 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
44 

•S 3404 IS

1 count, a clearly and conspicuously written 

2 statement that includes— 

3 ‘‘(I) the interest rate, principal 

4 balance, minimum monthly payment, 

5 and payment due date for each loan; 

6 ‘‘(II) the outstanding balance in 

7 the account and each loan at the be8 ginning of the billing cycle; 

9 ‘‘(III) the total amount credited 

10 to the account and each loan during 

11 the billing cycle; 

12 ‘‘(IV) the total amount of unpaid 

13 interest for the account and each loan; 

14 ‘‘(V) the amount of any fee 

15 added to the account during the bill16 ing cycle, itemized to show each indi17 vidual fee amount and reason for each 

18 fee; 

19 ‘‘(VI) the address and phone 

20 number of the postsecondary edu21 cational lender or servicer to which 

22 the borrower may direct billing inquir23 ies; 

24 ‘‘(VII) the amount of any pay25 ments or other credits during the billVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00044 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
45 

•S 3404 IS

1 ing cycle that was applied respectively 

2 to the principal and to interest for 

3 each loan; 

4 ‘‘(VIII) the manner, pursuant to 

5 subparagraph (G), in which payments 

6 will be allocated among multiple loans 

7 if the borrower does not provide spe8 cific payment instructions; 

9 ‘‘(IX) whether each loan is in 

10 deferment or forbearance; 

11 ‘‘(X) information on how to file a 

12 complaint with the Bureau and with 

13 the ombudsman designated pursuant 

14 to section 1035 of the Consumer Fi15 nancial Protection Act of 2010 (12 

16 U.S.C. 5535) and the Department of 

17 Education; 

18 ‘‘(XI) for any borrower consid19 ered to be at-risk, as described in sub20 paragraph (J)(i), a statement that a 

21 repayment specialist office or unit 

22 designated under subparagraph (J) is 

23 available to answer inquiries related to 

24 alternative repayment options, includ25 ing the toll-free telephone number and 

46 

•S 3404 IS

1 email address to contact the specialist 

2 pursuant to subparagraph (J)(iii); 

3 and 

4 ‘‘(XII) any other information de5 termined appropriate by the Director 

6 through regulations promulgated, 

7 based on consumer testing and in ac8 cordance with paragraph (17)(A). 

9 ‘‘(ii) DISCLOSURE OF PAYMENT DEAD10 LINES.—In the case of a postsecondary 

11 education loan account under which a late 

12 fee or charge may be imposed due to the 

13 failure of the borrower to make payment 

14 on or before the due date for such pay15 ment, the billing statement required under 

16 clause (i) with respect to the account shall 

17 include, in a conspicuous location on the 

18 billing statement and in clear and plain 

19 language, the date on which the payment 

20 is due or, if different, the date on which a 

21 late fee will be charged, together with the 

22 amount of the late fee to be imposed if 

23 payment is made after that date. 

24 ‘‘(F) APPLICATION OF PAYMENTS.— 

47 

•S 3404 IS

1 ‘‘(i) APPLY PAYMENT ON DATE RE2 CEIVED.—Unless otherwise directed by the 

3 borrower, a postsecondary educational 

4 lender or servicer shall apply payments to 

5 a borrower’s account on the date the pay6 ment is received. 

7 ‘‘(ii) PROMULGATION OF RULES.— 

8 The Director, in accordance with para9 graph (17)(A), may promulgate rules for 

10 the application of postsecondary education 

11 loan payments that— 

12 ‘‘(I) implements the requirements 

13 in this section; 

14 ‘‘(II) minimizes the amount of 

15 fees and interest incurred by the bor16 rower and the total loan amount paid 

17 by the borrower; 

18 ‘‘(III) minimizes delinquencies, 

19 assignments to collection, and charge20 offs; 

21 ‘‘(IV) requires postsecondary 

22 educational lenders or servicers to 

23 apply payments on the date received; 

24 and 

48 

•S 3404 IS

1 ‘‘(V) allows the borrower to in2 struct the postsecondary educational 

3 lender or servicer to apply payments 

4 in a manner preferred by the bor5 rower. 

6 ‘‘(iii) METHOD THAT BEST BENEFITS

7 BORROWER.—In promulgating the rules 

8 under clause (ii), the Director shall choose 

9 the allocation method that best benefits the 

10 borrower and is compatible with existing 

11 repayment options. 

12 ‘‘(G) ALLOCATION OF PAYMENTS AMONG

13 MULTIPLE LOANS.— 

14 ‘‘(i) ALLOCATION OF UNDERPAY15 MENTS.—Unless otherwise directed by the 

16 borrower, upon receipt of a payment that 

17 does not satisfy the full amount due for 

18 each postsecondary education loan, the 

19 postsecondary educational lender or 

20 servicer shall allocate amounts in a manner 

21 that minimizes negative consequences, in22 cluding negative credit reporting and late 

23 fees, and, where multiple loans share an 

24 equal stage of delinquency, the postsec25 ondary educational lender or servicer shall 

49 

•S 3404 IS

1 first allocate payment to the postsecondary 

2 education loan with the smallest monthly 

3 payment, and then, after satisfying that 

4 monthly payment, to each successive loan 

5 bearing the next highest monthly payment, 

6 until the payment is exhausted. A borrower 

7 may instruct or expressly authorize a post8 secondary educational lender or servicer to 

9 allocate payments in a different manner. 

10 ‘‘(ii) ALLOCATION OF EXCESS

11 AMOUNTS.—Unless otherwise directed by 

12 the borrower, upon receipt of a payment 

13 exceeding the total amount due among all 

14 the borrower’s postsecondary education 

15 loans, the postsecondary educational lender 

16 or servicer shall satisfy the amounts due 

17 for each loan, and then allocate amounts in 

18 excess of the minimum payment amount 

19 first to the postsecondary education loan 

20 balance bearing the highest annual per21 centage rate, and then, once that loan is 

22 repaid, to each successive postsecondary 

23 education loan bearing the next highest an24 nual percentage rate, until the payment is 

25 exhausted. A borrower may instruct or exVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
50 

•S 3404 IS

1 pressly authorize a postsecondary edu2 cational lender or servicer to allocate such 

3 excess payments in a different manner. 

4 ‘‘(iii) ALLOCATION OF EXACT PAY5 MENTS.—Unless otherwise directed by the 

6 borrower upon receipt of a payment that 

7 exactly satisfies the monthly payments for 

8 each loan, the postsecondary educational 

9 lender or servicer shall allocate payments 

10 to satisfy each monthly payment. 

11 ‘‘(iv) PROMULGATION OF RULES.— 

12 The Director, in accordance with para13 graph (17)(A), may promulgate rules for 

14 the allocation of payments among multiple 

15 postsecondary education loans that— 

16 ‘‘(I) implements the requirements 

17 in this section; 

18 ‘‘(II) minimizes the amount of 

19 fees and interest incurred by the bor20 rower and the total loan amount paid 

21 by the borrower; 

22 ‘‘(III) minimizes delinquencies, 

23 assignments to collection, and charge24 offs; 

51 

•S 3404 IS

1 ‘‘(IV) requires postsecondary 

2 educational lenders or servicers to 

3 apply payments on the date received; 

4 and 

5 ‘‘(V) allows the borrower to in6 struct postsecondary educational lend7 ers or servicers to apply payments in 

8 a manner preferred by the borrower, 

9 including excess payments. 

10 ‘‘(v) METHOD THAT BEST BENEFITS

11 BORROWER.—In promulgating the rules 

12 under clause (iv), the Director shall choose 

13 the allocation method that best benefits the 

14 borrower and is compatible with existing 

15 repayment options. 

16 ‘‘(H) LATE FEES.— 

17 ‘‘(i) IN GENERAL.—A late fee may not 

18 be charged to a borrower for a postsec19 ondary education loan under any of the fol20 lowing circumstances, either individually or 

21 in combination: 

22 ‘‘(I) On a per-loan basis when a 

23 borrower has multiple postsecondary 

24 education loans. 

52 

•S 3404 IS

1 ‘‘(II) In an amount greater than 

2 4 percent of the amount of the pay3 ment past due. 

