II 116th CONGRESS 1st Session S. 2184 IN THE SENATE OF THE UNITED STATES July 18, 2019 Mr. Durbin (for himself, Mr. Reed , Mr. Brown , Mr. Cardin , Ms. Baldwin , and Ms. Smith ) 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. Short title This Act may be cited as the Know Before You Owe Private Education Loan Act of 2019 . 2. Amendments to the Truth in Lending Act (a) In general Section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ) is amended— (1) 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 ( 20 U.S.C. 1070 et seq.) and other financial assistance known to the institution, as applicable. (B) Exception Notwithstanding subparagraph (A), a creditor may issue funds 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. ; (2) by redesignating paragraphs (9), (10), and (11) as paragraphs (10), (11), and (12), respectively; and (3) by inserting after paragraph (8) the following: (9) 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 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 Bureau containing the required information about private student loans to be determined by the Director of the Bureau, in consultation with the Secretary of Education. . (b) Definition of Private Education Loan Section 140(a)(8)(A) of the Truth in Lending Act ( 15 U.S.C. 1650(a)(8)(A) ) is amended— (1) by redesignating clause (ii) as clause (iii); (2) in clause (i), by striking and after the semicolon; and (3) 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 . (c) 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 (9) of section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ), as amended by subsection (a). Such regulations shall become effective not later than 6 months after their date of issuance. 3. Amendment to the Higher Education Act of 1965 (a) Amendment to the Higher Education Act of 1965 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, the institution shall within 15 days of receipt of the request— (i) provide 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 pursuant to 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 educational lender, as described in subparagraph (A)(i), with the following information and disclosures: (I) The amount of additional Federal student assistance for which the borrower is eligible and the advantages of Federal loans under this title, including disclosure of the fixed interest rates, deferments, flexible repayment options, loan forgiveness programs, and additional protections, and the higher student loan limits for dependent students whose parents are not eligible for a Federal Direct PLUS Loan. (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 ). . (b) Effective date The amendment made by subsection (a) shall take effect on the effective date of the regulations described in section 2(c). (c) 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, . 4. Report (a) In general Not later than 24 months after the issuance of regulations under section 2(c), the Director of the Consumer Financial Protection Bureau and the Secretary of Education shall jointly submit to Congress a report on the compliance of— (1) private educational lenders with section 128(e)(3) of the Truth in Lending Act ( 15 U.S.C. 1638(e)(3) ), as amended by section 2; and (2) institutions of higher education with section 487(a)(28) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a)(28) ), as amended by section 3. (b) Contents The contents of the report described in subsection (a) shall include information about the degree to which specific institutions utilize certifications in effectively— (1) encouraging the exhaustion of Federal student loan eligibility by borrowers prior to taking on private education loan debt; and (2) lowering private education loan debt by borrowers.