II 

113TH CONGRESS 

1ST SESSION S. 1803 

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

purposes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 11, 2013 

Mr. DURBIN (for himself, Ms. WARREN, Mrs. BOXER, and Mr. REED) 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. TRUTH IN LENDING ACT AMENDMENTS. 

7 The Truth in Lending Act (15 U.S.C. 1601 et seq.) 

8 is amended— 

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

10 (A) in subsection (e)— 


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1 (i) in paragraph (1)(O), by striking 

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

3 (9)’’; 

4 (ii) in paragraph (2)(L), by striking 

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

6 (9)’’; 

7 (iii) in paragraph (4)(C), by striking 

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

9 (10)’’; 

10 (iv) by redesignating paragraphs (5) 

11 through (11) as paragraphs (8) through 

12 (14), respectively; 

13 (v) by inserting after paragraph (4) 

14 the following: 

15 ‘‘(5) DISCLOSURES BEFORE FIRST FULLY AM16 ORTIZED PAYMENT.—Not fewer than 30 days and 

17 not more than 150 days before the first fully amor18 tized payment on a private education loan is due 

19 from the borrower, the private educational lender 

20 shall disclose to the borrower, clearly and conspicu21 ously— 

22 ‘‘(A) the information described in— 

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

24 necessary, for the rate of interest in effect 


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1 on the date the first fully amortized pay2 ment on a private education loan is due); 

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

4 of paragraph (2); 

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

6 necessary, for the rate of interest in effect 

7 on the date the first fully amortized pay8 ment on a private education loan is due); 

9 ‘‘(iv) paragraph (2)(K); and 

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

11 paragraph (2); 

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

13 first fully amortized payment is due; 

14 ‘‘(C) the name of the lender and servicer, 

15 and the address to which communications and 

16 payments should be sent including a telephone 

17 number and website where the borrower may 

18 obtain additional information; 

19 ‘‘(D) a description of alternative repay20 ment plans, including loan consolidation or refi21 nancing, and servicemember or veteran benefits 

22 under the Servicemembers Civil Relief Act (50 

23 U.S.C. App. 501 et seq.) or other Federal or 

24 State law related to private education loans; 

25 and 


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1 ‘‘(E) a statement that a Servicemember 

2 and Veterans Liaison designated under para3 graph (15)(F) is available to answer inquiries 

4 about servicemember and veteran benefits re5 lated to private education loans, including the 

6 toll-free telephone number to contact the Liai7 son pursuant to paragraph (15)(F). 

8 ‘‘(6) DISCLOSURES WHEN BORROWER IS 30

9 DAYS DELINQUENT.—Not fewer than 5 days after a 

10 borrower becomes 30 days delinquent on a private 

11 education loan, the private educational lender shall 

12 disclose to the borrower, clearly and conspicuously— 

13 ‘‘(A) the date on which the loan will be 

14 charged-off (as defined in paragraph (15)(A)) 

15 or assigned to collections, including the con16 sequences of such charge-off or assignment to 

17 collections, if no payment is made; 

18 ‘‘(B) the minimum payment that the bor19 rower must make to avoid the loan being 

20 charged off (as defined in paragraph (15)(A)) 

21 or assigned to collection, and the minimum pay22 ment that the borrower must make to bring the 

23 loan current; 

24 ‘‘(C) a statement informing the borrower 

25 that a payment of less than the minimum payVerDate Mar 15 2010 01:27 Dec 17, 2013 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1803.IS S1803

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1 ment described in subparagraph (B) could re2 sult in the loan being charged off (as defined in 

3 paragraph (15)(A)) or assigned to collection; 

4 and 

5 ‘‘(D) a statement that a Servicemember 

6 and Veterans Liaison designated under para7 graph (15)(F) is available to answer inquiries 

8 about servicemember and veteran benefits re9 lated to private education loans, including the 

10 toll-free telephone number to contact the Liai11 son pursuant to paragraph (15)(F). 

12 ‘‘(7) DISCLOSURES WHEN BORROWER IS HAV13 ING DIFFICULTY MAKING PAYMENT OR IS 60 DAYS

14 DELINQUENT.— 

15 ‘‘(A) IN GENERAL.—Not fewer than 5 days 

16 after a borrower notifies a private educational 

17 lender that the borrower is having difficulty 

18 making payment or a borrower becomes 60 

19 days delinquent on a private education loan, the 

20 private educational lender shall— 

21 ‘‘(i) complete a full review of the bor22 rower’s private education loan and make a 

23 reasonable effort to obtain the information 

24 necessary to determine— 


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

2 an alternative repayment plan, includ3 ing loan consolidation or refinancing; 

4 and 

5 ‘‘(II) if the borrower is eligible 

6 for servicemember or veteran benefits 

7 under the Servicemembers Civil Relief 

8 Act (50 U.S.C. App. 501 et seq.) or 

9 other Federal or State law related to 

10 private education loans; 

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

12 in simple and understandable terms, infor13 mation about alternative repayment plans 

14 and benefits for which the borrower is eli15 gible, including all terms, conditions, and 

16 fees or costs associated with such repay17 ment plan, pursuant to paragraph (8)(D); 

18 ‘‘(iii) allow the borrower not less than 

19 30 days to apply for an alternative repay20 ment plan or benefits, if eligible; and 

21 ‘‘(iv) notify the borrower that a Serv22 icemember and Veterans Liaison des23 ignated under paragraph (15)(F) is avail24 able to answer inquiries about servicemem25 ber and veteran benefits related to private 


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1 education loans, including the toll-free tele2 phone number to contact the Liaison pur3 suant to paragraph (15)(F). 