4 ‘‘(III) Before the end of the 15- 

5 day period beginning on the date the 

6 payment is due. 

7 ‘‘(IV) More than once with re8 spect to a single late payment. 

9 ‘‘(V) The borrower fails to make 

10 a singular, non-successive regularly11 scheduled payment on the postsec12 ondary education loan. 

13 ‘‘(ii) COORDINATION WITH SUBSE14 QUENT LATE FEES.—No late fee may be 

15 charged to a borrower for a postsecondary 

16 education loan relating to an insufficient 

17 payment if the payment is made on or be18 fore the due date of the payment, or within 

19 any applicable grace period for the pay20 ment, if the insufficiency is attributable 

21 only to a late fee relating to an earlier pay22 ment, and the payment is otherwise a full 

23 payment for the applicable period. 

24 ‘‘(iii) PAYMENTS AT LOCAL

25 BRANCHES.—If the loan holder, in the case 

53 

•S 3404 IS

1 of a postsecondary education loan account 

2 referred to in subparagraph (A), is a fi3 nancial institution that maintains a branch 

4 or office at which payments on any such 

5 account are accepted from the borrower in 

6 person, the date on which the borrower 

7 makes a payment on the account at such 

8 branch or office shall be considered to be 

9 the date on which the payment is made for 

10 purposes of determining whether a late fee 

11 may be imposed due to the failure of the 

12 borrower to make payment on or before 

13 the due date for such payment. 

14 ‘‘(I) BORROWER INQUIRIES.— 

15 ‘‘(i) DUTY OF POSTSECONDARY EDU16 CATIONAL LENDERS OR SERVICERS TO RE17 SPOND TO BORROWER INQUIRIES.— 

18 ‘‘(I) NOTICE OF RECEIPT OF RE19 QUEST.—If a borrower submits a 

20 qualified written request to the post21 secondary educational lender or 

22 servicer for information relating to the 

23 servicing of the postsecondary edu24 cation loan, the postsecondary edu25 cational lender or servicer shall proVerDate Sep 11 2014 03:51 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00053 Fmt 6652 Sfmt 6201 E:\BILLS\S3404.IS S3404
54 

•S 3404 IS

1 vide a written response acknowledging 

2 receipt of the qualified written request 

3 within 5 business days unless any ac4 tion requested by the borrower is 

5 taken within such period. 

6 ‘‘(II) ACTION WITH RESPECT TO

7 INQUIRY.—Not later than 30 business 

8 days after the receipt from a borrower 

9 of a qualified written request under 

10 subclause (I) and, if applicable, before 

11 taking any action with respect to the 

12 qualified written request of the bor13 rower, the postsecondary educational 

14 lender or servicer shall— 

15 ‘‘(aa) make appropriate cor16 rections in the account of the 

17 borrower, including the crediting 

18 of any late fees, and transmit to 

19 the borrower a written notifica20 tion of such correction (which 

21 shall include the name and toll22 free or collect-call telephone num23 ber and email address of a rep24 resentative of the postsecondary 

25 educational lender or servicer 

55 

•S 3404 IS

1 who can provide assistance to the 

2 borrower); 

3 ‘‘(bb) after conducting an 

4 investigation, provide the bor5 rower with a written explanation 

6 or clarification that includes— 

7 ‘‘(AA) to the extent ap8 plicable, a statement of the 

9 reasons for which the post10 secondary educational lender 

11 or servicer believes the ac12 count of the borrower is cor13 rect as determined by the 

14 postsecondary educational 

15 lender or servicer; and 

16 ‘‘(BB) the name and 

17 toll-free or collect-call tele18 phone number and email ad19 dress of an individual em20 ployed by, or the office or 

21 department of, the postsec22 ondary educational lender or 

23 servicer who can provide as24 sistance to the borrower; or 

56 

•S 3404 IS

1 ‘‘(cc) after conducting an in2 vestigation, provide the borrower 

3 with a written explanation or 

4 clarification that includes— 

5 ‘‘(AA) information re6 quested by the borrower or 

7 explanation of why the infor8 mation requested is unavail9 able or cannot be obtained 

10 by the postsecondary edu11 cational lender or servicer; 

12 and 

13 ‘‘(BB) the name and 

14 toll-free or collect-call tele15 phone number and email ad16 dress of an individual em17 ployed by, or the office or 

18 department of, the postsec19 ondary educational lender or 

20 servicer who can provide as21 sistance to the borrower. 

22 ‘‘(III) LIMITED EXTENSION OF

23 RESPONSE TIME.— 

24 ‘‘(aa) IN GENERAL.—There 

25 may be 1 extension of the 30-day 

57 

•S 3404 IS

1 period described in subclause (II) 

2 of not more than 15 days if, be3 fore the end of such 30-day pe4 riod, the postsecondary edu5 cational lender or servicer noti6 fies the borrower of the extension 

7 and the reasons for the delay in 

8 responding. 

9 ‘‘(bb) REPORTS TO BU10 REAU.—Each postsecondary edu11 cational lender or servicer shall, 

12 on an annual basis, report to the 

13 Bureau the aggregate number of 

14 extensions sought by the such 

15 postsecondary educational lender 

16 or servicer under item (aa). 

17 ‘‘(ii) PROTECTION AGAINST NEGATIVE

18 CONSEQUENCES.—During the 60-day pe19 riod beginning on the date on which a 

20 postsecondary educational lender or 

21 servicer receives a qualified written request 

22 from a borrower relating to a dispute re23 garding payments by the borrower, a post24 secondary educational lender or servicer 

25 may not impose any negative consequences 

58 

•S 3404 IS

1 on the borrower relating to the subject of 

2 the qualified written request or to such pe3 riod, including— 

4 ‘‘(I) engaging in debt collection 

5 efforts, including under chapter 37 of 

6 title 31, United States Code; 

7 ‘‘(II) providing negative credit in8 formation to any consumer reporting 

9 agency (as defined in section 603 of 

10 the Fair Credit Reporting Act (15 

11 U.S.C. 1681a)); 

12 ‘‘(III) lost eligibility for a bor13 rower benefit; 

14 ‘‘(IV) late fees; 

15 ‘‘(V) interest capitalization; or 

16 ‘‘(VI) other financial injury. 

17 ‘‘(J) REPAYMENT SPECIALISTS FOR AT18 RISK BORROWERS.— 

19 ‘‘(i) AT-RISK BORROWERS.—A post20 secondary educational lender or servicer 

21 shall designate an office or other unit to 

22 act as a repayment specialist regarding 

23 postsecondary education loans for— 

24 ‘‘(I) any borrower who— 

59 

•S 3404 IS

1 ‘‘(aa) becomes 30 calendar 

2 days or more delinquent under 

3 the postsecondary education loan; 

4 or 

5 ‘‘(bb) notifies the postsec6 ondary educational lender or 

7 servicer pursuant to paragraph 

8 (8)(C) that the borrower is hav9 ing difficulty making payment; 

10 ‘‘(II) any borrower who requests 

11 information related to options to re12 duce or suspend the borrower’s 

13 monthly payment, or otherwise indi14 cates that the borrower is experi15 encing or is about to experience finan16 cial hardship or distress; 

17 ‘‘(III) any borrower who has not 

18 completed the program of study for 

19 which the borrower received the loans; 

20 ‘‘(IV) any borrower who is en21 rolled in discretionary forbearance for 

22 more than 9 of the previous 12 

23 months; 

24 ‘‘(V) any borrower who has reha25 bilitated or consolidated 1 or more 

60 

•S 3404 IS

1 postsecondary education loans out of 

2 default within the prior 24 months; 

3 ‘‘(VI) a borrower who seeks in4 formation regarding, seeks to enter an 

5 agreement for, or seeks to resolve an 

6 issue under a repayment option that 

7 requires subsequent submission of 

8 supporting documentation; 

9 ‘‘(VII) a borrower who seeks to 

10 modify the terms of the repayment of 

11 the postsecondary education loan be12 cause of hardship; and 

13 ‘‘(VIII) any borrower or segment 

14 of borrowers determined by the Direc15 tor or the Secretary to be at-risk. 

