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[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1803 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Loan Borrower Bill of 
Rights''.

SEC. 2. TRUTH IN LENDING ACT AMENDMENTS.

    The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended--
            (1) in section 128 (15 U.S.C. 1638)--
                    (A) in subsection (e)--
                            (i) in paragraph (1)(O), by striking 
                        ``paragraph (6)'' and inserting ``paragraph 
                        (9)'';
                            (ii) in paragraph (2)(L), by striking 
                        ``paragraph (6)'' and inserting ``paragraph 
                        (9)'';
                            (iii) in paragraph (4)(C), by striking 
                        ``paragraph (7)'' and inserting ``paragraph 
                        (10)'';
                            (iv) by redesignating paragraphs (5) 
                        through (11) as paragraphs (8) through (14), 
                        respectively;
                            (v) by inserting after paragraph (4) the 
                        following:
            ``(5) Disclosures before first fully amortized payment.--
        Not fewer than 30 days and not more than 150 days before the 
        first fully amortized payment on a private education loan is 
        due from the borrower, the private educational lender shall 
        disclose to the borrower, clearly and conspicuously--
                    ``(A) the information described in--
                            ``(i) paragraph (2)(A) (adjusted, as 
                        necessary, for the rate of interest in effect 
                        on the date the first fully amortized payment 
                        on a private education loan is due);
                            ``(ii) subparagraphs (B) through (G) of 
                        paragraph (2);
                            ``(iii) paragraph (2)(H) (adjusted, as 
                        necessary, for the rate of interest in effect 
                        on the date the first fully amortized payment 
                        on a private education loan is due);
                            ``(iv) paragraph (2)(K); and
                            ``(v) subparagraphs (O) and (P) of 
                        paragraph (2);
                    ``(B) the scheduled date upon which the first fully 
                amortized payment is due;
                    ``(C) the name of the lender and servicer, and the 
                address to which communications and payments should be 
                sent including a telephone number and website where the 
                borrower may obtain additional information;
                    ``(D) a description of alternative repayment plans, 
                including loan consolidation or refinancing, and 
                servicemember or veteran benefits under the 
                Servicemembers Civil Relief Act (50 U.S.C. App. 501 et 
                seq.) or other Federal or State law related to private 
                education loans; and
                    ``(E) a statement that a Servicemember and Veterans 
                Liaison designated under paragraph (15)(F) is available 
                to answer inquiries about servicemember and veteran 
                benefits related to private education loans, including 
                the toll-free telephone number to contact the Liaison 
                pursuant to paragraph (15)(F).
            ``(6) Disclosures when borrower is 30 days delinquent.--Not 
        fewer than 5 days after a borrower becomes 30 days delinquent 
        on a private education loan, the private educational lender 
        shall disclose to the borrower, clearly and conspicuously--
                    ``(A) the date on which the loan will be charged-
                off (as defined in paragraph (15)(A)) or assigned to 
                collections, including the consequences of such charge-
                off or assignment to collections, if no payment is 
                made;
                    ``(B) the minimum payment that the borrower must 
                make to avoid the loan being charged off (as defined in 
                paragraph (15)(A)) or assigned to collection, and the 
                minimum payment that the borrower must make to bring 
                the loan current;
                    ``(C) a statement informing the borrower that a 
                payment of less than the minimum payment described in 
                subparagraph (B) could result in the loan being charged 
                off (as defined in paragraph (15)(A)) or assigned to 
                collection; and
                    ``(D) a statement that a Servicemember and Veterans 
                Liaison designated under paragraph (15)(F) is available 
                to answer inquiries about servicemember and veteran 
                benefits related to private education loans, including 
                the toll-free telephone number to contact the Liaison 
                pursuant to paragraph (15)(F).
            ``(7) Disclosures when borrower is having difficulty making 
        payment or is 60 days delinquent.--
                    ``(A) In general.--Not fewer than 5 days after a 
                borrower notifies a private educational lender that the 
                borrower is having difficulty making payment or a 
                borrower becomes 60 days delinquent on a private 
                education loan, the private educational lender shall--
                            ``(i) complete a full review of the 
                        borrower's private education loan and make a 
                        reasonable effort to obtain the information 
                        necessary to determine--
                                    ``(I) if the borrower is eligible 
                                for an alternative repayment plan, 
                                including loan consolidation or 
                                refinancing; and
                                    ``(II) if the borrower is eligible 
                                for servicemember or veteran benefits 
                                under the Servicemembers Civil Relief 
                                Act (50 U.S.C. App. 501 et seq.) or 
                                other Federal or State law related to 
                                private education loans;
                            ``(ii) provide the borrower, in writing, in 
                        simple and understandable terms, information 
                        about alternative repayment plans and benefits 
                        for which the borrower is eligible, including 
                        all terms, conditions, and fees or costs 
                        associated with such repayment plan, pursuant 
                        to paragraph (8)(D);
                            ``(iii) allow the borrower not less than 30 
                        days to apply for an alternative repayment plan 
                        or benefits, if eligible; and
                            ``(iv) notify the borrower that a 
                        Servicemember and Veterans Liaison designated 
                        under paragraph (15)(F) is available to answer 
                        inquiries about servicemember and veteran 
                        benefits related to private education loans, 
                        including the toll-free telephone number to 
                        contact the Liaison pursuant to paragraph 
                        (15)(F).