4 ‘‘(B) FORBEARANCE OR DEFERMENT.—If 

5 a borrower notifies the private educational lend6 er that a long-term alternative repayment plan 

7 is not needed, the private educational lender 

8 may comply with this paragraph by providing 

9 the borrower, in writing, in simple and under10 standable terms, information about forbearance 

11 or deferment options, including all terms, condi12 tions, and fees or costs associated with such op13 tions pursuant to paragraph (8)(D). 

14 ‘‘(C) NOTIFICATION PROCESS.— 

15 ‘‘(i) IN GENERAL.—Each private edu16 cational lender shall establish a process, in 

17 accordance subparagraph (A), for a bor18 rower to notify the lender that— 

19 ‘‘(I) the borrower is having dif20 ficulty making payments on a private 

21 education loan; and 

22 ‘‘(II) a long-term alternative re23 payment plan is not needed. 

24 ‘‘(ii) CONSUMER FINANCIAL PROTEC25 TION BUREAU REQUIREMENTS.—The DiVerDate Mar 15 2010 01:27 Dec 17, 2013 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1803.IS S1803

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1 rector of the Consumer Financial Protec2 tion Bureau, in consultation with the Sec3 retary of Education, shall promulgate rules 

4 establishing minimum standards for pri5 vate educational lenders in carrying out 

6 the requirements of this paragraph and a 

7 model form for borrowers to notify private 

8 educational lenders of the information 

9 under this paragraph.’’; 

10 (vi) in paragraph (8), as redesignated 

11 by clause (iv), by adding at the end the fol12 lowing: 

13 ‘‘(D) MODEL DISCLOSURE FORM FOR AL14 TERNATIVE REPAYMENT PLANS, FORBEARANCE, 

15 AND DEFERMENT OPTIONS.—Not later than 2 

16 years after the date of enactment of the Stu17 dent Loan Borrower Bill of Rights, the Director 

18 of the Consumer Financial Protection Bureau, 

19 in consultation with the Secretary of Education, 

20 shall develop and issue model forms to allow 

21 borrowers to compare alternative repayment 

22 plans, forbearance, and deferment options with 

23 the borrower’s existing repayment plan with re24 spect to a private education loan. Such forms 

25 shall include the following: 


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

2 the life of the loan. 

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

4 be paid over the life of the loan. 

5 ‘‘(iii) The monthly payment amount. 

6 ‘‘(iv) The expected pay-off date. 

7 ‘‘(v) Related fees and costs. 

8 ‘‘(vi) Eligibility requirements, and 

9 how the borrower can apply for the alter10 native repayment plan, forbearance, or 

11 deferment option. 

12 ‘‘(vii) Any consequences, including the 

13 loss of eligibility for alternative repayment 

14 plans, forbearance, or deferment options.’’; 

15 (vii) in paragraph (11), as redesig16 nated by clause (iv), by striking ‘‘para17 graph (7)’’ and inserting ‘‘paragraph 

18 (10)’’; 

19 (viii) in paragraph (14), as redesig20 nated by clause (iv), by striking ‘‘para21 graph (5)’’ and inserting ‘‘paragraph (8)’’; 

22 and 

23 (ix) by adding at the end the fol24 lowing: 


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1 ‘‘(15) STUDENT LOAN BORROWER BILL OF

2 RIGHTS.— 

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

4 ‘‘(i) BORROWER.—The term ‘bor5 rower’ means the person to whom a private 

6 education loan is extended. 

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

8 off’ means charge to profit and loss, or 

9 subject to any similar action. 

10 ‘‘(iii) PRIVATE EDUCATION LOAN.— 

11 The term ‘private education loan’ has the 

12 meaning given the term in section 140(a). 

13 ‘‘(iv) SERVICER.—The term ‘servicer’ 

14 means the person responsible for the serv15 icing of a private education loan, including 

16 any agent of such person or the person 

17 who makes, owns, or holds a loan if such 

18 person also services the loan. 

19 ‘‘(v) SERVICING.—The term ‘serv20 icing’ means— 

21 ‘‘(I) receiving any scheduled peri22 odic payments from a borrower pursu23 ant to the terms of a private edu24 cation loan; 


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1 ‘‘(II) making the payments of 

2 principal and interest and such other 

3 payments with respect to the amounts 

4 received from the borrower, as may be 

5 required pursuant to the terms of the 

6 loan; and 

7 ‘‘(III) performing other adminis8 trative services with respect to the 

9 loan. 

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

11 If the sale, other transfer, or assignment of a 

12 private education loan results in a change in 

13 the identity of the party to whom the borrower 

14 must send subsequent payments or direct any 

15 communications concerning the loan— 

16 ‘‘(i) the transferor shall— 

17 ‘‘(I) notify the borrower, in writ18 ing, in simple and understandable 

19 terms, not fewer than 45 days before 

20 transferring a legally enforceable right 

21 to receive payment from the borrower 

22 on such loan, of— 

23 ‘‘(aa) the sale or other 

24 transfer; 


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1 ‘‘(bb) the identity of the 

2 transferee; 

3 ‘‘(cc) the name and address 

4 of the party to whom subsequent 

5 payments or communications 

6 must be sent; 

7 ‘‘(dd) the telephone numbers 

8 and websites of both the trans9 feror and the transferee; 

10 ‘‘(ee) the effective date of 

11 the sale, transfer, or assignment; 

12 ‘‘(ff) the date on which the 

13 transferor servicer will stop ac14 cepting payment; and 

15 ‘‘(gg) the date on which the 

16 transferee servicer will begin ac17 cepting payment; and 

18 ‘‘(II) forward any payment from 

19 a borrower with respect to such pri20 vate education loan to the transferee 

21 servicer, immediately upon receiving 

22 such payment, during the 60-day pe23 riod beginning on the date on which 

24 the transferor servicer stops accepting 


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1 payment of such private education 