16 ‘‘(ii) TRAINING.—Staff of the repay17 ment specialist office or unit designated 

18 under clause (i) shall— 

19 ‘‘(I) receive rigorous, ongoing 

20 training related to available repay21 ment plans, loan forgiveness, and can22 cellation and discharge options; and 

23 ‘‘(II) be trained to— 

24 ‘‘(aa) assess the borrower’s 

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•S 3404 IS

1 cial situation in discussing alter2 native repayment options with 

3 borrowers; 

4 ‘‘(bb) inform borrowers, 

5 when there is sufficient informa6 tion to determine that a borrower 

7 may be eligible, about closed8 school discharge, discharge under 

9 defense to repayment, or total 

10 and permanent disability dis11 charge prior to informing the 

12 borrower about any other options 

13 for repayment; and 

14 ‘‘(cc) inform borrowers 

15 about alternative repayment op16 tions, prior to discussing forbear17 ance and deferment. 

18 ‘‘(iii) TOLL-FREE TELEPHONE NUM19 BER AND EMAIL ADDRESS.—Each postsec20 ondary educational lender or servicer shall 

21 maintain— 

22 ‘‘(I) a toll-free telephone number 

23 that shall— 

62 

•S 3404 IS

1 ‘‘(aa) connect directly to the 

2 repayment specialist office or 

3 unit designated under clause (i); 

4 ‘‘(bb) be made available on 

5 the primary internet website of 

6 the postsecondary educational 

7 lender or servicer, on monthly 

8 billing statements, and any dis9 closures required by paragraph 

10 (6); and 

11 ‘‘(cc) not subject borrowers 

12 to unreasonable call wait times; 

13 and 

14 ‘‘(II) an email address that 

15 shall— 

16 ‘‘(aa) connect directly to the 

17 repayment specialist office or 

18 unit designated under clause (i); 

19 ‘‘(bb) be made available on 

20 the primary internet website of 

21 the postsecondary educational 

22 lender or servicer, on monthly 

23 billing statements, and any dis24 closures required by paragraph 

25 (6); and 

63 

•S 3404 IS

1 ‘‘(cc) be monitored on a reg2 ular basis. 

3 ‘‘(iv) COMPENSATION.—Staff of the 

4 repayment specialist office or unit des5 ignated under clause (i) shall not be com6 pensated on the basis of the volume of 

7 calls or accounts handled, dollar amounts 

8 collected, brevity of calls, or in any other 

9 manner that may encourage undue haste 

10 and lack of diligence or quality customer 

11 service. 

12 ‘‘(K) SERVICEMEMBERS, VETERANS, AND

13 POSTSECONDARY EDUCATION LOANS.— 

14 ‘‘(i) SERVICEMEMBER AND VETERANS

15 LIAISON.—Each postsecondary educational 

16 lender or servicer shall designate an em17 ployee to act as the servicemember and 

18 veterans liaison who is responsible for an19 swering inquiries from servicemembers, 

20 veterans, and their immediate family mem21 bers, and is specially trained on service22 member and veteran benefits under the 

23 Servicemembers Civil Relief Act (50 U.S.C. 

24 3901 et seq.) and other Federal or State 

64 

•S 3404 IS

1 laws related to postsecondary education 

2 loans. 

3 ‘‘(ii) TOLL-FREE TELEPHONE NUM4 BER AND EMAIL ADDRESS.—Each postsec5 ondary educational lender or servicer shall 

6 maintain— 

7 ‘‘(I) a toll-free telephone number 

8 that shall— 

9 ‘‘(aa) connect directly to the 

10 servicemember and veterans liai11 son designated under clause (i); 

12 ‘‘(bb) be made available on 

13 the primary internet website of 

14 postsecondary educational lender 

15 or servicer and on monthly billing 

16 statements; and 

17 ‘‘(cc) not subject borrowers 

18 to unreasonable call wait times; 

19 and 

20 ‘‘(II) an email address that 

21 shall— 

22 ‘‘(aa) connect directly to the 

23 servicemember and veterans liai24 son designated under clause (i); 

65 

•S 3404 IS

1 ‘‘(bb) be made available on 

2 the primary internet website of 

3 the postsecondary educational 

4 lender or servicer and on monthly 

5 billing statements; and 

6 ‘‘(cc) be monitored on a reg7 ular basis. 

8 ‘‘(iii) PROHIBITION ON CHARGE OFFS

9 AND DEFAULT.—A postsecondary edu10 cational lender or servicer may not charge 

11 off or report a postsecondary education 

12 loan as delinquent, assigned to collection 

13 (internally or by referral to a third party), 

14 in default, or charged-off to a credit re15 porting agency if the borrower is on active 

16 duty in the Armed Forces (as defined in 

17 section 101(d)(1) of title 10, United States 

18 Code) serving in a combat zone (as des19 ignated by the President under section 

20 112(c) of the Internal Revenue Code of 

21 1986). 

22 ‘‘(iv) ADDITIONAL LIAISONS.—The 

23 Director, in consultation with the Sec24 retary, shall determine additional entities 

25 with whom borrowers interact, including 

66 

•S 3404 IS

1 guaranty agencies, that shall designate an 

2 employee to act as the servicemember and 

3 veterans liaison who is responsible for an4 swering inquiries from servicemembers, 

5 veterans, and their immediate family mem6 bers, and is specially trained on 

7 servicemembers and veteran benefits and 

8 option under the Servicemembers Civil Re9 lief Act (50 U.S.C. 3901 et seq.). 

10 ‘‘(L) BORROWER’S LOAN HISTORY.— 

11 ‘‘(i) IN GENERAL.—A postsecondary 

12 educational lender or servicer shall make 

13 available in a secure electronic form usable 

14 by borrowers, or in writing upon request, 

15 the loan history of each borrower for each 

16 postsecondary education loan, separately 

17 designating— 

18 ‘‘(I) history of information on the 

19 loan before any consolidation or trans20 fer of such loan; 

21 ‘‘(II) payment history, including 

22 repayment plan and payments— 

23 ‘‘(aa) made on such loan to 

24 previous postsecondary edu25 cational lenders or servicers; and 

67 

•S 3404 IS

1 ‘‘(bb) qualifying toward a 

2 loan forgiveness program and 

3 designating such program; 

4 ‘‘(III) loan history, including any 

5 forbearances, deferrals, delinquencies, 

6 assignment to collection, and charge 

7 offs; 

8 ‘‘(IV) annual percentage rate his9 tory; 

10 ‘‘(V) key loan terms, including 

11 application of payments to interest, 

12 principal, and fees, origination date, 

13 principal, capitalized interest, annual 

14 percentage rate, including any cap, 

15 loan term, and any contractual incen16 tives; 

17 ‘‘(VI) amount due to pay off the 

18 outstanding balance; and 

19 ‘‘(VII) any other items deter20 mined by the Director through regula21 tions promulgated in accordance with 

22 paragraph (17)(A). 

23 ‘‘(ii) ORIGINAL DOCUMENTATION.—A 

24 postsecondary educational lender or 

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68 

•S 3404 IS

1 rower, if requested, at no charge, copies of 

2 the original loan documents and the prom3 issory note for each postsecondary edu4 cation loan. 

5 ‘‘(M) ERROR RESOLUTION.—The Director, 

6 in consultation with the Secretary, shall pro7 mulgate rules requiring postsecondary edu8 cational lenders or servicers to establish error 

9 resolution procedures to allow borrowers to in10 quire about errors related to their postsec11 ondary education loans and obtain timely reso12 lution of such errors. 