                    ``(B) Forbearance or deferment.--If a borrower 
                notifies the private educational lender that a long-
                term alternative repayment plan is not needed, the 
                private educational lender may comply with this 
                paragraph by providing the borrower, in writing, in 
                simple and understandable terms, information about 
                forbearance or deferment options, including all terms, 
                conditions, and fees or costs associated with such 
                options pursuant to paragraph (8)(D).
                    ``(C) Notification process.--
                            ``(i) In general.--Each private educational 
                        lender shall establish a process, in accordance 
                        subparagraph (A), for a borrower to notify the 
                        lender that--
                                    ``(I) the borrower is having 
                                difficulty making payments on a private 
                                education loan; and
                                    ``(II) a long-term alternative 
                                repayment plan is not needed.
                            ``(ii) Consumer financial protection bureau 
                        requirements.--The Director of the Consumer 
                        Financial Protection Bureau, in consultation 
                        with the Secretary of Education, shall 
                        promulgate rules establishing minimum standards 
                        for private educational lenders in carrying out 
                        the requirements of this paragraph and a model 
                        form for borrowers to notify private 
                        educational lenders of the information under 
                        this paragraph.'';
                            (vi) in paragraph (8), as redesignated by 
                        clause (iv), by adding at the end the 
                        following:
                    ``(D) Model disclosure form for alternative 
                repayment plans, forbearance, and deferment options.--
                Not later than 2 years after the date of enactment of 
                the Student Loan Borrower Bill of Rights, the Director 
                of the Consumer Financial Protection Bureau, in 
                consultation with the Secretary of Education, shall 
                develop and issue model forms to allow borrowers to 
                compare alternative repayment plans, forbearance, and 
                deferment options with the borrower's existing 
                repayment plan with respect to a private education 
                loan. Such forms shall include the following:
                            ``(i) The total amount to be paid over the 
                        life of the loan.
                            ``(ii) The total amount in interest to be 
                        paid over the life of the loan.
                            ``(iii) The monthly payment amount.
                            ``(iv) The expected pay-off date.
                            ``(v) Related fees and costs.
                            ``(vi) Eligibility requirements, and how 
                        the borrower can apply for the alternative 
                        repayment plan, forbearance, or deferment 
                        option.
                            ``(vii) Any consequences, including the 
                        loss of eligibility for alternative repayment 
                        plans, forbearance, or deferment options.'';
                            (vii) in paragraph (11), as redesignated by 
                        clause (iv), by striking ``paragraph (7)'' and 
                        inserting ``paragraph (10)'';
                            (viii) in paragraph (14), as redesignated 
                        by clause (iv), by striking ``paragraph (5)'' 
                        and inserting ``paragraph (8)''; and
                            (ix) by adding at the end the following:
            ``(15) Student loan borrower bill of rights.--
                    ``(A) Definitions.--In this paragraph:
                            ``(i) Borrower.--The term `borrower' means 
                        the person to whom a private education loan is 
                        extended.
                            ``(ii) Charge off.--The term `charge off' 
                        means charge to profit and loss, or subject to 
                        any similar action.
                            ``(iii) Private education loan.--The term 
                        `private education loan' has the meaning given 
                        the term in section 140(a).
                            ``(iv) Servicer.--The term `servicer' means 
                        the person responsible for the servicing of a 
                        private education loan, including any agent of 
                        such person or the person who makes, owns, or 
                        holds a loan if such person also services the 
                        loan.
                            ``(v) Servicing.--The term `servicing' 
                        means--
                                    ``(I) receiving any scheduled 
                                periodic payments from a borrower 
                                pursuant to the terms of a private 
                                education loan;
                                    ``(II) making the payments of 
                                principal and interest and such other 
                                payments with respect to the amounts 
                                received from the borrower, as may be 
                                required pursuant to the terms of the 
                                loan; and
                                    ``(III) performing other 
                                administrative services with respect to 
                                the loan.