2 loan; and 

3 ‘‘(ii) the transferee shall— 

4 ‘‘(I) notify the borrower, in writ5 ing, in simple and understandable 

6 terms, not fewer than 45 days before 

7 acquiring a legally enforceable right to 

8 receive payment from the borrower on 

9 such loan, of— 

10 ‘‘(aa) the sale or other 

11 transfer; 

12 ‘‘(bb) the identity of the 

13 transferee; 

14 ‘‘(cc) the name and address 

15 of the party to whom subsequent 

16 payments or communications 

17 must be sent; 

18 ‘‘(dd) the telephone numbers 

19 and websites of both the trans20 feror and the transferee; 

21 ‘‘(ee) the effective date of 

22 the sale, transfer, or assignment; 

23 ‘‘(ff) the date on which the 

24 transferor will stop accepting 

25 payment; and 


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1 ‘‘(gg) the date on which the 

2 transferee will begin accepting 

3 payment; 

4 ‘‘(II) accept as on-time and may 

5 not impose any late fee or finance 

6 charge for any payment from a bor7 rower with respect to such private 

8 education loan that is forwarded from 

9 the transferor servicer during the 60- 

10 day period beginning on the date on 

11 which the transferor servicer stops ac12 cepting payment, if the transferor 

13 servicer receives such payment on or 

14 before the applicable due date, includ15 ing any grace period; 

16 ‘‘(III) provide borrowers a sim17 ple, online process for transferring ex18 isting electronic fund transfer author19 ity; and 

20 ‘‘(IV) honor any promotion or 

21 benefit offered to the borrower or ad22 vertised by the previous owner or 

23 transferor servicer of such private 

24 education loan. 


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1 ‘‘(C) MATERIAL CHANGE IN MAILING AD2 DRESS OR PROCEDURE FOR HANDLING PAY3 MENTS.—If a servicer makes a change in the 

4 mailing address, office, or procedures for han5 dling payments with respect to any private edu6 cation loan, and such change causes a delay in 

7 the crediting of the account of the borrower 

8 made during the 60-day period following the 

9 date on which such change took effect, the 

10 servicer may not impose any late fee or finance 

11 charge for a late payment on such private edu12 cation loan. 

13 ‘‘(D) APPLICATION OF PAYMENTS.— 

14 ‘‘(i) IN GENERAL.—Unless otherwise 

15 directed by the borrower, upon receipt of a 

16 payment, the servicer shall apply amounts 

17 first to the interest and fees owed on the 

18 payment due date, and then to the prin19 cipal balance of the private education loan 

20 bearing the highest annual percentage 

21 rate, and then to each successive interest 

22 and fees and then principal balance bear23 ing the next highest annual percentage 

24 rate, until the payment is exhausted. A 

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1 ize the servicer to apply payments in a dif2 ferent manner. 

3 ‘‘(ii) APPLICATION OF EXCESS

4 AMOUNTS.—Unless otherwise directed by 

5 the borrower, upon receipt of a payment, 

6 the servicer shall apply amounts in excess 

7 of the minimum payment amount first to 

8 the interest and fees owed on the payment 

9 due date, and then to the principal balance 

10 of the private education loan balance bear11 ing the highest annual percentage rate, 

12 and then to each successive interest and 

13 fees and principal balance bearing the next 

14 highest annual percentage rate, until the 

15 payment is exhausted. A borrower may in16 struct or expressly authorize the servicer to 

17 apply such excess payments in a different 

18 manner. 

19 ‘‘(iii) APPLY PAYMENT ON DATE RE20 CEIVED.—Unless otherwise directed by the 

21 borrower, a servicer shall apply payments 

22 to a borrower’s account on the date the 

23 payment is received. 

24 ‘‘(iv) PROMULGATION OF RULES.— 

25 The Director of the Consumer Financial 


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1 Protection Bureau, in consultation with 

2 the Secretary of Education, may promul3 gate rules for the application of payments 

4 that— 

5 ‘‘(I) minimizes the amount of 

6 fees and interest incurred by the bor7 rower and the total loan amount paid 

8 by the borrower; 

9 ‘‘(II) minimizes delinquencies, as10 signments to collection, and charge11 offs; 

12 ‘‘(III) requires servicers to apply 

13 payments on the date received; and 

14 ‘‘(IV) allows the borrower to in15 struct the servicer to apply payments 

16 in a manner preferred by the bor17 rower. 

18 ‘‘(E) REHABILITATION OF LOANS.—If a 

19 borrower successfully and voluntarily makes 9 

20 payments within 20 days of the due date during 

21 10 consecutive months of amounts owed on a 

22 private education loan, or otherwise brings a 

23 private education loan current after the loan is 

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1 quest that any consumer reporting agency to 

2 which the charge-off was reported remove the 

3 delinquency that led to the charge-off and the 

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

5 ‘‘(F) SERVICEMEMBERS, VETERANS, AND

6 PRIVATE EDUCATION LOANS.— 

7 ‘‘(i) SERVICEMEMBER AND VETERANS

8 LIAISON.—Each servicer shall designate an 

9 employee to act as the servicemember and 

10 veterans liaison who is responsible for an11 swering inquiries from servicemembers and 

12 veterans, and is specially trained on serv13 icemember and veteran benefits under the 

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

15 App. 501 et seq.) and other Federal or 

16 State laws related to private education 

17 loans. 

18 ‘‘(ii) TOLL-FREE TELEPHONE NUM19 BER.—Each servicer shall maintain a toll20 free telephone number that shall— 

21 ‘‘(I) connect directly to the serv22 icemember and veterans liaison des23 ignated under clause (i); and 

24 ‘‘(II) be made available on the 

25 primary internet website of the 


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1 servicer and on monthly billing state2 ments. 