13 ‘‘(N) ADDITIONAL SERVICING STAND14 ARDS.— 

15 ‘‘(i) PROHIBITIONS.—A postsecondary 

16 educational lender or servicer may not— 

17 ‘‘(I) charge a fee for responding 

18 to a qualified written request under 

19 this paragraph; 

20 ‘‘(II) fail to take timely action to 

21 respond to a qualified written request 

22 from a borrower to correct an error 

23 relating to an allocation of payment or 

24 the payoff amount of the postsec25 ondary education loan; 

69 

•S 3404 IS

1 ‘‘(III) fail to take reasonable 

2 steps to avail the borrower of all pos3 sible alternative repayment arrange4 ments to avoid default; 

5 ‘‘(IV) fail to perform the obliga6 tions required under title IV of the 

7 Higher Education Act of 1965 (20 

8 U.S.C. 1070 et seq.); 

9 ‘‘(V) fail to respond within 10 

10 business days to a request from a bor11 rower to provide the name, address, 

12 and other relevant contact information 

13 of the loan holder of the borrower’s 

14 postsecondary education loan or, for a 

15 Federal Direct Loan or a Federal 

16 Perkins Loan, the Secretary of Edu17 cation, or the institution of higher 

18 education who made the loan, respec19 tively; 

20 ‘‘(VI) fail to comply with any ap21 plicable requirement of the 

22 Servicemembers Civil Relief Act (50 

23 U.S.C. 3901 et seq.); 

24 ‘‘(VII) charge a convenience, 

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70 

•S 3404 IS

1 ments made electronically or by tele2 phone; 

3 ‘‘(VIII) fail to comply with any 

4 other obligation that the Bureau, by 

5 regulation, has determined to be ap6 propriate to carry out the consumer 

7 protection purposes of this paragraph; 

8 ‘‘(IX) fail to perform other 

9 standard servicing duties and func10 tions; or 

11 ‘‘(X) engage in any unfair, de12 ceptive, or abusive acts or practices, 

13 as those terms are described in sec14 tion 1031 of the Consumer Financial 

15 Protection Act of 2010 (12 U.S.C. 

16 5531). 

17 ‘‘(ii) BUSINESS HOURS.—Postsec18 ondary educational lenders or servicers 

19 shall be open for borrower inquiries and 

20 outreach during and after normal business 

21 hours, including availability after 5:00 pm 

22 in all continental United States time zones 

23 and some weekend hours. 

24 ‘‘(iii) ADDITIONAL STANDARDS.—The 

25 Director may promulgate regulations, in 

71 

•S 3404 IS

1 accordance with paragraph (17)(A), estab2 lishing additional servicing standards to re3 duce delinquencies, assignment to collec4 tions, defaults, and charge-offs, and to en5 sure borrowers understand their rights and 

6 obligations related to their postsecondary 

7 education loans. 

8 ‘‘(O) PROHIBITION ON LIMITING BOR9 ROWER LEGAL ACTION BY POSTSECONDARY

10 EDUCATIONAL LENDERS AND SERVICERS.— 

11 ‘‘(i) WAIVER OF RIGHTS AND REM12 EDIES.—Notwithstanding chapter 1 of title 

13 9, United States Code (commonly known 

14 as the ‘Federal Arbitration Act’), any 

15 rights and remedies available to borrowers 

16 against postsecondary educational lenders 

17 or servicers may not be waived by any 

18 agreement, policy, or form, including by a 

19 mandatory predispute arbitration agree20 ment or class action waiver. 

21 ‘‘(ii) PREDISPUTE ARBITRATION

22 AGREEMENTS.—Notwithstanding chapter 1 

23 of title 9, United States Code (commonly 

24 known as the ‘Federal Arbitration Act’), 

25 no limitation or restriction on the ability of 

72 

•S 3404 IS

1 a borrower to pursue a claim in court with 

2 respect to a postsecondary education loan, 

3 including mandatory predispute arbitration 

4 agreements and class action waivers, shall 

5 be valid or enforceable by a postsecondary 

6 educational lender or servicer, including as 

7 a third-party beneficiary or by estoppel. 

8 ‘‘(P) PREEMPTION.—Nothing in this para9 graph may be construed to preempt any provi10 sion of State law regarding postsecondary edu11 cation loans where the State law provides 

12 stronger consumer protections. 

13 ‘‘(Q) CIVIL LIABILITY.—A postsecondary 

14 educational lender or servicer that fails to com15 ply with any requirement imposed under this 

16 paragraph shall be deemed a creditor that has 

17 failed to comply with a requirement under this 

18 chapter for purposes of liability under section 

19 130 and such postsecondary educational lender 

20 or servicer shall be subject to the liability provi21 sions under such section, including the provi22 sions under paragraphs (1), (2)(A)(i), (2)(B), 

23 and (3) of section 130(a). 

24 ‘‘(R) ELIGIBILITY FOR DISCHARGE.—The 

25 Director, in accordance with paragraph (17)(A), 

73 

•S 3404 IS

1 shall promulgate rules requiring postsecondary 

2 educational lenders and servicers to— 

3 ‘‘(i) identify and contact borrowers 

4 who may be eligible for— 

5 ‘‘(I) student loan discharge by 

6 the Secretary, including under section 

7 437 of the Higher Education Act of 

8 1965 (20 U.S.C. 1087); and 

9 ‘‘(II) special and time-limited dis10 charge opportunities, including bor11 rowers who may become eligible for 

12 such discharge upon taking one or 

13 more actions; and 

14 ‘‘(ii) provide the borrower, in writing, 

15 in simple and understandable terms, com16 plete and accurate information about ob17 taining such discharge, including any ac18 tion that must be taken in order to become 

19 eligible for discharge; and 

20 ‘‘(iii) provide the information de21 scribed under clause (ii) to any borrower of 

22 the postsecondary educational lender or 

23 servicer who contacts the lender or servicer 

24 and inquires about loan affordability or 

25 discharge opportunities. 

74 

•S 3404 IS

1 ‘‘(S) FORBEARANCE UPON REQUEST.—A 

2 postsecondary educational lender or servicer 

3 shall grant a borrower forbearance on a private 

4 education loan, renewable at 12-month inter5 vals, if— 

6 ‘‘(i) the borrower requests forbear7 ance; and 

8 ‘‘(ii) the borrower is described in any 

9 of subclauses (I) through (IV) of section 

10 428(c)(3)(A)(i) of the Higher Education 

11 Act of 1965 (20 U.S.C. 1078(c)(3)(A)(i)). 

12 ‘‘(17) CONSUMER FINANCIAL PROTECTION BU13 REAU REQUIREMENTS.— 

14 ‘‘(A) RULEMAKING.—The Director shall, 

15 based on consumer testing (as appropriate) and 

16 upon consideration of any final recommenda17 tions published by the Secretary under section 

18 456(f)(3) of the Higher Education Act of 1965 

19 (20 U.S.C. 1087f(g)(3)), promulgate regula20 tions in consultation with the Secretary, to 

21 carry out the requirements of this subsection. 

22 ‘‘(B) COMPLIANCE FOR CERTAIN ENTI23 TIES.— 

24 ‘‘(i) IN GENERAL.—The Director may 

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75 

•S 3404 IS

1 graph (A) to require an entity or class of 

2 entities with which the Secretary has en3 tered into a contract under section 456 of 

4 the Higher Education Act of 1965 (20 

5 U.S.C. 1087f) to comply with an alter6 native requirement or standard promul7 gated by the Director in lieu of compliance 

8 with any requirement or standard under 

9 this subsection if the Director determines 

10 that— 

11 ‘‘(I) such entity or class of enti12 ties are not required by the Secretary 

13 pursuant to the contract to perform a 

14 servicing function governed by the re15 quirement or standard, and where 

16 such function is required by the Sec17 retary, to be performed by another en18 tity or class of entities; or 

19 ‘‘(II) the Secretary, in consulta20 tion with the Chief Operating Officer 

21 of Federal Student Aid, has promul22 gated regulations to establish an alter23 native requirement or standard with 

24 respect to such entity or class of enti25 ties that better benefits or protects 

76 

•S 3404 IS

1 borrowers and the Director incor2 porates such requirement or standard 

3 that better benefits or protects bor4 rowers into regulations promulgated 

5 under subparagraph (A). 

6 ‘‘(ii) REPORTS.—The Director shall 

7 report to the Committee on Banking, 

8 Housing, and Urban Affairs of the Senate, 

9 the Committee on Health, Education, 

10 Labor, and Pensions of the Senate, the 

11 Committee on Financial Services of the 

12 House of Representatives, and the Com13 mittee on Education and the Workforce of 

14 the House of Representatives on any regu15 lations promulgated under clause (i). 

16 ‘‘(18) POSTSECONDARY EDUCATIONAL LEND17 ERS OR SERVICERS AND CONTRACTS OR SUB18 CONTRACTS.— 

19 ‘‘(A) IN GENERAL.—Any person or entity 

20 that enters into a contract or subcontract with 

21 a postsecondary educational lender or servicer 

22 to perform the servicing of a postsecondary 

23 educational loan may fulfill the obligations of 

24 the postsecondary educational lender or servicer 

25 under this subsection. 

