I 

113TH CONGRESS 

1ST SESSION H. R. 3612 

To amend the Truth in Lending Act and the Higher Education Act of 

1965 to require certain creditors to obtain certifications from institutions 

of higher education, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 21, 2013 

Mr. POLIS (for himself, Ms. SCHWARTZ, and Mr. BISHOP of New York) introduced the following bill; which was referred to the Committee on Education and the Workforce, and in addition to the Committee on Financial 

Services, for a period to be subsequently determined by the Speaker, in 

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

A BILL 

To amend the Truth in Lending Act and the Higher Education Act of 1965 to require certain creditors to obtain 

certifications from institutions of higher education, 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 ‘‘Know Before You Owe 

5 Private Student Loan Act of 2013’’. 

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1 SEC. 2. AMENDMENTS TO THE TRUTH IN LENDING ACT. 

2 (a) IN GENERAL.—Section 128(e) of the Truth in 

3 Lending Act (15 U.S.C. 1638(e)) is amended— 

4 (1) by striking paragraph (3) and inserting the 

5 following: 

6 ‘‘(3) INSTITUTIONAL CERTIFICATION RE7 QUIRED.— 

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

9 subparagraph (B), before a creditor may issue 

10 any funds with respect to an extension of credit 

11 described in this subsection, the creditor shall 

12 obtain from the relevant institution of higher 

13 education where such loan is to be used for a 

14 student, such institution’s certification of— 

15 ‘‘(i) the enrollment status of the stu16 dent; 

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

18 at the institution as determined by the in19 stitution under part F of title IV of the 

20 Higher Education Act of 1965; and 

21 ‘‘(iii) the difference between— 

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

23 ‘‘(II) the student’s estimated fi24 nancial assistance, including such as25 sistance received under title IV of the 

26 Higher Education Act of 1965 and 

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1 other financial assistance known to 

2 the institution, as applicable. 

3 ‘‘(B) EXCEPTION.—Notwithstanding sub4 paragraph (A), a creditor may issue funds with 

5 respect to an extension of credit described in 

6 this subsection without obtaining from the rel7 evant institution of higher education such insti8 tution’s certification if such institution fails to 

9 provide within 15 business days of the credi10 tor’s request for such certification— 

11 ‘‘(i) the requested certification; or 

12 ‘‘(ii) notification that the institution 

13 has received the request for certification 

14 and will need additional time to comply 

15 with the certification request. 

16 ‘‘(C) LOANS DISBURSED WITHOUT CER17 TIFICATION.—If a creditor issues funds without 

18 obtaining a certification, as described in sub19 paragraph (B), such creditor shall report the 

20 issuance of such funds in a manner determined 

21 by the Director of the Bureau.’’; 

22 (2) by redesignating paragraphs (9), (10), and 

23 (11) as paragraphs (10), (11), and (12), respec24 tively; and 

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1 (3) by inserting after paragraph (8) the fol2 lowing: 

3 ‘‘(9) PROVISION OF INFORMATION.— 

4 ‘‘(A) PROVISION OF INFORMATION TO STU5 DENTS.— 

6 ‘‘(i) LOAN STATEMENT.—A creditor 

7 that issues any funds with respect to an 

8 extension of credit described in this sub9 section shall send loan statements, where 

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

11 borrowers of such funds not less than once 

12 every 3 months during the time that such 

13 student is enrolled at an institution of 

14 higher education. 

15 ‘‘(ii) CONTENTS OF LOAN STATE16 MENT.—Each statement described in 

17 clause (i) shall— 

18 ‘‘(I) report the borrower’s total 

19 remaining debt to the creditor, includ20 ing accrued but unpaid interest and 

21 capitalized interest; 

22 ‘‘(II) report any debt increases 

23 since the last statement; and 

24 ‘‘(III) list the current interest 

25 rate for each loan. 

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1 ‘‘(B) NOTIFICATION OF LOANS DISBURSED

2 WITHOUT CERTIFICATION.—On or before the 

3 date a creditor issues any funds with respect to 

4 an extension of credit described in this sub5 section, the creditor shall notify the relevant in6 stitution of higher education, in writing, of the 

7 amount of the extension of credit and the stu8 dent on whose behalf credit is extended. The 

9 form of such written notification shall be sub10 ject to the regulations of the Bureau. 

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

12 issues funds with respect to an extension of 

13 credit described in this subsection shall prepare 

14 and submit an annual report to the Bureau 

15 containing the required information about pri16 vate student loans to be determined by the Bu17 reau, in consultation with the Secretary of Edu18 cation.’’. 

19 (b) DEFINITION OF PRIVATE EDUCATION LOAN.— 

20 Section 140(a)(7)(A) of the Truth in Lending Act (15 

21 U.S.C. 1650(a)(7)(A)) is amended— 

22 (1) by redesignating clause (ii) as clause (iii); 

23 (2) in clause (i), by striking ‘‘and’’ after the 

24 semicolon; and 

25 (3) by adding after clause (i) the following: 

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1 ‘‘(ii) is not made, insured, or guaran2 teed under title VII or title VIII of the 

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

4 et seq. and 296 et seq.); and’’. 