3 ‘‘(iii) PROHIBITION ON CHARGE

4 OFFS.—A lender or servicer may not 

5 charge off or report a private education 

6 loan as delinquent, assigned to collection 

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

8 or charged-off to a credit reporting agency 

9 if the borrower is on active duty in the 

10 Armed Forces (as defined in section 

11 101(d)(1) of title 10, United States Code) 

12 serving in a combat zone (as designated by 

13 the President under section 112(c) of the 

14 Internal Revenue Code of 1986). 

15 ‘‘(G) BORROWER’S LOAN HISTORY.— 

16 ‘‘(i) IN GENERAL.—A servicer shall 

17 make available through a secure website, 

18 or in writing upon request, the loan history 

19 of each borrower for each private education 

20 loan, separately designating— 

21 ‘‘(I) payment history; 

22 ‘‘(II) loan history, including any 

23 forbearances, deferrals, delinquencies, 

24 assignment to collection, and charge 

25 offs; 


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1 ‘‘(III) annual percentage rate 

2 history; and 

3 ‘‘(IV) key loan terms, including 

4 application of payments to interest, 

5 principal, and fees, origination date, 

6 principal, capitalized interest, annual 

7 percentage rate, including any cap, 

8 loan term, and any contractual incen9 tives. 

10 ‘‘(ii) ORIGINAL DOCUMENTATION.—A 

11 servicer shall make available to the bor12 rower, if requested, at no charge, copies of 

13 the original loan documents and the prom14 issory note for each private education loan. 

15 ‘‘(H) ERROR RESOLUTION.—The Director 

16 of the Consumer Financial Protection Bureau, 

17 in consultation with the Secretary of Education, 

18 shall promulgate rules requiring servicers to es19 tablish error resolution procedures to allow bor20 rowers to inquire about errors related to their 

21 private education loans and obtain timely reso22 lution of such errors. 

23 ‘‘(I) ADDITIONAL SERVICING STAND24 ARDS.—The Director of the Consumer Finan25 cial Protection Bureau, in consultation with the 


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1 Secretary of Education, may establish addi2 tional servicing standards to reduce delin3 quencies, assignment to collections, and charge4 offs, and to ensure borrowers understand their 

5 rights and obligations related to their private 

6 education loans. 

7 ‘‘(J) ARBITRATION.— 

8 ‘‘(i) WAIVER OF RIGHTS AND REM9 EDIES.—Any rights and remedies available 

10 to borrowers against servicers may not be 

11 waived by any agreement, policy, or form, 

12 including by a predispute arbitration 

13 agreement. 

14 ‘‘(ii) PREDISPUTE ARBITRATION

15 AGREEMENTS.—No predispute arbitration 

16 agreement shall be valid or enforceable by 

17 a servicer, including as a third-party bene18 ficiary or by estoppel, if the agreement re19 quires arbitration of a dispute with respect 

20 to a private education loan. This subpara21 graph applies to predispute arbitration 

22 agreements entered into before the date of 

23 enactment of the Student Loan Borrower 

24 Bill of Rights, as well as on and after such 

25 date of enactment, if the violation that is 


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1 the subject of the dispute occurred on or 

2 after such date of enactment. 

3 ‘‘(K) ENFORCEMENT.—The provisions of 

4 this paragraph shall be enforced by the agencies 

5 specified in subsections (a) through (d) of sec6 tion 108, in the manner set forth in that sec7 tion or under any other applicable authorities 

8 available to such agencies by law. 

9 ‘‘(L) PREEMPTION.—Nothing in this para10 graph may be construed to preempt any provi11 sion of State law regarding private education 

12 loans where the State law provides stronger 

13 consumer protections. 

14 ‘‘(M) CIVIL LIABILITY.—A servicer that 

15 fails to comply with any requirement imposed 

16 under this paragraph shall be deemed a creditor 

17 that has failed to comply with a requirement 

18 under this chapter for purposes of liability 

19 under section 130 and such servicer shall be 

20 subject to the applicable liability provisions 

21 under such section.’’; and 

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

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

24 CHARGE.—The information required to be disclosed under 


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

2 borrower.’’; and 

3 (2) in section 130(a)— 

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

5 ‘‘128(e)(7)’’ and inserting ‘‘128(e)(10)’’; and 

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

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

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

9 (4)(C), (9), (10), or (11) of section 128(e),’’. 

10 SEC. 3. STUDENT LOAN BORROWER BILL OF RIGHTS. 

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

12 et seq.) is amended— 

13 (1) in part G of title IV (20 U.S.C. 1088 et 

14 seq.) by adding at the end the following: 

15 ‘‘SEC. 493E. STUDENT LOAN BORROWER BILL OF RIGHTS. 

16 ‘‘(a) DEFINITIONS.—In this section: 

17 ‘‘(1) SERVICER.—The term ‘servicer’ means the 

18 person responsible for the servicing of any student 

19 loan, including any agent of such person or the per20 son who makes, owns, or holds a loan if such person 

21 also services the loan. 

22 ‘‘(2) SERVICING.—The term ‘servicing’ 

23 means— 


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1 ‘‘(A) receiving any scheduled periodic pay2 ments from a borrower pursuant to the terms 

3 of a student loan; 

4 ‘‘(B) making the payments of principal 

5 and interest and such other payments with re6 spect to the amounts received from the bor7 rower, as may be required pursuant to the 

8 terms of the loan; and 

9 ‘‘(C) performing other administrative serv10 ices with respect to the loan. 

11 ‘‘(3) STUDENT LOAN.—The term ‘student loan’ 

12 means a loan made, insured, or guaranteed under 

13 this title. 