                    ``(B) Sale, transfer, or assignment.--If the sale, 
                other transfer, or assignment of a private education 
                loan results in a change in the identity of the party 
                to whom the borrower must send subsequent payments or 
                direct any communications concerning the loan--
                            ``(i) the transferor shall--
                                    ``(I) notify the borrower, in 
                                writing, in simple and understandable 
                                terms, not fewer than 45 days before 
                                transferring a legally enforceable 
                                right to receive payment from the 
                                borrower on such loan, of--
                                            ``(aa) the sale or other 
                                        transfer;
                                            ``(bb) the identity of the 
                                        transferee;
                                            ``(cc) the name and address 
                                        of the party to whom subsequent 
                                        payments or communications must 
                                        be sent;
                                            ``(dd) the telephone 
                                        numbers and websites of both 
                                        the transferor and the 
                                        transferee;
                                            ``(ee) the effective date 
                                        of the sale, transfer, or 
                                        assignment;
                                            ``(ff) the date on which 
                                        the transferor servicer will 
                                        stop accepting payment; and
                                            ``(gg) the date on which 
                                        the transferee servicer will 
                                        begin accepting payment; and
                                    ``(II) forward any payment from a 
                                borrower with respect to such private 
                                education loan to the transferee 
                                servicer, immediately upon receiving 
                                such payment, during the 60-day period 
                                beginning on the date on which the 
                                transferor servicer stops accepting 
                                payment of such private education loan; 
                                and
                            ``(ii) the transferee shall--
                                    ``(I) notify the borrower, in 
                                writing, in simple and understandable 
                                terms, not fewer than 45 days before 
                                acquiring a legally enforceable right 
                                to receive payment from the borrower on 
                                such loan, of--
                                            ``(aa) the sale or other 
                                        transfer;
                                            ``(bb) the identity of the 
                                        transferee;
                                            ``(cc) the name and address 
                                        of the party to whom subsequent 
                                        payments or communications must 
                                        be sent;
                                            ``(dd) the telephone 
                                        numbers and websites of both 
                                        the transferor and the 
                                        transferee;
                                            ``(ee) the effective date 
                                        of the sale, transfer, or 
                                        assignment;
                                            ``(ff) the date on which 
                                        the transferor will stop 
                                        accepting payment; and
                                            ``(gg) the date on which 
                                        the transferee will begin 
                                        accepting payment;
                                    ``(II) accept as on-time and may 
                                not impose any late fee or finance 
                                charge for any payment from a borrower 
                                with respect to such private education 
                                loan that is forwarded from the 
                                transferor servicer during the 60-day 
                                period beginning on the date on which 
                                the transferor servicer stops accepting 
                                payment, if the transferor servicer 
                                receives such payment on or before the 
                                applicable due date, including any 
                                grace period;
                                    ``(III) provide borrowers a simple, 
                                online process for transferring 
                                existing electronic fund transfer 
                                authority; and
                                    ``(IV) honor any promotion or 
                                benefit offered to the borrower or 
                                advertised by the previous owner or 
                                transferor servicer of such private 
                                education loan.
                    ``(C) Material change in mailing address or 
                procedure for handling payments.--If a servicer makes a 
                change in the mailing address, office, or procedures 
                for handling payments with respect to any private 
                education loan, and such change causes a delay in the 
                crediting of the account of the borrower made during 
                the 60-day period following the date on which such 
                change took effect, the servicer may not impose any 
                late fee or finance charge for a late payment on such 
                private education loan.
                    ``(D) Application of payments.--
                            ``(i) In general.--Unless otherwise 
                        directed by the borrower, upon receipt of a 
                        payment, the servicer shall apply amounts first 
                        to the interest and fees owed on the payment 
                        due date, and then to the principal balance of 
                        the private education loan bearing the highest 
                        annual percentage rate, and then to each 
                        successive interest and fees and then principal 
                        balance bearing the next highest annual 
                        percentage rate, until the payment is 
                        exhausted. A borrower may instruct or expressly 
                        authorize the servicer to apply payments in a 
                        different manner.
                            ``(ii) Application of excess amounts.--
                        Unless otherwise directed by the borrower, upon 
                        receipt of a payment, the servicer shall apply 
                        amounts in excess of the minimum payment amount 
                        first to the interest and fees owed on the 
                        payment due date, and then to the principal 
                        balance of the private education loan balance 
                        bearing the highest annual percentage rate, and 
                        then to each successive interest and fees and 
                        principal balance bearing the next highest 
                        annual percentage rate, until the payment is 
                        exhausted. A borrower may instruct or expressly 
                        authorize the servicer to apply such excess 
                        payments in a different manner.
                            ``(iii) Apply payment on date received.--
                        Unless otherwise directed by the borrower, a 
                        servicer shall apply payments to a borrower's 
                        account on the date the payment is received.
                            ``(iv) Promulgation of rules.--The Director 
                        of the Consumer Financial Protection Bureau, in 
                        consultation with the Secretary of Education, 
                        may promulgate rules for the application of 
                        payments that--
                                    ``(I) minimizes the amount of fees 
                                and interest incurred by the borrower 
                                and the total loan amount paid by the 
                                borrower;
                                    ``(II) minimizes delinquencies, 
                                assignments to collection, and charge-
                                offs;
                                    ``(III) requires servicers to apply 
                                payments on the date received; and
                                    ``(IV) allows the borrower to 
                                instruct the servicer to apply payments 
                                in a manner preferred by the borrower.
                    ``(E) Rehabilitation of loans.--If a borrower 
                successfully and voluntarily makes 9 payments within 20 
                days of the due date during 10 consecutive months of 
                amounts owed on a private education loan, or otherwise 
                brings a private education loan current after the loan 
                is charged-off, the loan shall be considered 
                rehabilitated, and the lender or servicer shall request 
                that any consumer reporting agency to which the charge-
                off was reported remove the delinquency that led to the 
                charge-off and the charge-off from the borrower's 
                credit history.
                    ``(F) Servicemembers, veterans, and private 
                education loans.--
                            ``(i) Servicemember and veterans liaison.--
                        Each servicer shall designate an employee to 
                        act as the servicemember and veterans liaison 
                        who is responsible for answering inquiries from 
                        servicemembers and veterans, and is specially 
                        trained on servicemember and veteran benefits 
                        under the Servicemembers Civil Relief Act (50 
                        U.S.C. App. 501 et seq.) and other Federal or 
                        State laws related to private education loans.