77 

•S 3404 IS

1 ‘‘(B) JOINT AND SEVERAL LIABILITY FOR

2 SERVICE PROVIDERS.—Any entity or person de3 scribed in subparagraph (A) shall be jointly and 

4 severally liable for the actions of the entity or 

5 person in fulfilling the obligations of the post6 secondary educational lender or servicer under 

7 this subsection.’’; and 

8 (B) by adding at the end the following: 

9 ‘‘(g) INFORMATION TO BE AVAILABLE AT NO

10 CHARGE.—The information required to be disclosed under 

11 this section shall be made available at no charge to the 

12 borrower.’’; and 

13 (2) in section 130(a)— 

14 (A) in paragraph (3), by striking 

15 ‘‘128(e)(7)’’ and inserting ‘‘128(e)(11)’’; and 

16 (B) in the flush matter at the end, by 

17 striking ‘‘or paragraph (4)(C), (6), (7), or (8) 

18 of section 128(e),’’ and inserting ‘‘or paragraph 

19 (4)(C), (10), (11), or (12) of section 128(e),’’. 

20 (b) EFFECTIVE DATE.— 

21 (1) IN GENERAL.—The amendments made 

22 under subsection (a) shall be effective 180 days after 

23 the date of enactment of this Act. 

24 (2) DELAY.—The Director of the Bureau of 

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78 

•S 3404 IS

1 tive date of the amendments made under subsection 

2 (a) for not more than 1 additional year with respect 

3 to entities engaged in servicing pursuant to a con4 tract awarded under section 456 of the Higher Edu5 cation Act of 1965 (20 U.S.C. 1087f) pending the 

6 Secretary of Education’s final recommendations re7 quired under section 456(f) of such Act related to 

8 the promulgation of regulations by the Director 

9 under section 128(e)(17) of the Truth in Lending 

10 Act (15 U.S.C. 1638(e)(17)). 

11 SEC. 4. REHABILITATION OF PRIVATE EDUCATION LOANS. 

12 Section 623(a)(1)(E) of the Fair Credit Reporting 

13 Act (15 U.S.C. 1681s–2(a)(1)(E)) is amended to read as 

14 follows: 

15 ‘‘(E) REHABILITATION OF PRIVATE EDU16 CATION LOANS.— 

17 ‘‘(i) IN GENERAL.—If a borrower of a 

18 private education loan rehabilitates such 

19 loan in accordance with section 128(e)(23) 

20 of the Truth in Lending Act (15 U.S.C. 

21 1638(e)(23)), the private educational lend22 er or entity engaged in servicing such loan 

23 shall request that any consumer reporting 

24 agency to which the charge-off was re25 ported remove the delinquency that led to 

79 

•S 3404 IS

1 the charge-off and the charge-off from the 

2 borrower’s credit history. 

3 ‘‘(ii) BANKING AGENCIES.— 

4 ‘‘(I) IN GENERAL.—If a private 

5 educational lender is supervised by a 

6 Federal banking agency, the private 

7 educational lender shall seek written 

8 approval from the Federal banking 

9 agency that the terms and conditions 

10 of the loan rehabilitation program of 

11 the lender meet the requirements of 

12 section 128(e)(23) of the Truth in 

13 Lending Act (15 U.S.C. 1638(e)(23)). 

14 ‘‘(II) FEEDBACK.—An appro15 priate Federal banking agency shall 

16 provide feedback to a private edu17 cational lender within 120 days of a 

18 request for approval under subclause 

19 (I). 

20 ‘‘(iii) DEFINITIONS.—For purposes of 

21 this subparagraph— 

22 ‘‘(I) the term ‘appropriate Fed23 eral banking agency’ has the meaning 

24 given the term in section 3 of the 

80 

•S 3404 IS

1 Federal Deposit Insurance Act (12 

2 U.S.C. 1813); and 

3 ‘‘(II) the term ‘private education 

4 loan’ has the meaning given the term 

5 in section 140(a) of the Truth in 

6 Lending Act (15 U.S.C. 1650(a)).’’. 

7 SEC. 5. IMPROVED CONSUMER PROTECTIONS FOR PRIVATE 

8 EDUCATION LOANS. 

9 Section 128(e) of the Truth in Lending Act (15 

10 U.S.C. 1638(e)), as amended by section 3, is further 

11 amended— 

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

13 ‘‘(19) DISCHARGE OF PRIVATE EDUCATION

14 LOANS IN THE EVENT OF DEATH OR DISABILITY OF

15 THE BORROWER.—Each private education loan shall 

16 include terms that provide that the liability to repay 

17 the loan shall be cancelled— 

18 ‘‘(A) upon the death of the borrower; 

19 ‘‘(B) if the borrower becomes permanently 

20 and totally disabled, as determined under sec21 tion 437(a)(1) of the Higher Education Act of 

22 1965 (20 U.S.C. 1087(a)(1)) and the regula23 tions promulgated by the Secretary under that 

24 section; or 

81 

•S 3404 IS

1 ‘‘(C) if the Secretary of Veterans Affairs 

2 or the Secretary of Defense determines that the 

3 borrower is unemployable due to a service-con4 nected condition or disability, in accordance 

5 with the requirements of section 437(a)(2) of 

6 such Act and the regulations promulgated by 

7 the Secretary under that section. 

8 ‘‘(20) TERMS FOR CO-BORROWERS.—Each pri9 vate education loan shall include terms that clearly 

10 define the requirements to release a co-borrower 

11 from the obligation. 

12 ‘‘(21) PROHIBITION OF ACCELERATION OF PAY13 MENTS ON PRIVATE EDUCATION LOANS.— 

14 ‘‘(A) IN GENERAL.—Except as provided in 

15 subparagraph (B), a private education loan exe16 cuted after the date of enactment of this para17 graph may not include a provision that permits 

18 the private educational lender, loan holder, or 

19 entity engaged in servicing such loan to accel20 erate, in whole or in part, payments on the pri21 vate education loan. 

22 ‘‘(B) ACCELERATION CAUSED BY A PAY23 MENT DEFAULT.—A private education loan may 

24 include a provision that permits acceleration of 

25 the loan in cases of payment default. 

82 

•S 3404 IS

1 ‘‘(22) PROHIBITION ON DENIAL OF CREDIT DUE

2 TO ELIGIBILITY FOR PROTECTION UNDER

3 SERVICEMEMBERS CIVIL RELIEF ACT.—A private 

4 educational lender may not deny or refuse credit to 

5 an individual who is entitled to any right or protec6 tion provided under the Servicemembers Civil Relief 

7 Act (50 U.S.C. 3901 et seq.) or subject, solely by 

8 reason of such entitlement, such individual to any 

9 other action described in paragraphs (1) through (6) 

10 of section 108 of such Act. 

11 ‘‘(23) REHABILITATION OF PRIVATE EDU12 CATION LOANS.— 

13 ‘‘(A) IN GENERAL.—If a borrower of a pri14 vate education loan successfully and voluntarily 

15 makes 9 payments within 20 days of the due 

16 date during 10 consecutive months of amounts 

17 owed on the private education loan, or other18 wise brings the private education loan current 

19 after the loan is charged-off, the loan shall be 

20 considered rehabilitated, and the lender or enti21 ty engaged in servicing such loan shall request 

22 that any consumer reporting agency to which 

23 the charge-off was reported remove the delin24 quency that led to the charge-off and the 

25 charge-off from the borrower’s credit history. 

