II 

114TH CONGRESS 

2D SESSION S. 3347 

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 SENATE OF THE UNITED STATES 

SEPTEMBER 15, 2016 

Mr. DURBIN (for himself, Mr. FRANKEN, and Mr. REED) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

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 Education Loan Act of 2016’’. 

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

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

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


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

2 following: 

3 ‘‘(3) INSTITUTIONAL CERTIFICATION RE4 QUIRED.— 

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

6 subparagraph (B), before a creditor may issue 

7 any funds with respect to an extension of credit 

8 described in this subsection, the creditor shall 

9 obtain from the relevant institution of higher 

10 education where such loan is to be used for a 

11 student, such institution’s certification of— 

12 ‘‘(i) the enrollment status of the stu13 dent; 

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

15 at the institution as determined by the in16 stitution under part F of title IV of the 

17 Higher Education Act of 1965; and 

18 ‘‘(iii) the difference between— 

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

20 ‘‘(II) the student’s estimated fi21 nancial assistance, including such as22 sistance received under title IV of the 

23 Higher Education Act of 1965 and 

24 other financial assistance known to 

25 the institution, as applicable. 


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1 ‘‘(B) EXCEPTION.—Notwithstanding sub2 paragraph (A), a creditor may issue funds with 

3 respect to an extension of credit described in 

4 this subsection without obtaining from the rel5 evant institution of higher education such insti6 tution’s certification if such institution fails to 

7 provide within 15 business days of the credi8 tor’s request for such certification— 

9 ‘‘(i) the requested certification; or 

10 ‘‘(ii) notification that the institution 

11 has received the request for certification 

12 and will need additional time to comply 

13 with the certification request. 

14 ‘‘(C) LOANS DISBURSED WITHOUT CER15 TIFICATION.—If a creditor issues funds without 

16 obtaining a certification, as described in sub17 paragraph (B), such creditor shall report the 

18 issuance of such funds in a manner determined 

19 by the Director of the Bureau of Consumer Fi20 nancial Protection.’’; 

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

22 (11) as paragraphs (10), (11), and (12), respec23 tively; and 

24 (3) by inserting after paragraph (8) the fol25 lowing: 


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1 ‘‘(9) PROVISION OF INFORMATION.— 

2 ‘‘(A) PROVISION OF INFORMATION TO STU3 DENTS.— 

4 ‘‘(i) LOAN STATEMENT.—A creditor 

5 that issues any funds with respect to an 

6 extension of credit described in this sub7 section shall send loan statements, where 

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

9 borrowers of such funds not less than once 

10 every 3 months during the time that such 

11 student is enrolled at an institution of 

12 higher education. 

13 ‘‘(ii) CONTENTS OF LOAN STATE14 MENT.—Each statement described in 

15 clause (i) shall— 

16 ‘‘(I) report the borrower’s total 

17 remaining debt to the creditor, includ18 ing accrued but unpaid interest and 

19 capitalized interest; 

20 ‘‘(II) report any debt increases 

21 since the last statement; and 

22 ‘‘(III) list the current interest 

23 rate for each loan. 

24 ‘‘(B) NOTIFICATION OF LOANS DISBURSED

25 WITHOUT CERTIFICATION.—On or before the 


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1 date a creditor issues any funds with respect to 

2 an extension of credit described in this sub3 section, the creditor shall notify the relevant in4 stitution of higher education, in writing, of the 

5 amount of the extension of credit and the stu6 dent on whose behalf credit is extended. The 

7 form of such written notification shall be sub8 ject to the regulations of the Bureau. 

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

10 issues funds with respect to an extension of 

11 credit described in this subsection shall prepare 

12 and submit an annual report to the Bureau 

13 containing the required information about pri14 vate student loans to be determined by the Bu15 reau, in consultation with the Secretary of Edu16 cation.’’. 

17 (b) DEFINITION OF PRIVATE EDUCATION LOAN.— 

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

19 U.S.C. 1650(a)(7)(A)) is amended— 

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

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

22 semicolon; and 

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

24 ‘‘(ii) is not made, insured, or guaran25 teed under title VII or title VIII of the 


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

2 et seq. and 296 et seq.); and’’. 