                            ``(ii) Toll-free telephone number.--Each 
                        servicer shall maintain a toll-free telephone 
                        number that shall--
                                    ``(I) connect directly to the 
                                servicemember and veterans liaison 
                                designated under clause (i); and
                                    ``(II) be made available on the 
                                primary internet website of the 
                                servicer and on monthly billing 
                                statements.
                            ``(iii) Prohibition on charge offs.--A 
                        lender or servicer may not charge off or report 
                        a private education loan as delinquent, 
                        assigned to collection (internally or by 
                        referral to a third party), or charged-off to a 
                        credit reporting agency if the borrower is on 
                        active duty in the Armed Forces (as defined in 
                        section 101(d)(1) of title 10, United States 
                        Code) serving in a combat zone (as designated 
                        by the President under section 112(c) of the 
                        Internal Revenue Code of 1986).
                    ``(G) Borrower's loan history.--
                            ``(i) In general.--A servicer shall make 
                        available through a secure website, or in 
                        writing upon request, the loan history of each 
                        borrower for each private education loan, 
                        separately designating--
                                    ``(I) payment history;
                                    ``(II) loan history, including any 
                                forbearances, deferrals, delinquencies, 
                                assignment to collection, and charge 
                                offs;
                                    ``(III) annual percentage rate 
                                history; and
                                    ``(IV) key loan terms, including 
                                application of payments to interest, 
                                principal, and fees, origination date, 
                                principal, capitalized interest, annual 
                                percentage rate, including any cap, 
                                loan term, and any contractual 
                                incentives.
                            ``(ii) Original documentation.--A servicer 
                        shall make available to the borrower, if 
                        requested, at no charge, copies of the original 
                        loan documents and the promissory note for each 
                        private education loan.
                    ``(H) Error resolution.--The Director of the 
                Consumer Financial Protection Bureau, in consultation 
                with the Secretary of Education, shall promulgate rules 
                requiring servicers to establish error resolution 
                procedures to allow borrowers to inquire about errors 
                related to their private education loans and obtain 
                timely resolution of such errors.
                    ``(I) Additional servicing standards.--The Director 
                of the Consumer Financial Protection Bureau, in 
                consultation with the Secretary of Education, may 
                establish additional servicing standards to reduce 
                delinquencies, assignment to collections, and charge-
                offs, and to ensure borrowers understand their rights 
                and obligations related to their private education 
                loans.
                    ``(J) Arbitration.--
                            ``(i) Waiver of rights and remedies.--Any 
                        rights and remedies available to borrowers 
                        against servicers may not be waived by any 
                        agreement, policy, or form, including by a 
                        predispute arbitration agreement.
                            ``(ii) Predispute arbitration agreements.--
                        No predispute arbitration agreement shall be 
                        valid or enforceable by a servicer, including 
                        as a third-party beneficiary or by estoppel, if 
                        the agreement requires arbitration of a dispute 
                        with respect to a private education loan. This 
                        subparagraph applies to predispute arbitration 
                        agreements entered into before the date of 
                        enactment of the Student Loan Borrower Bill of 
                        Rights, as well as on and after such date of 
                        enactment, if the violation that is the subject 
                        of the dispute occurred on or after such date 
                        of enactment.
                    ``(K) Enforcement.--The provisions of this 
                paragraph shall be enforced by the agencies specified 
                in subsections (a) through (d) of section 108, in the 
                manner set forth in that section or under any other 
                applicable authorities available to such agencies by 
                law.
                    ``(L) Preemption.--Nothing in this paragraph may be 
                construed to preempt any provision of State law 
                regarding private education loans where the State law 
                provides stronger consumer protections.
                    ``(M) Civil liability.--A servicer that fails to 
                comply with any requirement imposed under this 
                paragraph shall be deemed a creditor that has failed to 
                comply with a requirement under this chapter for 
                purposes of liability under section 130 and such 
                servicer shall be subject to the applicable liability 
                provisions under such section.''; and
                    (B) by adding at the end the following:
    ``(g) Information To Be Available at No Charge.--The information 
required to be disclosed under this section shall be made available at 
no charge to the borrower.''; and
            (2) in section 130(a)--
                    (A) in paragraph (3), by striking ``128(e)(7)'' and 
                inserting ``128(e)(10)''; and
                    (B) in the flush matter at the end, by striking 
                ``or paragraph (4)(C), (6), (7), or (8) of section 
                128(e),'' and inserting ``or paragraph (4)(C), (9), 
                (10), or (11) of section 128(e),''.

SEC. 3. STUDENT LOAN BORROWER BILL OF RIGHTS.

    The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is 
amended--
            (1) in part G of title IV (20 U.S.C. 1088 et seq.) by 
        adding at the end the following:

``SEC. 493E. STUDENT LOAN BORROWER BILL OF RIGHTS.

    ``(a) Definitions.--In this section:
            ``(1) Servicer.--The term `servicer' means the person 
        responsible for the servicing of any student loan, including 
        any agent of such person or the person who makes, owns, or 
        holds a loan if such person also services the loan.
            ``(2) Servicing.--The term `servicing' means--
                    ``(A) receiving any scheduled periodic payments 
                from a borrower pursuant to the terms of a student 
                loan;
                    ``(B) making the payments of principal and interest 
                and such other payments with respect to the amounts 
                received from the borrower, as may be required pursuant 
                to the terms of the loan; and
                    ``(C) performing other administrative services with 
                respect to the loan.