14 ‘‘(b) TRANSFER OF LENDER OR SERVICER.—If the 

15 sale, other transfer, or assignment of a student loan re16 sults in a change in the identity of the party to whom 

17 the borrower must send subsequent payments or direct 

18 any communications concerning the loan— 

19 ‘‘(1) the transferor shall— 

20 ‘‘(A) notify the borrower in writing not 

21 fewer than 45 days before transferring a legally 

22 enforceable right to receive payment from the 

23 borrower on such loan, of— 

24 ‘‘(i) the sale, transfer, or assignment; 

25 ‘‘(ii) the identity of the transferee; 


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1 ‘‘(iii) the name and address of the 

2 party to whom subsequent payments or 

3 communications must be sent; 

4 ‘‘(iv) the telephone numbers and 

5 websites of both the transferor and the 

6 transferee; 

7 ‘‘(v) the effective date of the sale, 

8 transfer, or assignment; 

9 ‘‘(vi) the date on which the current 

10 servicer will stop accepting payments; and 

11 ‘‘(vii) the date on which the transferee 

12 servicer will begin accepting payment; and 

13 ‘‘(B) forward to the transferee servicer any 

14 payment with respect to such student loan, im15 mediately upon receiving such payment, from a 

16 borrower during the 60-day period beginning on 

17 the date on which the transferor servicer stops 

18 accepting payment for such student loan; and 

19 ‘‘(2) the transferee shall— 

20 ‘‘(A) notify the borrower in writing not 

21 fewer than 45 days before transferring a legally 

22 enforceable right to receive payment from the 

23 borrower on such loan, of— 

24 ‘‘(i) the sale, transfer, or assignment; 

25 ‘‘(ii) the identity of the transferor; 


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1 ‘‘(iii) the name and address of the 

2 party to whom subsequent payments or 

3 communications must be sent; 

4 ‘‘(iv) the telephone numbers and 

5 websites of both the transferor and the 

6 transferee; 

7 ‘‘(v) the effective date of the sale, 

8 transfer, or assignment; 

9 ‘‘(vi) the date on which the current 

10 servicer will stop accepting payments; and 

11 ‘‘(vii) the date on which the transferee 

12 servicer will begin accepting payment; 

13 ‘‘(B) accept as on-time and may not im14 pose any late fee or finance charge with respect 

15 to such student loan for any payment forwarded 

16 from the transferor servicer during the 60-day 

17 period beginning on the date on which the 

18 transferor servicer stops accepting payment, if 

19 the transferor servicer received such payment 

20 from the borrower on or before the applicable 

21 due date, including any grace period; 

22 ‘‘(C) provide borrowers a simple, online 

23 process for transferring existing electronic fund 

24 transfer authority; and 


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1 ‘‘(D) honor any promotion or benefit of2 fered to the borrower or advertised by the pre3 vious owner or transferor servicer of such stu4 dent loan. 

5 ‘‘(c) MATERIAL CHANGE IN MAILING ADDRESS OR

6 PROCEDURE FOR HANDLING PAYMENTS.—If a servicer 

7 makes a change in the mailing address, office, or proce8 dures for handling payments with respect to any student 

9 loan, and such change causes a delay in the crediting of 

10 the account of the borrower made during the 60-day pe11 riod following the date on which such change took effect, 

12 the servicer may not impose any late fee or finance charge 

13 for a late payment on such student loan. 

14 ‘‘(d) ELIGIBILITY FOR DISCHARGE.—The Director of 

15 the Consumer Financial Protection Bureau, in consulta16 tion with the Secretary, shall promulgate rules requiring 

17 lenders and servicers to— 

18 ‘‘(1) identify and contact borrowers who may be 

19 eligible for student loan discharge by the Secretary; 

20 ‘‘(2) provide the borrower, in writing, in simple 

21 and understandable terms, information about obtain22 ing such discharge; and 

23 ‘‘(3) create a streamlined process for eligible 

24 borrowers to apply for and receive such discharge. 

25 ‘‘(e) APPLICATION OF PAYMENTS.— 


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1 ‘‘(1) IN GENERAL.—Notwithstanding any other 

2 provision of this Act, the Director of the Consumer 

3 Financial Protection Bureau, in consultation with 

4 the Secretary, shall issue rules for the application of 

5 student loan payments that— 

6 ‘‘(A) minimizes the amount of fees and in7 terest incurred by the borrower and the total 

8 loan amount paid by the borrower; 

9 ‘‘(B) minimizes delinquencies, assignments 

10 to collection, and charge offs; 

11 ‘‘(C) requires servicers to apply payments 

12 on the date received; and 

13 ‘‘(D) allows the borrower to direct the 

14 servicer to apply payments in a manner pre15 ferred by the borrower. 

16 ‘‘(2) METHOD THAT BEST BENEFITS BOR17 ROWER.—In issuing the rules under paragraph (1), 

18 the Director of the Consumer Financial Protection 

19 Bureau shall choose the application method that 

20 best benefits the borrower and is compatible with ex21 isting repayment options. 

22 ‘‘(f) SERVICEMEMBERS, VETERANS, AND STUDENT

23 LOANS.— 

24 ‘‘(1) SERVICEMEMBER AND VETERANS LIAI25 SON.—Each servicer of a student loan shall desVerDate Mar 15 2010 01:27 Dec 17, 2013 Jkt 039200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\S1803.IS S1803

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1 ignate an employee to act as the servicemember and 

2 veterans liaison who is responsible for answering in3 quiries from servicemembers and veterans, and is 

4 specially trained on servicemember and veteran ben5 efits and options under the Servicemembers Civil 

6 Relief Act (50 U.S.C. App. 501 et seq.) and other 

7 Federal or State laws related to student loans. 

8 ‘‘(2) TOLL-FREE TELEPHONE NUMBER.—Each 

9 servicer of a student loan shall maintain a toll-free 

10 telephone number for the servicemember and vet11 erans liaison designated under paragraph (1), which 

12 shall be made available on the primary Internet 

13 website of the servicer and on monthly billing state14 ments. 