83 

•S 3404 IS

1 ‘‘(B) TERMS.—No private educational 

2 lender shall offer a borrower rehabilitation of 

3 loans where the payment required to rehabili4 tate a defaulted private education loan is less 

5 than the monthly payment amount required 

6 upon completion of rehabilitation.’’; 

7 (2) in paragraph (1)— 

8 (A) by striking subparagraph (D) and in9 serting the following: 

10 ‘‘(D) requirements for a co-borrower, in11 cluding— 

12 ‘‘(i) any changes in the applicable in13 terest rates without a co-borrower; and 

14 ‘‘(ii) any conditions the borrower is 

15 required meet in order to release a co-bor16 rower from the private education loan obli17 gation;’’; 

18 (B) by redesignating subparagraphs (O), 

19 (P), (Q), and (R) as subparagraphs (P), (Q), 

20 (R), and (S), respectively; and 

21 (C) by inserting after subparagraph (N) 

22 the following: 

23 ‘‘(O) in the case of a refinancing of edu24 cation loans that include a Federal student loan 

25 made, insured, or guaranteed under title IV of 

84 

•S 3404 IS

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

2 1070 et seq.)— 

3 ‘‘(i) a list containing each loan to be 

4 refinanced, which shall identify whether 

5 the loan is— 

6 ‘‘(I) a private education loan; 

7 ‘‘(II) a Federal student loan 

8 made, insured, or guaranteed under 

9 title IV of the Higher Education Act 

10 of 1965 (20 U.S.C. 1070 et seq.); or 

11 ‘‘(III) a loan made, insured, or 

12 guaranteed under title VII or title 

13 VIII of the Public Health Service Act 

14 (42 U.S.C. 292 et seq. and 296 et 

15 seq.); and 

16 ‘‘(ii) benefits that the borrower may 

17 be forfeiting, including income-driven re18 payment options, opportunities for loan 

19 forgiveness, forbearance or deferment op20 tions, interest subsidies, and tax benefits;’’; 

21 and 

22 (3) in paragraph (2)— 

23 (A) by redesignating subparagraphs (O) 

24 and (P) as subparagraphs (P) and (Q), respec25 tively; and 

85 

•S 3404 IS

1 (B) by inserting after subparagraph (N) 

2 the following: 

3 ‘‘(O) in the case of a refinancing of edu4 cation loans that include a Federal student loan 

5 made, insured, or guaranteed under title IV of 

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

7 1070 et seq.)— 

8 ‘‘(i) a list containing each loan to be 

9 refinanced, which shall identify whether 

10 the loan is— 

11 ‘‘(I) a private education loan; 

12 ‘‘(II) a Federal student loan 

13 made, insured, or guaranteed under 

14 title IV of the Higher Education Act 

15 of 1965 (20 U.S.C. 1070 et seq.); or 

16 ‘‘(III) a loan made, insured, or 

17 guaranteed under title VII or title 

18 VIII of the Public Health Service Act 

19 (42 U.S.C. 292 et seq. and 296 et 

20 seq.); and 

21 ‘‘(ii) benefits that the borrower may 

22 be forfeiting, including income-driven re23 payment options, opportunities for loan 

24 forgiveness, forbearance or deferment op25 tions, interest subsidies, and tax benefits;’’. 

86 

•S 3404 IS

1 SEC. 6. KNOW BEFORE YOU OWE. 

2 (a) AMENDMENTS TO THE TRUTH IN LENDING

3 ACT.— 

4 (1) IN GENERAL.—Section 128(e) of the Truth 

5 in Lending Act (15 U.S.C. 1638(e)), as amended by 

6 sections 3 and 5, is further amended— 

7 (A) by striking paragraph (3) and insert8 ing the following: 

9 ‘‘(3) INSTITUTIONAL CERTIFICATION RE10 QUIRED.— 

11 ‘‘(A) IN GENERAL.—Except as provided in 

12 subparagraph (B), before a creditor may issue 

13 any funds with respect to an extension of credit 

14 described in this subsection, the creditor shall 

15 obtain from the relevant covered educational in16 stitution where such loan is to be used for a 

17 student, such institution’s certification of— 

18 ‘‘(i) the enrollment status of the stu19 dent; 

20 ‘‘(ii) the student’s cost of attendance 

21 at the institution as determined by the in22 stitution under part F of title IV of the 

23 Higher Education Act of 1965 (20 U.S.C. 

24 1087kk et seq.); and 

25 ‘‘(iii) the difference between— 

26 ‘‘(I) such cost of attendance; and 

87 

•S 3404 IS

1 ‘‘(II) the student’s estimated fi2 nancial assistance, including such as3 sistance received under title IV of the 

4 Higher Education Act of 1965 (20 

5 U.S.C. 1070 et seq.) (except for Fed6 eral Direct PLUS Loans made on be7 half of the student) and other finan8 cial assistance known to the institu9 tion, as applicable (except for loans 

10 made under the Public Health Service 

11 Act (42 U.S.C. 201 et seq.)). 

12 ‘‘(B) EXCEPTION.—Notwithstanding sub13 paragraph (A), a creditor may issue funds, not 

14 to exceed the amount described in subpara15 graph (A)(iii), with respect to an extension of 

16 credit described in this subsection without ob17 taining from the relevant covered educational 

18 institution such institution’s certification if such 

19 institution fails to provide within 15 business 

20 days of the creditor’s request for such certifi21 cation— 

22 ‘‘(i) notification of the institution’s re23 fusal to certify the request; or 

24 ‘‘(ii) notification that the institution 

25 has received the request for certification 

88 

•S 3404 IS

1 and will need additional time to comply 

2 with the certification request. 

3 ‘‘(C) LOANS DISBURSED WITHOUT CER4 TIFICATION.—If a creditor issues funds without 

5 obtaining a certification, as described in sub6 paragraph (B), such creditor shall report the 

7 issuance of such funds in a manner determined 

8 by the Director.’’; and 

9 (B) by adding at the end the following: 

10 ‘‘(24) PROVISION OF INFORMATION.— 

11 ‘‘(A) PROVISION OF INFORMATION TO STU12 DENTS.— 

13 ‘‘(i) LOAN STATEMENT.—A creditor 

14 that issues any funds with respect to an 

15 extension of credit described in this sub16 section shall send loan statements, where 

17 such loan is to be used for a student, to 

18 borrowers of such funds not less than once 

19 every 3 months during the time that such 

20 student is enrolled at a covered educational 

21 institution. 

22 ‘‘(ii) CONTENTS OF LOAN STATE23 MENT.—Each statement described in 

24 clause (i) shall— 

89 

•S 3404 IS

1 ‘‘(I) report the borrower’s total 

2 remaining debt to the creditor, includ3 ing accrued but unpaid interest and 

4 capitalized interest; 

5 ‘‘(II) report any debt increases 

6 since the last statement; and 

7 ‘‘(III) list the current interest 

8 rate for each loan. 

9 ‘‘(B) NOTIFICATION OF LOANS DISBURSED

10 WITHOUT CERTIFICATION.—On or before the 

11 date a creditor issues any funds with respect to 

12 an extension of credit described in this sub13 section, the creditor shall notify the relevant 

14 covered educational institution, in writing, of 

15 the amount of the extension of credit and the 

16 student on whose behalf credit is extended. The 

17 form of such written notification shall be sub18 ject to the regulations of the Bureau of Con19 sumer Financial Protection. 

20 ‘‘(C) ANNUAL REPORT.—A creditor that 

21 issues funds with respect to an extension of 

22 credit described in this subsection shall prepare 

23 and submit an annual report to the Bureau of 

24 Consumer Financial Protection containing the 

25 required information about private student 

90 

•S 3404 IS

1 loans to be determined by the Bureau of Con2 sumer Financial Protection, in consultation 

3 with the Secretary. 

4 ‘‘(25) UNLAWFUL CONDUCT.—An extension of 

5 credit described in this subsection shall be void if 

6 made to a student to attend— 

7 ‘‘(A) a covered educational institution that, 

8 at the time of the execution of such extension 

9 of credit, was not lawfully authorized to operate 

10 in the State in which the student resided at the 

11 time; or 

12 ‘‘(B) a covered educational institution that 

13 engaged in any unfair, deceptive, or abusive 

14 acts or practices, as those terms are described 

15 in section 1031 of the Consumer Financial Pro16 tection Act of 2010 (12 U.S.C. 5531), related 

17 to the student’s recruitment, enrollment, in18 struction, job placement, or other interactions 

19 with the covered educational institution or its 

20 agents.’’. 