            ``(3) Student loan.--The term `student loan' means a loan 
        made, insured, or guaranteed under this title.
    ``(b) Transfer of Lender or Servicer.--If the sale, other transfer, 
or assignment of a student loan results in a change in the identity of 
the party to whom the borrower must send subsequent payments or direct 
any communications concerning the loan--
            ``(1) the transferor shall--
                    ``(A) notify the borrower in writing not fewer than 
                45 days before transferring a legally enforceable right 
                to receive payment from the borrower on such loan, of--
                            ``(i) the sale, transfer, or assignment;
                            ``(ii) the identity of the transferee;
                            ``(iii) the name and address of the party 
                        to whom subsequent payments or communications 
                        must be sent;
                            ``(iv) the telephone numbers and websites 
                        of both the transferor and the transferee;
                            ``(v) the effective date of the sale, 
                        transfer, or assignment;
                            ``(vi) the date on which the current 
                        servicer will stop accepting payments; and
                            ``(vii) the date on which the transferee 
                        servicer will begin accepting payment; and
                    ``(B) forward to the transferee servicer any 
                payment with respect to such student loan, immediately 
                upon receiving such payment, from a borrower during the 
                60-day period beginning on the date on which the 
                transferor servicer stops accepting payment for such 
                student loan; and
            ``(2) the transferee shall--
                    ``(A) notify the borrower in writing not fewer than 
                45 days before transferring a legally enforceable right 
                to receive payment from the borrower on such loan, of--
                            ``(i) the sale, transfer, or assignment;
                            ``(ii) the identity of the transferor;
                            ``(iii) the name and address of the party 
                        to whom subsequent payments or communications 
                        must be sent;
                            ``(iv) the telephone numbers and websites 
                        of both the transferor and the transferee;
                            ``(v) the effective date of the sale, 
                        transfer, or assignment;
                            ``(vi) the date on which the current 
                        servicer will stop accepting payments; and
                            ``(vii) the date on which the transferee 
                        servicer will begin accepting payment;
                    ``(B) accept as on-time and may not impose any late 
                fee or finance charge with respect to such student loan 
                for any payment forwarded from the transferor servicer 
                during the 60-day period beginning on the date on which 
                the transferor servicer stops accepting payment, if the 
                transferor servicer received such payment from the 
                borrower on or before the applicable due date, 
                including any grace period;
                    ``(C) provide borrowers a simple, online process 
                for transferring existing electronic fund transfer 
                authority; and
                    ``(D) honor any promotion or benefit offered to the 
                borrower or advertised by the previous owner or 
                transferor servicer of such student loan.
    ``(c) Material Change in Mailing Address or Procedure for Handling 
Payments.--If a servicer makes a change in the mailing address, office, 
or procedures for handling payments with respect to any student loan, 
and such change causes a delay in the crediting of the account of the 
borrower made during the 60-day period following the date on which such 
change took effect, the servicer may not impose any late fee or finance 
charge for a late payment on such student loan.
    ``(d) Eligibility for Discharge.--The Director of the Consumer 
Financial Protection Bureau, in consultation with the Secretary, shall 
promulgate rules requiring lenders and servicers to--
            ``(1) identify and contact borrowers who may be eligible 
        for student loan discharge by the Secretary;
            ``(2) provide the borrower, in writing, in simple and 
        understandable terms, information about obtaining such 
        discharge; and
            ``(3) create a streamlined process for eligible borrowers 
        to apply for and receive such discharge.
    ``(e) Application of Payments.--
            ``(1) In general.--Notwithstanding any other provision of 
        this Act, the Director of the Consumer Financial Protection 
        Bureau, in consultation with the Secretary, shall issue rules 
        for the application of student loan payments that--
                    ``(A) minimizes the amount of fees and interest 
                incurred by the borrower and the total loan amount paid 
                by the borrower;
                    ``(B) minimizes delinquencies, assignments to 
                collection, and charge offs;
                    ``(C) requires servicers to apply payments on the 
                date received; and
                    ``(D) allows the borrower to direct the servicer to 
                apply payments in a manner preferred by the borrower.
            ``(2) Method that best benefits borrower.--In issuing the 
        rules under paragraph (1), the Director of the Consumer 
        Financial Protection Bureau shall choose the application method 
        that best benefits the borrower and is compatible with existing 
        repayment options.
    ``(f) Servicemembers, Veterans, and Student Loans.--
            ``(1) Servicemember and veterans liaison.--Each servicer of 
        a student loan shall designate an employee to act as the 
        servicemember and veterans liaison who is responsible for 
        answering inquiries from servicemembers and veterans, and is 
        specially trained on servicemember and veteran benefits and 
        options under the Servicemembers Civil Relief Act (50 U.S.C. 
        App. 501 et seq.) and other Federal or State laws related to 
        student loans.
            ``(2) Toll-free telephone number.--Each servicer of a 
        student loan shall maintain a toll-free telephone number for 
        the servicemember and veterans liaison designated under 
        paragraph (1), which shall be made available on the primary 
        Internet website of the servicer and on monthly billing 
        statements.