15 ‘‘(3) PROHIBITION ON DEFAULT.—Notwith16 standing any other provision of this Act, a servicer 

17 may not report a student loan as delinquent, as18 signed to collection (internally or by referral to a 

19 third party), charged off, or in default, to a credit 

20 reporting agency if the borrower is on active duty in 

21 the Armed Forces (as defined in section 101(d)(1) 

22 of title 10, United States Code) serving in a combat 

23 zone (as designated by the President under section 

24 112(c) of the Internal Revenue Code of 1986). 


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1 ‘‘(4) ADDITIONAL LIAISONS.—The Secretary 

2 shall determine additional entities with whom bor3 rowers interact, including guaranty agencies, that 

4 shall designate an employee to act as the service5 member and veterans liaison who is responsible for 

6 answering inquiries from servicemembers and vet7 erans, and is specially trained on servicemember and 

8 veteran benefits and options under the 

9 Servicemembers Civil Relief Act (50 U.S.C. App. 

10 501 et seq.) and other Federal or State laws related 

11 to student loans. 

12 ‘‘(g) BORROWER’S LOAN HISTORY.— 

13 ‘‘(1) IN GENERAL.—A servicer of a student loan 

14 shall make available through a secure website, or in 

15 writing upon request, the loan history of each bor16 rower for each student loan, separately desig17 nating— 

18 ‘‘(A) payment history; 

19 ‘‘(B) loan history, including any 

20 forbearances, deferrals, delinquencies, and de21 faults; 

22 ‘‘(C) annual percentage rate history; and 

23 ‘‘(D) key loan terms, including application 

24 of payments to interest, principal, and fees, 

25 origination date, principal, capitalized interest, 


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1 annual percentage rate, including any cap, loan 

2 term, and any contractual incentives. 

3 ‘‘(2) ORIGINAL DOCUMENTATION.—A servicer 

4 shall make available to the borrower, if requested, at 

5 no charge, copies of the original loan documents and 

6 the promissory note for each student loan. 

7 ‘‘(h) ERROR RESOLUTION.—The Director of the Con8 sumer Financial Protection Bureau, in consultation with 

9 the Secretary, shall promulgate rules requiring servicers 

10 to establish error resolution procedures to allow borrowers 

11 to inquire about errors related to their student loans and 

12 obtain timely resolution of such errors. 

13 ‘‘(i) ADDITIONAL SERVICING STANDARDS.—The Di14 rector of the Consumer Financial Protection Bureau, in 

15 consultation with the Secretary, may establish additional 

16 servicing standards to reduce delinquencies, assignments 

17 to collection, and defaults, and to ensure borrowers under18 stand their rights and obligations related to their student 

19 loans. 

20 ‘‘(j) PROMULGATION OF RULES.—The Director of 

21 the Consumer Financial Protection Bureau, in consulta22 tion with the Secretary, shall promulgate rules imple23 menting this section.’’; 

24 (2) in section 433 (20 U.S.C. 1083)— 

25 (A) in subsection (b)— 


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1 (i) in paragraph (12), by striking 

2 ‘‘and’’ after the semicolon; 

3 (ii) in paragraph (13), by striking the 

4 period at the end and inserting ‘‘; and’’; 

5 and 

6 (iii) by adding at the end the fol7 lowing: 

8 ‘‘(14) a statement that— 

9 ‘‘(A) the borrower may be entitled to serv10 icemember and veteran benefits under the 

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

12 App. 501 et seq.) and other Federal or State 

13 laws; and 

14 ‘‘(B) a Servicemember and Veterans Liai15 son designated under section 493E(f) is avail16 able to answer inquiries about servicemember 

17 and veteran benefits, including the toll-free tele18 phone number to contact the Liaison pursuant 

19 to section 493E(f).’’; and 

20 (B) in subsection (e)— 

21 (i) in paragraph (2), by adding at the 

22 end the following: 

23 ‘‘(D) A statement that— 

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

25 servicemember and veteran benefits under 


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1 the Servicemembers Civil Relief Act (50 

2 U.S.C. App. 501 et seq.) and other Fed3 eral or State laws; and 

4 ‘‘(ii) a Servicemember and Veterans 

5 Liaison designated under section 493E(f) 

6 is available to answer inquiries about serv7 icemember and veteran benefits, including 

8 the toll-free telephone number to contact 

9 the Liaison pursuant to section 493E(f).’’; 

10 (ii) in paragraph (3), by adding at the 

11 end the following: 

12 ‘‘(F) A statement that— 

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

14 servicemember and veteran benefits under 

15 the Servicemembers Civil Relief Act (50 

16 U.S.C. App. 501 et seq.) and other Fed17 eral or State laws; and 

18 ‘‘(ii) a Servicemember and Veterans 

19 Liaison designated under section 493E(f) 

20 is available to answer inquiries about serv21 icemember and veteran benefits, including 

22 the toll-free telephone number to contact 

23 the Liaison pursuant to section 493E(f).’’; 

24 and 


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1 (iii) by adding at the end the fol2 lowing: 

3 ‘‘(4) NOTIFICATION OF REPAYMENT OPTIONS

4 AND ALTERNATIVES TO DEFAULT.—The Secretary 

5 shall require eligible lenders to, not later than 1 year 

6 after the date of enactment of the Student Loan 

7 Borrower Bill of Rights— 

8 ‘‘(A) notify borrowers, in writing, in simple 

9 and understandable terms, about alternative re10 payment options, including income-based repay11 ment, income contingent repayment, consolida12 tion, and forgiveness options, as well as service13 member or veteran benefits under the 

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

15 App. 501 et seq.) or other Federal or State 

16 laws; 

17 ‘‘(B) provide borrowers, in writing, in sim18 ple and understandable terms, information 

19 about alternative repayment plans, including all 

20 terms, conditions, and fees or costs associated 

21 with such repayment plans in a format that al22 lows the borrower to compare the current re23 payment plan with alternative repayment plans; 

24 and 


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1 ‘‘(C) offer to enroll such borrowers in al2 ternative repayment plans, if eligible.’’; and 

3 (3) in section 455(d) (20 U.S.C. 1087e(d)), by 

4 adding at the end the following: 

5 ‘‘(6) NOTIFICATION OF REPAYMENT OPTIONS.— 

6 The Secretary shall carry out, not later than 1 year 

7 after the date of enactment of the Student Loan 

8 Borrower Bill of Rights, the activities described in 

9 subparagraphs (A), (B), and (C) of section 

10 433(e)(4) with respect to loans made under this 

11 part.’’. 

