Christopher's Law

To amend the Truth in Lending Act and the Higher Education Act of 1965 to require additional disclosures and protections for students and cosigners with respect to student loans, and for other purposes. 1. Short title; Findings (a) Short title This Act may be cited as the Christopher Bryski Student Loan Protection Act Christopher’s Law (b) Findings Congress finds the following: (1) No requirement exists for private educational lenders’ promissory notes to include a clear and conspicuous description of the responsibilities of a borrower and cosigner in the event the borrower or cosigner becomes disabled, incapacitated, or dies. (2) According to the Annual Report of the Bureau of Consumer Financial Protection (CFPB) Student Loan Ombudsman, dated October 16, 2012: (A) In less than seven months, the CFPB has handled approximately 2,900 private student loan complaints. (B) Co-signers complain that information about discharge or alternative arrangements in the case of death of the primary borrower is not readily available and that decisions are made on a case-by-case basis, giving co-signers little understanding of how the process works, or if they will be successful. (C) The complaints and input received by the CFPB resemble many of the same issues experienced by mortgage borrowers, such as improper application of payments, untimeliness in error resolution, and inability to contact appropriate personnel in times of hardship. (D) The difference between federal and private student loans in periods of disability was not well-understood. (E) There are at least $8 billion of private student loans in default, representing more than 850,000 individual loans. (F) While lenders do provide the terms of agreement in promissory notes, including associated benefits and protections, many borrowers state they were unaware of the categorical differences between federal and private protections. (3) No requirement exists for a private education loan borrower to designate an alternate point of contact on their account in the event of their death or permanent disability. (4) An estimated 1,700,000 people sustain a traumatic brain injury each year, with older adolescents aged 15 to 19 years old more likely to sustain a traumatic brain injury than other age groups. (5) It has been estimated that the annual incidence of spinal cord injury, not including those who die at the scene of an accident, is approximately 40 cases per 1,000,000 people in the United States or approximately 12,000 new cases each year. These injuries can lead to permanent disability or loss of movement and can prohibit the victim from engaging in any substantial gainful activity. (6) In the 2007–2008 academic year, 13 percent of students attending a 4-year public institution of higher education, and 26.2 percent of students attending a 4-year private institution of higher education, borrowed monies from private educational lenders. (7) According to Sallie Mae, in 2009, the percentage of cosigned private education loans increased from 66 percent to 84 percent of all private education loans. 2. Additional student loan protections (a) In general Section 140 of the Truth in Lending Act ( 15 U.S.C. 1650 (g) Additional protections relating to death or disability of borrower or cosigner of a private education loan (1) Clear and conspicuous description of borrower’s and cosigner’s obligation In the case of any private educational lender who extends a private education loan, the lender shall clearly and conspicuously describe, in writing, the cosigner’s obligations with respect to the loan, including the effect the death, disability, or inability to engage in any substantial gainful activity of the borrower or any cosigner would have on any such obligation, in language that the Bureau determines would give a reasonable person a reasonable understanding of the obligation being assumed by becoming a cosigner for the loan. (2) Designation of individual to act on behalf of the borrower In the case of any private educational lender who extends a private education loan, the lender shall require the borrower to designate an individual to have the legal authority to act on behalf of the borrower with respect to the private education loan in the event of the borrower’s death, disability, or inability to engage in any substantial gainful activity. (3) Counseling In the case of any private educational lender who extends a private education loan, the lender shall ensure that the borrower, and any cosigner, receives comprehensive information on the terms and conditions of the loan and of the responsibilities the borrower has with respect to such loan, including the information described under section 485(l)(2) of the Higher Education Act of 1965 ( 20 U.S.C. 1092(l)(2) (4) Model form The Bureau shall publish a model form under section 105 for describing a cosigner’s obligation for purposes of paragraph (1). (5) Definition of death, disability, or inability