            ``(3) Prohibition on default.--Notwithstanding any other 
        provision of this Act, a servicer may not report a student loan 
        as delinquent, assigned to collection (internally or by 
        referral to a third party), charged off, or in default, to a 
        credit reporting agency if the borrower is on active duty in 
        the Armed Forces (as defined in section 101(d)(1) of title 10, 
        United States Code) serving in a combat zone (as designated by 
        the President under section 112(c) of the Internal Revenue Code 
        of 1986).
            ``(4) Additional liaisons.--The Secretary shall determine 
        additional entities with whom borrowers interact, including 
        guaranty agencies, that shall designate an employee to act as 
        the servicemember and veterans liaison who is responsible for 
        answering inquiries from servicemembers and veterans, and is 
        specially trained on servicemember and veteran benefits and 
        options under the Servicemembers Civil Relief Act (50 U.S.C. 
        App. 501 et seq.) and other Federal or State laws related to 
        student loans.
    ``(g) Borrower's Loan History.--
            ``(1) In general.--A servicer of a student loan shall make 
        available through a secure website, or in writing upon request, 
        the loan history of each borrower for each student loan, 
        separately designating--
                    ``(A) payment history;
                    ``(B) loan history, including any forbearances, 
                deferrals, delinquencies, and defaults;
                    ``(C) annual percentage rate history; and
                    ``(D) key loan terms, including application of 
                payments to interest, principal, and fees, origination 
                date, principal, capitalized interest, annual 
                percentage rate, including any cap, loan term, and any 
                contractual incentives.
            ``(2) Original documentation.--A servicer shall make 
        available to the borrower, if requested, at no charge, copies 
        of the original loan documents and the promissory note for each 
        student loan.
    ``(h) Error Resolution.--The Director of the Consumer Financial 
Protection Bureau, in consultation with the Secretary, shall promulgate 
rules requiring servicers to establish error resolution procedures to 
allow borrowers to inquire about errors related to their student loans 
and obtain timely resolution of such errors.
    ``(i) Additional Servicing Standards.--The Director of the Consumer 
Financial Protection Bureau, in consultation with the Secretary, may 
establish additional servicing standards to reduce delinquencies, 
assignments to collection, and defaults, and to ensure borrowers 
understand their rights and obligations related to their student loans.
    ``(j) Promulgation of Rules.--The Director of the Consumer 
Financial Protection Bureau, in consultation with the Secretary, shall 
promulgate rules implementing this section.'';
            (2) in section 433 (20 U.S.C. 1083)--
                    (A) in subsection (b)--
                            (i) in paragraph (12), by striking ``and'' 
                        after the semicolon;
                            (ii) in paragraph (13), by striking the 
                        period at the end and inserting ``; and''; and
                            (iii) by adding at the end the following:
            ``(14) a statement that--
                    ``(A) the borrower may be entitled to servicemember 
                and veteran benefits under the Servicemembers Civil 
                Relief Act (50 U.S.C. App. 501 et seq.) and other 
                Federal or State laws; and
                    ``(B) a Servicemember and Veterans Liaison 
                designated under section 493E(f) is available to answer 
                inquiries about servicemember and veteran benefits, 
                including the toll-free telephone number to contact the 
                Liaison pursuant to section 493E(f).''; and
                    (B) in subsection (e)--
                            (i) in paragraph (2), by adding at the end 
                        the following:
                    ``(D) A statement that--
                            ``(i) the borrower may be entitled to 
                        servicemember and veteran benefits under the 
                        Servicemembers Civil Relief Act (50 U.S.C. App. 
                        501 et seq.) and other Federal or State laws; 
                        and
                            ``(ii) a Servicemember and Veterans Liaison 
                        designated under section 493E(f) is available 
                        to answer inquiries about servicemember and 
                        veteran benefits, including the toll-free 
                        telephone number to contact the Liaison 
                        pursuant to section 493E(f).'';
                            (ii) in paragraph (3), by adding at the end 
                        the following:
                    ``(F) A statement that--
                            ``(i) the borrower may be entitled to 
                        servicemember and veteran benefits under the 
                        Servicemembers Civil Relief Act (50 U.S.C. App. 
                        501 et seq.) and other Federal or State laws; 
                        and
                            ``(ii) a Servicemember and Veterans Liaison 
                        designated under section 493E(f) is available 
                        to answer inquiries about servicemember and 
                        veteran benefits, including the toll-free 
                        telephone number to contact the Liaison 
                        pursuant to section 493E(f).''; and
                            (iii) by adding at the end the following:
            ``(4) Notification of repayment options and alternatives to 
        default.--The Secretary shall require eligible lenders to, not 
        later than 1 year after the date of enactment of the Student 
        Loan Borrower Bill of Rights--
                    ``(A) notify borrowers, in writing, in simple and 
                understandable terms, about alternative repayment 
                options, including income-based repayment, income 
                contingent repayment, consolidation, and forgiveness 
                options, as well as servicemember or veteran benefits 
                under the Servicemembers Civil Relief Act (50 U.S.C. 
