I 117th CONGRESS 1st Session H. R. 1143 IN THE HOUSE OF REPRESENTATIVES February 18, 2021 Mr. Kildee (for himself, Mr. Carson , Mr. Cohen , Ms. Dean , Ms. Norton , Mr. Perlmutter , and Mr. Vargas ) introduced the following bill; which was referred to the Committee on Financial Services , and in addition to the Committees on the Judiciary , and Ways and Means , 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 to modify obligations relating to private education loans due to the disability of a cosigner or borrower of the loan, to amend title 11 of the United States Code to make student loans dischargeable, and for other purposes.

1. Short title This Act may be cited as the Lenders Offer Assistance Now Act or the LOAN Act . 2. Disability of a cosigner or a borrower of a private education loan (a) In general Section 140(g) of the Truth in Lending Act ( 15 U.S.C. 1650(g) ) is amended— (1) in paragraph (1), by striking bankruptcy or death and inserting bankruptcy, death, or disability ; and (2) by adding at the end the following new paragraphs: (3) Discharge in case of disability A lender that extends a private education loan shall discharge the student obligor’s liability on the loan if a student obligor experiences a disability. (4) Disability defined In this subsection, the term disability means a permanent and total disability, as determined in accordance with the regulations of the Secretary of Education under section 437(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1087(a) ), or a determination by the Secretary of Veterans Affairs that the individual is unemployable due to a service-connected condition. . (b) Tax treatment of discharge Section 108(f)(5)(A) of the Internal Revenue Code of 1986 is further amended by striking or in clause (ii), by redesignating clause (iii) as clause (iv), and by inserting after clause (ii) the following new clause: (iii) pursuant to paragraph (3) of section 140(g) of the Truth in Lending Act, or . (c) Impact on certain programs Discharge of a private education loan due to disability of a borrower under paragraph (3) of section 140(g) of the Truth in Lending Act, as added by subsection (a), shall not be regarded as income and shall not be regarded as a resource for purposes of determining the eligibility of the borrower of such loan (or the borrower’s spouse or family) for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds. (d) Applicability The amendments made by this section shall apply to private education loan agreements entered into on or after the date that is 180 days after the date of enactment of this Act. (e) Private education loan defined In this section, the term private education loan has the meaning given in section 140(a) of the Truth in Lending Act ( 15 U.S.C. 1650(a) ). 3. Exception to discharge (a) In general Section 523(a) of title 11, United States Code, is amended— (1) by striking paragraph (8); and (2) by redesignating paragraphs (9) through (14B) as paragraphs (8) through (14A), respectively. (b) Conforming amendments Title 11, United States Code, is amended— (1) in section 704(c)(1)(C)(iv)(I) by striking (14A) and inserting (14) ; (2) in section 1106(c)(1)(C)(iv)(I) by striking (14A) and inserting (14) ; (3) in section 1202(c)(1)(C)(iv)(I) by striking (14A) and inserting (14) ; and (4) in section 1328(a)(2) by striking (8), or (9) and inserting or (8) . (c) Effective date; application of amendments (1) Effective date Except as provided in paragraph (2), this section and the amendments made by this section shall take effect on the date of the enactment of this Act. (2) Application of amendments The amendments made by this section shall apply only with respect to cases commenced under title 11 of the United States Code on or after the date of the enactment of this Act.