to engage in any substantial gainful activity For the purposes of this subsection with respect to a borrower or cosigner, the term death, disability, or inability to engage in any substantial gainful activity (A) means any condition described in section 437(a) of the Higher Education Act of 1965 (20 U.S.C. 1087(a)); and (B) shall be interpreted by the Bureau in such a manner as to conform with the regulations prescribed by the Secretary of Education under section 437(a) of such Act ( 20 U.S.C. 1087(a) . (b) Definitions Subsection (a) of section 140 of the Truth in Lending Act ( 15 U.S.C. 1650(a) (1) by redesignating paragraphs (1) through (8) as paragraphs (2) through (9), respectively; and (2) by inserting before paragraph (2) (as redesignated by paragraph (1)) the following: (1) the term cosigner (A) means any individual who is liable for the obligation of another without compensation, regardless of how designated in the contract or instrument; (B) includes any person whose signature is requested as condition to grant credit or to forbear on collection; and (C) does not include a spouse of an individual referred to in subparagraph (A) whose signature is needed to perfect the security interest in the loan; . (c) Rulemaking Not later than the end of the 1-year period following the date of the enactment of this Act, the Bureau of Consumer Financial Protection shall issue regulations to carry out section 140(g) of the Truth in Lending Act. 3. Federal student loans (a) Counseling information Section 485(l)(2) of the Higher Education Act of 1965 ( 20 U.S.C. 1092(l)(2) (L) Information on the conditions required to discharge the loan due to the death, disability, or inability to engage in any substantial gainful activity of the borrower in accordance with section 437(a), and an explanation that, in the case of a private education loan made through a private educational lender (as such terms are defined in section 140 of the Truth in Lending Act ( 15 U.S.C. 1650 (M) Any repayment, refinance, deferment, forbearance, or forgiveness opportunities available to the borrower, or cosigner, in the event of either individual’s death, disability, or inability to engage in any substantial gainful activity. (N) The effect that the death, disability, or inability to engage in any substantial gainful activity of the borrower would have on the obligations of the borrower and any cosigner of the loan. . (b) Designation of individual To act on behalf of the borrower Section 484(a)(4) of the Higher Education Act of 1965 ( 20 U.S.C. 1091(a)(4) (1) in subparagraph (A), by striking and (2) in subparagraph (B), by inserting and (3) by adding at the end the following new subparagraph: (C) a designation by such student of an individual who shall have the legal authority to act on behalf of the student with respect to any loan to the student under this title in the event of the student’s death, disability, or inability to engage in any substantial gainful activity; .

Summary: Christopher Bryski Student Loan Protection Act or Christopher's Law - Amends the Truth in Lending Act to require lenders of private education loans to: describe clearly and conspicuously, in writing, the cosigners' obligations regarding such loans, including the effect a borrower's or cosigner's death, disability, or inability to engage in any substantial gainful activity would have on such obligations; require the borrower to designate an individual to have the legal authority to act on behalf of the borrower in the event of the borrower's death, disability, or inability to engage in any substantial gainful activity; and ensure that the borrower, and any cosigner, receives comprehensive information on the loan's terms and conditions and the borrower's responsibilities with respect to such loan. Directs the Consumer Financial Protection Bureau (CFPB) to publish a model form for describing a cosigner's obligations regarding private education loans. Amends the Higher Education Act of 1965 (HEA) to require institutions of higher education to provide borrowers of federal education loans information at their entrance counseling on: the effect their death, disability, or inability to engage in any substantial gainful activity would have on their federal and private education loans; any repayment, refinance, deferment, forbearance, or forgiveness opportunities available to the borrower, or cosigner, in the event of either individual's death, disability, or inability to engage in any substantial gainful activity; and the effect their death, disability, or inability to engage in any substantial gainful activity would have on their obligations and any cosigner's obligations with respect to the loan. Requires students applying for federal education loans to designate an individual who is to have the legal authority to act on their behalf with respect to such a loan in the event of their death, disability, or inability to engage in any substantial gainful activity.