                App. 501 et seq.) or other Federal or State laws;
                    ``(B) provide borrowers, in writing, in simple and 
                understandable terms, information about alternative 
                repayment plans, including all terms, conditions, and 
                fees or costs associated with such repayment plans in a 
                format that allows the borrower to compare the current 
                repayment plan with alternative repayment plans; and
                    ``(C) offer to enroll such borrowers in alternative 
                repayment plans, if eligible.''; and
            (3) in section 455(d) (20 U.S.C. 1087e(d)), by adding at 
        the end the following:
            ``(6) Notification of repayment options.--The Secretary 
        shall carry out, not later than 1 year after the date of 
        enactment of the Student Loan Borrower Bill of Rights, the 
        activities described in subparagraphs (A), (B), and (C) of 
        section 433(e)(4) with respect to loans made under this 
        part.''.

SEC. 4. KNOW BEFORE YOU OWE.

    (a) Amendments to the Truth in Lending Act.--
            (1) In general.--Section 128(e) of the Truth in Lending Act 
        (15 U.S.C. 1638(e)), as amended by section 2, is further 
        amended--
                    (A) by striking paragraph (3) and inserting the 
                following:
            ``(3) Institutional certification required.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), before a creditor may issue any funds 
                with respect to an extension of credit described in 
                this subsection, the creditor shall obtain from the 
                relevant institution of higher education where such 
                loan is to be used for a student, such institution's 
                certification of--
                            ``(i) the enrollment status of the student;
                            ``(ii) the student's cost of attendance at 
                        the institution as determined by the 
                        institution under part F of title IV of the 
                        Higher Education Act of 1965; and
                            ``(iii) the difference between--
                                    ``(I) such cost of attendance; and
                                    ``(II) the student's estimated 
                                financial assistance, including such 
                                assistance received under title IV of 
                                the Higher Education Act of 1965 and 
                                other financial assistance known to the 
                                institution, as applicable.
                    ``(B) Exception.--Notwithstanding subparagraph (A), 
                a creditor may issue funds, not to exceed the amount 
                described in subparagraph (A)(iii), with respect to an 
                extension of credit described in this subsection 
                without obtaining from the relevant institution of 
                higher education such institution's certification if 
                such institution fails to provide within 15 business 
                days of the creditor's request for such certification--
                            ``(i) notification of the institution's 
                        refusal to certify the request; or
                            ``(ii) notification that the institution 
                        has received the request for certification and 
                        will need additional time to comply with the 
                        certification request.
                    ``(C) Loans disbursed without certification.--If a 
                creditor issues funds without obtaining a 
                certification, as described in subparagraph (B), such 
                creditor shall report the issuance of such funds in a 
                manner determined by the Director of the Consumer 
                Financial Protection Bureau.''; and
                    (B) by adding at the end the following:
            ``(16) Provision of information.--
                    ``(A) Provision of information to students.--
                            ``(i) Loan statement.--A creditor that 
                        issues any funds with respect to an extension 
                        of credit described in this subsection shall 
                        send loan statements, where such loan is to be 
                        used for a student, to borrowers of such funds 
                        not less than once every 3 months during the 
                        time that such student is enrolled at an 
                        institution of higher education.
                            ``(ii) Contents of loan statement.--Each 
                        statement described in clause (i) shall--
                                    ``(I) report the borrower's total 
                                remaining debt to the creditor, 
                                including accrued but unpaid interest 
                                and capitalized interest;
                                    ``(II) report any debt increases 
                                since the last statement; and
                                    ``(III) list the current interest 
                                rate for each loan.
                    ``(B) Notification of loans disbursed without 
                certification.--On or before the date a creditor issues 
                any funds with respect to an extension of credit 
                described in this subsection, the creditor shall notify 
                the relevant institution of higher education, in 
                writing, of the amount of the extension of credit and 
                the student on whose behalf credit is extended. The 
                form of such written notification shall be subject to 
                the regulations of the Consumer Financial Protection 
                Bureau.
                    ``(C) Annual report.--A creditor that issues funds 
                with respect to an extension of credit described in 
                this subsection shall prepare and submit an annual 
                report to the Consumer Financial Protection Bureau 
                containing the required information about private 
                student loans to be determined by the Consumer 
                Financial Protection Bureau, in consultation with the 
                Secretary of Education.''.
            (2) Definition of private education loan.--Section 
        140(a)(7)(A) of the Truth in Lending Act (15 U.S.C. 
        1650(a)(7)(A)) is amended--
                    (A) by redesignating clause (ii) as clause (iii);
                    (B) in clause (i), by striking ``and'' after the 
                semicolon; and
                    (C) by adding after clause (i) the following:
                            ``(ii) is not made, insured, or guaranteed 
                        under title VII or title VIII of the Public 
                        Health Service Act (42 U.S.C. 292 et seq. and 
                        296 et seq.); and''.
            (3) Regulations.--Not later than 365 days after the date of 
        enactment of this Act, the Director of the Consumer Financial 
        Protection Bureau shall issue regulations in final form to 
        implement paragraphs (3) and (16) of section 128(e) of the 
        Truth in Lending Act (15 U.S.C. 1638(e)), as amended by 
        paragraph (1). Such regulations shall become effective not 
        later than 6 months after their date of issuance.
    (b) Amendments to the Higher Education Act of 1965.--
            (1) Program participation agreements.--Section 487(a) of 
        the Higher Education Act of 1965 (20 U.S.C. 1094(a)) is amended 
        by striking paragraph (28) and inserting the following:
            ``(28)(A) Upon the request of a private educational lender, 
        acting in connection with an application initiated by a 
        borrower for a private education loan in accordance with 
        section 128(e)(3) of the Truth in Lending Act (15 U.S.C. 