5 (c) REGULATIONS.—Not later than 365 days after 

6 the date of enactment of this Act, the Bureau of Consumer 

7 Financial Protection shall issue regulations in final form 

8 to implement paragraphs (3) and (9) of section 128(e) of 

9 the Truth in Lending Act (15 U.S.C. 1638(e)), as amend10 ed by subsection (a). Such regulations shall become effec11 tive not later than 6 months after their date of issuance. 

12 SEC. 3. AMENDMENT TO THE HIGHER EDUCATION ACT OF 

13 1965. 

14 (a) AMENDMENT TO THE HIGHER EDUCATION ACT

15 OF 1965.—Section 487(a) of the Higher Education Act 

16 of 1965 (20 U.S.C. 1094(a)) is amended by striking para17 graph (28) and inserting the following: 

18 ‘‘(28)(A) The institution shall— 

19 ‘‘(i) upon the request of a private edu20 cational lender, acting in connection with 

21 an application initiated by a borrower for 

22 a private education loan in accordance with 

23 section 128(e)(3) of the Truth in Lending 

24 Act, provide certification to such private 

25 educational lender— 

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1 ‘‘(I) that the student who initi2 ated the application for the private 

3 education loan, or on whose behalf the 

4 application was initiated, is enrolled 

5 or is scheduled to enroll at the institu6 tion; 

7 ‘‘(II) of such student’s cost of at8 tendance at the institution as deter9 mined under part F of this title; and 

10 ‘‘(III) of the difference be11 tween— 

12 ‘‘(aa) the cost of attendance 

13 at the institution; and 

14 ‘‘(bb) the student’s esti15 mated financial assistance re16 ceived under this title and other 

17 assistance known to the institu18 tion, as applicable; and 

19 ‘‘(ii) provide the certification de20 scribed in clause (i), or notify the creditor 

21 that the institution has received the re22 quest for certification and will need addi23 tional time to comply with the certification 

24 request— 

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1 ‘‘(I) within 15 business days of 

2 receipt of such certification request; 

3 and 

4 ‘‘(II) only after the institution 

5 has completed the activities described 

6 in subparagraph (B). 

7 ‘‘(B) The institution shall, upon receipt of 

8 a certification request described in subpara9 graph (A)(i), and prior to providing such cer10 tification— 

11 ‘‘(i) determine whether the student 

12 who initiated the application for the pri13 vate education loan, or on whose behalf the 

14 application was initiated, has applied for 

15 and exhausted the Federal financial assist16 ance available to such student under this 

17 title and inform the student accordingly; 

18 and 

19 ‘‘(ii) provide the borrower whose loan 

20 application has prompted the certification 

21 request by a private education lender, as 

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

23 following information and disclosures: 

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

25 borrower’s potential eligibility for, 

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1 Federal financial assistance under this 

2 title, including disclosing the terms, 

3 conditions, interest rates, and repay4 ment options and programs of Federal 

5 student loans. 

6 ‘‘(II) The borrower’s ability to 

7 select a private educational lender of 

8 the borrower’s choice. 

9 ‘‘(III) The impact of a proposed 

10 private education loan on the bor11 rower’s potential eligibility for other 

12 financial assistance, including Federal 

13 financial assistance under this title. 

14 ‘‘(IV) The borrower’s right to ac15 cept or reject a private education loan 

16 within the 30-day period following a 

17 private educational lender’s approval 

18 of a borrower’s application and about 

19 a borrower’s 3-day right to cancel pe20 riod. 

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

22 terms ‘private educational lender’ and ‘private 

23 education loan’ have the meanings given such 

24 terms in section 140 of the Truth in Lending 

25 Act (15 U.S.C. 1650).’’. 

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1 (b) EFFECTIVE DATE.—The amendment made by 

2 subsection (a) shall take effect on the effective date of the 

3 regulations described in section 2(c). 

4 SEC. 4. REPORT. 

5 Not later than 24 months after the issuance of regu6 lations under section 2(c), the Director of the Bureau of 

7 Consumer Financial Protection and the Secretary of Edu8 cation shall jointly submit to Congress a report on the 

9 compliance of institutions of higher education and private 

10 educational lenders with section 128(e)(3) of the Truth 

11 in Lending Act (15 U.S.C. 1638(e)), as amended by sec12 tion 2, and section 487(a)(28) of the Higher Education 

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

14 3. Such report shall include information about the degree 

15 to which specific institutions utilize certifications in effec16 tively encouraging the exhaustion of Federal student loan 

17 eligibility and lowering student private education loan 

18 debt. 

Æ 

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