Private Loan Disability Discharge Act of 2021

Bill: 117-hr-2498
Sponsor: full_name: Rep. Dean, Madeleine [D-PA-4]
Introduced: 2021-04-14
Policy area: Finance and Financial Sector
Subjects: Consumer credit

Debt collection

Disability and paralysis

Higher education

Income tax exclusion

Student aid and college costs
Latest action: action_date: 2021-04-14
text: Referred to the Committee on Financial Services, and in addition to the Committee on 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.

Summaries:
action_date: 2021-04-14
action_desc: Introduced in House
text: <p><b>Private Loan Disability Discharge Act of 2021</b></p> <p>This bill directs the holder of a private education loan to discharge the loan in the event of the borrower's death or total and permanent disability. The obligation of a cosigner for a private education loan is also discharged in the event of total and permanent disability of the borrower. The bill also extends indefinitely the exclusion of student loan debt discharge from gross income for federal income tax purposes. </p>

tv_txt: I 117th CONGRESS 1st Session H. R. 2498 IN THE HOUSE OF REPRESENTATIVES April 14, 2021 Ms. Dean introduced the following bill; which was referred to the Committee on Financial Services , and in addition to the Committee on 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 provide for the discharge of a private education loan in the case of death or total and permanent disability of a student obligor, and for other purposes.

1. Short title This Act may be cited as the Private Loan Disability Discharge Act of 2021 . 2. Protections for obligors and cosigners in case of death or total and permanent disability (a) In general Section 140(g) of the Truth in Lending Act ( 15 U.S.C. 1650(g) ) is amended— (1) in paragraph (2)— (A) in the heading, by striking in case of death of borrower ; (B) in subparagraph (A), by inserting after of the death , the following: or total and permanent disability ; and (C) in subparagraph (C), by inserting after of the death , the following: or total and permanent disability ; and (2) by adding at the end the following: (3) Discharge in case of death or total and permanent disability of borrower The holder of a private education loan shall, when notified of the death or total and permanent disability of a student obligor, discharge the liability of the student obligor on the loan and may not, after such notification— (A) attempt to collect on the outstanding liability of the student obligor; and (B) in the case of total and permanent disability, monitor the disability status of the student obligor at any point after the date of discharge. (4) Total and permanent disability defined For the purposes of this subsection and with respect to an individual, the term total and permanent disability means the individual is totally and permanently disabled, as such term is defined in section 685.102(b) of title 34 of the Code of Federal Regulations. (5) Private discharge in cases of certain discharge for death or disability The holder of a private education loan shall, when notified of the discharge of liability of a student obligor on a loan described under section 108(f)(5)(A) of the Internal Revenue Code of 1986, discharge any liability of the student obligor (and any cosigner) on any private education loan which the private education loan holder holds and may not, after such notification— (A) attempt to collect on the outstanding liability of the student obligor; and (B) in the case of total and permanent disability, monitor the disability status of the student obligor at any point after the date of discharge. . (b) Tax liability Section 108(f)(5)(A) of the Internal Revenue Code of 1986 ( 26 U.S.C. 108(f)(5)(A) ) is amended— (1) by striking , and before January 1, 2026 ; (2) in clause (ii), by striking or ; (3) by redesignating clause (iii) as clause (iv); and (4) by inserting after clause (ii) the following: (iii) pursuant to paragraph (3) or (5) of section 140(g) of the Truth in Lending Act, or . (c) Rulemaking The Director of the Bureau of Consumer Financial Protection may issue rules to implement the amendments made by subsection (a) as the Director determines appropriate. (d) Effective date The amendments made by this section shall take effect 1 year after the date of the enactment of this Act.