        1638(e)(3)), the institution shall within 15 days of receipt of 
        a certification request--
                            ``(i) provide such certification to such 
                        private educational lender--
                                    ``(I) that the student who 
                                initiated the application for the 
                                private education loan, or on whose 
                                behalf the application was initiated, 
                                is enrolled or is scheduled to enroll 
                                at the institution;
                                    ``(II) of such student's cost of 
                                attendance at the institution as 
                                determined under part F of this title; 
                                and
                                    ``(III) of the difference between--
                                            ``(aa) the cost of 
                                        attendance at the institution; 
                                        and
                                            ``(bb) the student's 
                                        estimated financial assistance 
                                        received under this title and 
                                        other assistance known to the 
                                        institution, as applicable;
                            ``(ii) notify the creditor that the 
                        institution has received the request for 
                        certification and will need additional time to 
                        comply with the certification request; or
                            ``(iii) provide notice to the private 
                        educational lender of the institution's refusal 
                        to certify the private education loan under 
                        subparagraph (D).
                    ``(B) With respect to a certification request 
                described in subparagraph (A), and prior to providing 
                such certification under subparagraph (A)(i) or 
                providing notice of the refusal to provide 
                certification under subparagraph (A)(iii), the 
                institution shall--
                            ``(i) determine whether the student who 
                        initiated the application for the private 
                        education loan, or on whose behalf the 
                        application was initiated, has applied for and 
                        exhausted the Federal financial assistance 
                        available to such student under this title and 
                        inform the student accordingly; and
                            ``(ii) provide the borrower whose loan 
                        application has prompted the certification 
                        request by a private education lender, as 
                        described in subparagraph (A)(i), with the 
                        following information and disclosures:
                                    ``(I) The availability of, and the 
                                borrower's potential eligibility for, 
                                Federal financial assistance under this 
                                title, including disclosing the terms, 
                                conditions, interest rates, and 
                                repayment options and programs of 
                                Federal student loans.
                                    ``(II) The borrower's ability to 
                                select a private educational lender of 
                                the borrower's choice.
                                    ``(III) The impact of a proposed 
                                private education loan on the 
                                borrower's potential eligibility for 
                                other financial assistance, including 
                                Federal financial assistance under this 
                                title.
                                    ``(IV) The borrower's right to 
                                accept or reject a private education 
                                loan within the 30-day period following 
                                a private educational lender's approval 
                                of a borrower's application and about a 
                                borrower's 3-day right to cancel 
                                period.
                    ``(C) For purposes of this paragraph, the terms 
                `private educational lender' and `private education 
                loan' have the meanings given such terms in section 140 
                of the Truth in Lending Act (15 U.S.C. 1650).
                    ``(D)(i) An institution shall not provide a 
                certification with respect to a private education loan 
                under this paragraph unless the private education loan 
                includes terms that provide--
                            ``(I) the borrower alternative repayment 
                        plans, including loan consolidation or 
                        refinancing; and
                            ``(II) that the liability to repay the loan 
                        shall be cancelled upon the death or disability 
                        of the borrower or co-borrower.
                    ``(ii) In this paragraph, the term `disability' 
                means a permanent and total disability, as determined 
                in accordance with the regulations of the Secretary of 
                Education, or a determination by the Secretary of 
                Veterans Affairs that the borrower is unemployable due 
                to a service connected-disability.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the effective date of the regulations 
        described in subsection (a)(3).
            (3) Preferred lender arrangement.--Section 151(8)(A)(ii) of 
        the Higher Education Act of 1965 (20 U.S.C. 1019(8)(A)(ii)) is 
        amended by inserting ``certifying,'' after ``promoting,''.
    (c) Report.--Not later than 24 months after the issuance of 
regulations under subsection (a)(3), the Director of the Consumer 
Financial Protection Bureau and the Secretary of Education shall 
jointly submit to Congress a report on the compliance of institutions 
of higher education and private educational lenders with section 
128(e)(3) of the Truth in Lending Act (15 U.S.C. 1638(e)), as amended 
by subsection (a), and section 487(a)(28) of the Higher Education Act 
of 1965 (20 U.S.C. 1094(a)), as amended by subsection (b). Such report 
shall include information about the degree to which specific 
institutions utilize certifications in effectively encouraging the 
exhaustion of Federal student loan eligibility and lowering student 
private education loan debt.

SEC. 5. REPORT ON STUDENT LOAN SERVICERS.

    Not later than 1 year after the date of enactment of this Act, the 
Director of the Consumer Financial Protection Bureau, in consultation 
with the Secretary of Education, shall submit a report to the Committee 
on Banking, Housing, and Urban Affairs of the Senate, the Committee on 
Health, Education, Labor, and Pensions of the Senate, the Committee on 
Financial Services of the House of Representatives, and the Committee 
on Education and the Workforce of the House of Representatives on 
private and Federal student loan servicers, including--
            (1) any legislative recommendations to improve student loan 
        servicing standards; and
            (2) information on proactive early intervention methods by 
        servicers to help distressed student loan borrowers enroll in 
        any eligible repayment plans.
                                 <all>
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