21 (2) DEFINITION OF PRIVATE EDUCATION

22 LOAN.—Section 140(a)(8) of the Truth in Lending 

23 Act (15 U.S.C. 1650(a)(8)) is amended— 

24 (A) in subparagraph (A)— 

91 

•S 3404 IS

1 (i) by redesignating clause (ii) as 

2 clause (iii); 

3 (ii) in clause (i), by striking ‘‘and’’ 

4 after the semicolon; 

5 (iii) by adding after clause (i) the fol6 lowing: 

7 ‘‘(ii) is not made, insured, or guaran8 teed under title VII or title VIII of the 

9 Public Health Service Act (42 U.S.C. 292 

10 et seq. and 296 et seq.); and’’; and 

11 (iv) in clause (iii), as redesignated by 

12 clause (i), by striking ‘‘regardless of’’ and 

13 all that follows through ‘‘educational lend14 er’’ and inserting the following: ‘‘regardless 

15 of— 

16 ‘‘(I) whether the loan is provided 

17 through the institution or provider of 

18 postsecondary education that the sub19 ject student attends or directly to the 

20 borrower from the private educational 

21 lender; or 

22 ‘‘(II) whether some or all of the 

23 postsecondary education financed by 

24 the private education loan has already 

25 been provided;’’; and 

92 

•S 3404 IS

1 (B) by striking subparagraph (B) and in2 serting the following: 

3 ‘‘(B) does not include— 

4 ‘‘(i) an extension of credit under an 

5 open-end consumer credit plan, unless such 

6 open-end credit is extended expressly for 

7 postsecondary education expenses; 

8 ‘‘(ii) a reverse mortgage transaction; 

9 ‘‘(iii) a residential mortgage trans10 action; or 

11 ‘‘(iv) any other loan that is secured by 

12 real property or a dwelling; and’’. 

13 (3) REGULATIONS.—Not later than 365 days 

14 after the date of enactment of this Act, the Director 

15 of the Bureau of Consumer Financial Protection 

16 shall issue regulations in final form to implement 

17 paragraphs (3), (24), and (25) of section 128(e) of 

18 the Truth in Lending Act (15 U.S.C. 1638(e)), as 

19 amended by paragraph (1). Such regulations shall 

20 become effective not later than 6 months after their 

21 date of issuance. 

22 (b) AMENDMENTS TO THE HIGHER EDUCATION ACT

23 OF 1965.— 

24 (1) PROGRAM PARTICIPATION AGREEMENTS.— 

25 Section 487(a) of the Higher Education Act of 1965 

93 

•S 3404 IS

1 (20 U.S.C. 1094(a)) is amended by striking para2 graph (28) and inserting the following: 

3 ‘‘(28)(A) Upon the request of a private edu4 cational lender, acting in connection with an applica5 tion initiated by a borrower for a private education 

6 loan in accordance with section 128(e)(3) of the 

7 Truth in Lending Act (15 U.S.C. 1638(e)(3)), the 

8 institution shall within 15 days of receipt of a cer9 tification request— 

10 ‘‘(i) provide such certification to such pri11 vate educational lender— 

12 ‘‘(I) that the student who initiated the 

13 application for the private education loan, 

14 or on whose behalf the application was ini15 tiated, is enrolled or is scheduled to enroll 

16 at the institution; 

17 ‘‘(II) of such student’s cost of attend18 ance at the institution as determined under 

19 part F of this title; and 

20 ‘‘(III) of the difference between— 

21 ‘‘(aa) the cost of attendance at 

22 the institution; and 

23 ‘‘(bb) the student’s estimated fi24 nancial assistance received under this 

25 title (except for Federal Direct PLUS 

94 

•S 3404 IS

1 Loans made on behalf of the student) 

2 and other assistance known to the in3 stitution, as applicable (except for 

4 loans made under the Public Health 

5 Service Act (42 U.S.C. 201 et seq.)); 

6 ‘‘(ii) notify the creditor that the institution 

7 has received the request for certification and 

8 will need additional time to comply with the 

9 certification request; or 

10 ‘‘(iii) provide notice to the private edu11 cational lender of the institution’s refusal to 

12 certify the private education loan under sub13 paragraph (D). 

14 ‘‘(B) With respect to a certification request de15 scribed in subparagraph (A), and prior to providing 

16 such certification under subparagraph (A)(i) or pro17 viding notice of the refusal to provide certification 

18 under subparagraph (A)(iii), the institution shall— 

19 ‘‘(i) determine whether the student who 

20 initiated the application for the private edu21 cation loan, or on whose behalf the application 

22 was initiated, has applied for and exhausted the 

23 Federal financial assistance available to such 

24 student under this title and inform the student 

25 accordingly; and 

95 

•S 3404 IS

1 ‘‘(ii) provide the borrower whose loan ap2 plication has prompted the certification request 

3 by a private educational lender, as described in 

4 subparagraph (A)(i), with the following infor5 mation and disclosures: 

6 ‘‘(I) The availability of, and the bor7 rower’s potential eligibility for, Federal fi8 nancial assistance under this title, includ9 ing disclosing the terms, conditions, inter10 est rates, and repayment options and pro11 grams of Federal student loans. 

12 ‘‘(II) The borrower’s ability to select a 

13 private educational lender of the bor14 rower’s choice. 

15 ‘‘(III) The impact of a proposed pri16 vate education loan on the borrower’s po17 tential eligibility for other financial assist18 ance, including Federal financial assistance 

19 under this title. 

20 ‘‘(IV) The borrower’s right to accept 

21 or reject a private education loan within 

22 the 30-day period following a private edu23 cational lender’s approval of a borrower’s 

24 application and about a borrower’s 3-day 

25 right to cancel period. 

96 

•S 3404 IS

1 ‘‘(C) For purposes of this paragraph, the terms 

2 ‘private educational lender’ and ‘private education 

3 loan’ have the meanings given such terms in section 

4 140 of the Truth in Lending Act (15 U.S.C. 1650). 

5 ‘‘(D)(i) An institution shall not provide a cer6 tification with respect to a private education loan 

7 under this paragraph unless the private education 

8 loan includes terms that provide— 

9 ‘‘(I) the borrower alternative repayment 

10 options, including loan consolidation or refi11 nancing; and 

12 ‘‘(II) for the discharge of the borrower and 

13 co-borrower’s, if applicable, liability to repay 

14 the loan pursuant to paragraphs (19) and (20) 

15 of section 128(e) of the Truth in Lending Act 

16 (15 U.S.C. 1638(e)). 

17 ‘‘(ii) In this paragraph, the term ‘disability’ 

18 means a permanent and total disability, as deter19 mined in accordance with the regulations of the Sec20 retary of Education, or a determination by the Sec21 retary of Veterans Affairs that the borrower is un22 employable due to a service connected-disability.’’. 

23 (2) EFFECTIVE DATE.—The amendment made 

24 by paragraph (1) shall take effect on the effective 

97 

•S 3404 IS

1 date of the regulations described in subsection 

2 (a)(3). 

3 (3) PREFERRED LENDER ARRANGEMENT.—Sec4 tion 151(8)(A)(ii) of the Higher Education Act of 

5 1965 (20 U.S.C. 1019(8)(A)(ii)) is amended by in6 serting ‘‘certifying,’’ after ‘‘promoting,’’. 

7 (c) REPORT.— 

8 (1) IN GENERAL.—Not later than 24 months 

9 after the issuance of regulations under subsection 

10 (a)(3), the Director of the Bureau of Consumer Fi11 nancial Protection and the Secretary of Education 

12 shall jointly submit to Congress a report on the com13 pliance of— 

14 (A) private educational lenders with sec15 tion 128(e)(3) of the Truth in Lending Act (15 

16 U.S.C. 1638(e)), as amended by subsection (a); 

17 and 

18 (B) institutions of higher education with 

19 section 487(a)(28) of the Higher Education Act 

20 of 1965 (20 U.S.C. 1094(a)), as amended by 

21 subsection (b). 

22 (2) CONTENTS.—The report under paragraph 

23 (1) shall include information about the degree to 

24 which specific institutions utilize certifications in ef25 fectively— 

98 

•S 3404 IS

1 (A) encouraging the exhaustion of Federal 

2 student loan eligibility by borrowers prior to 

3 taking on private education loan debt; and 

4 (B) lowering student private education 

5 loan debt by borrowers. 