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

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

5 Financial Protection shall issue regulations in final form 

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

7 the Truth in Lending Act (15 U.S.C. 1638(e)), as amend8 ed by subsection (a). Such regulations shall become effec9 tive not later than 6 months after their date of issuance. 

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

11 1965. 

12 (a) AMENDMENT TO THE HIGHER EDUCATION ACT

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

14 of 1965 (20 U.S.C. 1094(a)) is amended by striking para15 graph (28) and inserting the following: 

16 ‘‘(28)(A) The institution shall— 

17 ‘‘(i) upon the request of a private edu18 cational lender, acting in connection with an ap19 plication initiated by a borrower for a private 

20 education loan in accordance with section 

21 128(e)(3) of the Truth in Lending Act, provide 

22 certification to such private educational lend23 er— 

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

25 application for the private education loan, 


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1 or on whose behalf the application was ini2 tiated, is enrolled or is scheduled to enroll 

3 at the institution; 

4 ‘‘(II) of such student’s cost of attend5 ance at the institution as determined under 

6 part F of this title; and 

7 ‘‘(III) of the difference between— 

8 ‘‘(aa) the cost of attendance at 

9 the institution; and 

10 ‘‘(bb) the student’s estimated fi11 nancial assistance received under this 

12 title and other assistance known to 

13 the institution, as applicable; and 

14 ‘‘(ii) provide the certification described in 

15 clause (i), or notify the creditor that the institu16 tion has received the request for certification 

17 and will need additional time to comply with the 

18 certification request— 

19 ‘‘(I) within 15 business days of receipt 

20 of such certification request; and 

21 ‘‘(II) only after the institution has 

22 completed the activities described in sub23 paragraph (B). 


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1 ‘‘(B) The institution shall, upon receipt of a 

2 certification request described in subparagraph 

3 (A)(i), and prior to providing such certification— 

4 ‘‘(i) determine whether the student who 

5 initiated the application for the private edu6 cation loan, or on whose behalf the application 

7 was initiated, has applied for and exhausted the 

8 Federal financial assistance available to such 

9 student under this title and inform the student 

10 accordingly; and 

11 ‘‘(ii) provide the borrower whose loan ap12 plication has prompted the certification request 

13 by a private education lender, as described in 

14 subparagraph (A)(i), with the following infor15 mation and disclosures: 

16 ‘‘(I) The amount of additional Federal 

17 student assistance for which the borrower 

18 is eligible and the potential advantages of 

19 Federal loans under this title, including 

20 disclosure of the fixed interest rates, 

21 deferments, flexible repayment options, 

22 loan forgiveness programs, and additional 

23 protections, and the higher student loan 

24 limits for dependent students whose parVerDate Sep 11 2014 02:17 Sep 20, 2016 Jkt 059200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3347.IS S3347

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1 ents are not eligible for a Federal Direct 

2 PLUS Loan. 

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

4 private educational lender of the bor5 rower’s choice. 

6 ‘‘(III) The impact of a proposed pri7 vate education loan on the borrower’s po8 tential eligibility for other financial assist9 ance, including Federal financial assistance 

10 under this title. 

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

12 or reject a private education loan within 

13 the 30-day period following a private edu14 cational lender’s approval of a borrower’s 

15 application and about a borrower’s 3-day 

16 right to cancel period. 

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

18 ‘private educational lender’ and ‘private education 

19 loan’ have the meanings given such terms in section 

20 140 of the Truth in Lending Act (15 U.S.C. 

21 1650).’’. 

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

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

24 regulations described in section 2(c). 


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1 SEC. 4. REPORT. 

2 Not later than 24 months after the issuance of regu3 lations under section 2(c), the Director of the Bureau of 

4 Consumer Financial Protection and the Secretary of Edu5 cation shall jointly submit to Congress a report on the 

6 compliance of institutions of higher education and private 

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

8 in Lending Act (15 U.S.C. 1638(e)), as amended by sec9 tion 2, and section 487(a)(28) of the Higher Education 

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

11 3. Such report shall include information about the degree 

12 to which specific institutions utilize certifications in effec13 tively encouraging the exhaustion of Federal student loan 

14 eligibility and lowering student private education loan 

15 debt. 

Æ 


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