12 SEC. 4. KNOW BEFORE YOU OWE. 

13 (a) AMENDMENTS TO THE TRUTH IN LENDING

14 ACT.— 

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

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

17 section 2, is further amended— 

18 (A) by striking paragraph (3) and insert19 ing the following: 

20 ‘‘(3) INSTITUTIONAL CERTIFICATION RE21 QUIRED.— 

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

23 subparagraph (B), before a creditor may issue 

24 any funds with respect to an extension of credit 

25 described in this subsection, the creditor shall 


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1 obtain from the relevant institution of higher 

2 education where such loan is to be used for a 

3 student, such institution’s certification of— 

4 ‘‘(i) the enrollment status of the stu5 dent; 

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

7 at the institution as determined by the in8 stitution under part F of title IV of the 

9 Higher Education Act of 1965; and 

10 ‘‘(iii) the difference between— 

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

12 ‘‘(II) the student’s estimated fi13 nancial assistance, including such as14 sistance received under title IV of the 

15 Higher Education Act of 1965 and 

16 other financial assistance known to 

17 the institution, as applicable. 

18 ‘‘(B) EXCEPTION.—Notwithstanding sub19 paragraph (A), a creditor may issue funds, not 

20 to exceed the amount described in subpara21 graph (A)(iii), with respect to an extension of 

22 credit described in this subsection without ob23 taining from the relevant institution of higher 

24 education such institution’s certification if such 

25 institution fails to provide within 15 business 


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1 days of the creditor’s request for such certifi2 cation— 

3 ‘‘(i) notification of the institution’s re4 fusal to certify the request; or 

5 ‘‘(ii) notification that the institution 

6 has received the request for certification 

7 and will need additional time to comply 

8 with the certification request. 

9 ‘‘(C) LOANS DISBURSED WITHOUT CER10 TIFICATION.—If a creditor issues funds without 

11 obtaining a certification, as described in sub12 paragraph (B), such creditor shall report the 

13 issuance of such funds in a manner determined 

14 by the Director of the Consumer Financial Pro15 tection Bureau.’’; and 

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

17 ‘‘(16) PROVISION OF INFORMATION.— 

18 ‘‘(A) PROVISION OF INFORMATION TO STU19 DENTS.— 

20 ‘‘(i) LOAN STATEMENT.—A creditor 

21 that issues any funds with respect to an 

22 extension of credit described in this sub23 section shall send loan statements, where 

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

25 borrowers of such funds not less than once 


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1 every 3 months during the time that such 

2 student is enrolled at an institution of 

3 higher education. 

4 ‘‘(ii) CONTENTS OF LOAN STATE5 MENT.—Each statement described in 

6 clause (i) shall— 

7 ‘‘(I) report the borrower’s total 

8 remaining debt to the creditor, includ9 ing accrued but unpaid interest and 

10 capitalized interest; 

11 ‘‘(II) report any debt increases 

12 since the last statement; and 

13 ‘‘(III) list the current interest 

14 rate for each loan. 

15 ‘‘(B) NOTIFICATION OF LOANS DISBURSED

16 WITHOUT CERTIFICATION.—On or before the 

17 date a creditor issues any funds with respect to 

18 an extension of credit described in this sub19 section, the creditor shall notify the relevant in20 stitution of higher education, in writing, of the 

21 amount of the extension of credit and the stu22 dent on whose behalf credit is extended. The 

23 form of such written notification shall be sub24 ject to the regulations of the Consumer Finan25 cial Protection Bureau. 


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

2 issues funds with respect to an extension of 

3 credit described in this subsection shall prepare 

4 and submit an annual report to the Consumer 

5 Financial Protection Bureau containing the re6 quired information about private student loans 

7 to be determined by the Consumer Financial 

8 Protection Bureau, in consultation with the 

9 Secretary of Education.’’. 

10 (2) DEFINITION OF PRIVATE EDUCATION

11 LOAN.—Section 140(a)(7)(A) of the Truth in Lend12 ing Act (15 U.S.C. 1650(a)(7)(A)) is amended— 

13 (A) by redesignating clause (ii) as clause 

14 (iii); 

15 (B) in clause (i), by striking ‘‘and’’ after 

16 the semicolon; and 

17 (C) by adding after clause (i) the following: 

18 ‘‘(ii) is not made, insured, or guaran19 teed under title VII or title VIII of the 

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

21 et seq. and 296 et seq.); and’’. 

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

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

24 of the Consumer Financial Protection Bureau shall 

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1 graphs (3) and (16) of section 128(e) of the Truth 

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

3 paragraph (1). Such regulations shall become effec4 tive not later than 6 months after their date of 

5 issuance. 