6 SEC. 7. CENTRALIZED POINT OF ACCESS. 

7 Part G of title IV of the Higher Education Act of 

8 1965 (20 U.S.C. 1088 et seq.) is amended by adding at 

9 the end the following: 

10 ‘‘SEC. 493E. CENTRALIZED POINT OF ACCESS. 

11 ‘‘Not later than 2 years after the date of enactment 

12 of the Student Loan Borrower Bill of Rights, the Sec13 retary shall establish a centralized point of access for all 

14 borrowers of loans that are made, insured, or guaranteed 

15 under this title that are in repayment, including a central 

16 location for account information and payment processing 

17 for such loan servicing, regardless of the specific entity 

18 engaged in servicing.’’. 

19 SEC. 8. EDUCATION LOAN OMBUDSMAN. 

20 Section 1035 of the Consumer Financial Protection 

21 Act of 2010 (12 U.S.C. 5535) is amended— 

22 (1) in the section heading, by striking ‘‘PRI23 VATE’’; 

24 (2) in subsection (a)— 

99 

•S 3404 IS

1 (A) by striking ‘‘a Private’’ and inserting 

2 ‘‘an’’; and 

3 (B) by striking ‘‘private’’; 

4 (3) in subsection (b), by striking ‘‘private edu5 cation student loan’’ and inserting ‘‘postsecondary 

6 education loan’’; 

7 (4) in subsection (c)— 

8 (A) in the matter preceding paragraph (1), 

9 by striking ‘‘subsection’’ and inserting ‘‘sec10 tion’’; 

11 (B) in paragraph (1), by striking ‘‘pri12 vate’’; 

13 (C) by striking paragraph (2) and insert14 ing the following: 

15 ‘‘(2) coordinate with the unit of the Bureau es16 tablished under section 1013(b)(3), in order to mon17 itor complaints by borrowers and responses to those 

18 complaints by the Bureau or other appropriate Fed19 eral or State agency;’’; and 

20 (D) in paragraph (3), by striking ‘‘pri21 vate’’; 

22 (5) in subsection (d)— 

23 (A) in paragraph (2)— 

24 (i) by striking ‘‘on the same day an25 nually’’; and 

100 

•S 3404 IS

1 (ii) by inserting ‘‘and be made avail2 able to the public’’ after ‘‘Representa3 tives’’; and 

4 (B) by adding at the end the following: 

5 ‘‘(3) CONTENTS.—The report required under 

6 paragraph (1) shall include information on the num7 ber, nature, and resolution of complaints received, 

8 disaggregated by postsecondary educational lender 

9 or servicer, region, State, and institution of higher 

10 education.’’; and 

11 (6) by striking subsection (e) and inserting the 

12 following: 

13 ‘‘(e) DEFINITIONS.—In this section: 

14 ‘‘(1) BORROWER.—The term ‘borrower’ means 

15 a borrower of a postsecondary education loan. 

16 ‘‘(2) INSTITUTION OF HIGHER EDUCATION.— 

17 The term ‘institution of higher education’ has the 

18 meaning given the term in section 140 of the Truth 

19 in Lending Act (15 U.S.C. 1650). 

20 ‘‘(3) POSTSECONDARY EDUCATION LOAN.—The 

21 term ‘postsecondary education loan’ means— 

22 ‘‘(A) a private education loan, as defined 

23 in section 140 of the Truth in Lending Act (15 

24 U.S.C. 1650); 

101 

•S 3404 IS

1 ‘‘(B) a loan made, insured, or guaranteed 

2 under part B, D, or E of title IV of the Higher 

3 Education Act of 1965 (20 U.S.C. 1071 et seq., 

4 1087a et seq., and 1087aa et seq.); or 

5 ‘‘(C) a loan made, insured, or guaranteed 

6 under title VII or title VIII of the Public 

7 Health Service Act (42 U.S.C. 292 et seq. and 

8 296 et seq.).’’. 

9 SEC. 9. REPORT ON PRIVATE EDUCATION LOANS AND PRI10 VATE EDUCATIONAL LENDERS. 

11 (a) IN GENERAL.—Not later than 2 years after the 

12 date of enactment of this Act, the Director of the Bureau 

13 of Consumer Financial Protection and the Secretary of 

14 Education, in consultation with the Commissioners of the 

15 Federal Trade Commission and the Attorney General of 

16 the United States, shall submit a report to the Committee 

17 on Banking, Housing, and Urban Affairs of the Senate, 

18 the Committee on Health, Education, Labor, and Pen19 sions of the Senate, the Committee on Financial Services 

20 of the House of Representatives, and the Committee on 

21 Education and the Workforce of the House of Representa22 tives on private education loans (as that term is defined 

23 in section 140 of the Truth in Lending Act (15 U.S.C. 

24 1650)) and private educational lenders (as that term is 

25 defined in such section). 

102 

•S 3404 IS

1 (b) CONTENTS.—The report required by this section 

2 shall examine, at a minimum— 

3 (1) the growth and changes of the private edu4 cation loan market in the United States; 

5 (2) factors influencing such growth and 

6 changes; 

7 (3) the extent to which students and parents of 

8 students rely on private education loans to finance 

9 postsecondary education and the private education 

10 loan indebtedness of borrowers; 

11 (4) the characteristics of private education loan 

12 borrowers, including— 

13 (A) the types of institutions of higher edu14 cation that they attend; 

15 (B) socioeconomic characteristics (includ16 ing income and education levels, racial charac17 teristics, geographical background, age, and 

18 gender); 

19 (C) what other forms of financing bor20 rowers use to pay for education; 

21 (D) whether they exhaust their Federal 

22 loan options before taking out a private edu23 cation loan; 

24 (E) whether such borrowers are dependent 

25 or independent students (as determined under 

103 

•S 3404 IS

1 part F of title IV of the Higher Education Act 

2 of 1965 (20 U.S.C. 1087kk et seq.)) or parents 

3 of such students; 

4 (F) whether such borrowers are students 

5 enrolled in a program leading to a certificate, li6 cense, or credential other than a degree, an as7 sociate degree, a baccalaureate degree, or a 

8 graduate or professional degree; and 

9 (G) if practicable, employment and repay10 ment behaviors; 

11 (5) the characteristics of private educational 

12 lenders, including whether such creditors are for13 profit, non-profit, or institutions of higher education; 

14 (6) the underwriting criteria used by private 

15 educational lenders, including the use of cohort de16 fault rate (as such term is defined in section 435(m) 

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

18 1085(m)); 

19 (7) the terms, conditions, and pricing of private 

20 education loans; 

21 (8) the consumer protections available to pri22 vate education loan borrowers, including the effec23 tiveness of existing disclosures and requirements and 

24 borrowers’ awareness and understanding about 

25 terms and conditions of various financial products; 

104 

•S 3404 IS

1 (9) whether Federal regulators and the public 

2 have access to information sufficient to provide them 

3 with assurances that private education loans are 

4 provided in accord with the Nation’s fair lending 

5 laws and that allows public officials to determine 

6 lender compliance with fair lending laws; and 

7 (10) any statutory or legislative recommenda8 tions necessary to improve consumer protections for 

9 private education loan borrowers and to better en10 able Federal regulators and the public to ascertain 

11 private educational lender compliance with fair lend12 ing laws. 

13 SEC. 10. REPORT ON POSTSECONDARY EDUCATION LOAN 

14 SERVICING. 

15 Not later than 1 year after the date of enactment 

16 of this Act, the Director of the Bureau of Consumer Fi17 nancial Protection and the Secretary of Education shall 

18 submit a joint report to the Committee on Banking, Hous19 ing, and Urban Affairs of the Senate, the Committee on 

20 Health, Education, Labor, and Pensions of the Senate, the 

21 Committee on Financial Services of the House of Rep22 resentatives, and the Committee on Education and the 

23 Workforce of the House of Representatives on servicing 

24 of postsecondary education loans, including— 

105 

•S 3404 IS

1 (1) any legislative recommendations to improve 

2 servicing standards; and 

3 (2) information on proactive early intervention 

4 methods by postsecondary educational lenders or 

5 servicers to help distressed postsecondary education 

6 loan borrowers enroll in any eligible repayment 

7 plans. 

Æ