6 (b) AMENDMENTS TO THE HIGHER EDUCATION ACT

7 OF 1965.— 

8 (1) PROGRAM PARTICIPATION AGREEMENTS.— 

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

10 (20 U.S.C. 1094(a)) is amended by striking para11 graph (28) and inserting the following: 

12 ‘‘(28)(A) Upon the request of a private edu13 cational lender, acting in connection with an applica14 tion initiated by a borrower for a private education 

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

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

17 institution shall within 15 days of receipt of a cer18 tification request— 

19 ‘‘(i) provide such certification to such 

20 private educational lender— 

21 ‘‘(I) that the student who initi22 ated the application for the private 

23 education loan, or on whose behalf the 

24 application was initiated, is enrolled 


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1 or is scheduled to enroll at the institu2 tion; 

3 ‘‘(II) of such student’s cost of at4 tendance at the institution as deter5 mined under part F of this title; and 

6 ‘‘(III) of the difference be7 tween— 

8 ‘‘(aa) the cost of attendance 

9 at the institution; and 

10 ‘‘(bb) the student’s esti11 mated financial assistance re12 ceived under this title and other 

13 assistance known to the institu14 tion, as applicable; 

15 ‘‘(ii) notify the creditor that the insti16 tution has received the request for certifi17 cation and will need additional time to 

18 comply with the certification request; or 

19 ‘‘(iii) provide notice to the private 

20 educational lender of the institution’s re21 fusal to certify the private education loan 

22 under subparagraph (D). 

23 ‘‘(B) With respect to a certification request 

24 described in subparagraph (A), and prior to 

25 providing such certification under subparagraph 


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1 (A)(i) or providing notice of the refusal to pro2 vide certification under subparagraph (A)(iii), 

3 the institution shall— 

4 ‘‘(i) determine whether the student 

5 who initiated the application for the pri6 vate education loan, or on whose behalf the 

7 application was initiated, has applied for 

8 and exhausted the Federal financial assist9 ance available to such student under this 

10 title and inform the student accordingly; 

11 and 

12 ‘‘(ii) provide the borrower whose loan 

13 application has prompted the certification 

14 request by a private education lender, as 

15 described in subparagraph (A)(i), with the 

16 following information and disclosures: 

17 ‘‘(I) The availability of, and the 

18 borrower’s potential eligibility for, 

19 Federal financial assistance under this 

20 title, including disclosing the terms, 

21 conditions, interest rates, and repay22 ment options and programs of Federal 

23 student loans. 


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1 ‘‘(II) The borrower’s ability to 

2 select a private educational lender of 

3 the borrower’s choice. 

4 ‘‘(III) The impact of a proposed 

5 private education loan on the bor6 rower’s potential eligibility for other 

7 financial assistance, including Federal 

8 financial assistance under this title. 

9 ‘‘(IV) The borrower’s right to ac10 cept or reject a private education loan 

11 within the 30-day period following a 

12 private educational lender’s approval 

13 of a borrower’s application and about 

14 a borrower’s 3-day right to cancel pe15 riod. 

16 ‘‘(C) For purposes of this paragraph, the 

17 terms ‘private educational lender’ and ‘private 

18 education loan’ have the meanings given such 

19 terms in section 140 of the Truth in Lending 

20 Act (15 U.S.C. 1650). 

21 ‘‘(D)(i) An institution shall not provide a 

22 certification with respect to a private education 

23 loan under this paragraph unless the private 

24 education loan includes terms that provide— 


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1 ‘‘(I) the borrower alternative repay2 ment plans, including loan consolidation or 

3 refinancing; and 

4 ‘‘(II) that the liability to repay the 

5 loan shall be cancelled upon the death or 

6 disability of the borrower or co-borrower. 

7 ‘‘(ii) In this paragraph, the term ‘dis8 ability’ means a permanent and total disability, 

9 as determined in accordance with the regula10 tions of the Secretary of Education, or a deter11 mination by the Secretary of Veterans Affairs 

12 that the borrower is unemployable due to a 

13 service connected-disability.’’. 

14 (2) EFFECTIVE DATE.—The amendment made 

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

16 date of the regulations described in subsection 

17 (a)(3). 

18 (3) PREFERRED LENDER ARRANGEMENT.—Sec19 tion 151(8)(A)(ii) of the Higher Education Act of 

20 1965 (20 U.S.C. 1019(8)(A)(ii)) is amended by in21 serting ‘‘certifying,’’ after ‘‘promoting,’’. 

22 (c) REPORT.—Not later than 24 months after the 

23 issuance of regulations under subsection (a)(3), the Direc24 tor of the Consumer Financial Protection Bureau and the 

25 Secretary of Education shall jointly submit to Congress 


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1 a report on the compliance of institutions of higher edu2 cation and private educational lenders with section 

3 128(e)(3) of the Truth in Lending Act (15 U.S.C. 

4 1638(e)), as amended by subsection (a), and section 

5 487(a)(28) of the Higher Education Act of 1965 (20 

6 U.S.C. 1094(a)), as amended by subsection (b). Such re7 port shall include information about the degree to which 

8 specific institutions utilize certifications in effectively en9 couraging the exhaustion of Federal student loan eligi10 bility and lowering student private education loan debt. 

11 SEC. 5. REPORT ON STUDENT LOAN SERVICERS. 

12 Not later than 1 year after the date of enactment 

13 of this Act, the Director of the Consumer Financial Pro14 tection Bureau, in consultation with the Secretary of Edu15 cation, shall submit a report to the Committee on Bank16 ing, Housing, and Urban Affairs of the Senate, the Com17 mittee on Health, Education, Labor, and Pensions of the 

18 Senate, the Committee on Financial Services of the House 

19 of Representatives, and the Committee on Education and 

20 the Workforce of the House of Representatives on private 

21 and Federal student loan servicers, including— 

22 (1) any legislative recommendations to improve 

23 student loan servicing standards; and 


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1 (2) information on proactive early intervention 

2 methods by servicers to help distressed student loan 

3 borrowers enroll in any eligible repayment plans. 

Æ 


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