Sec. 2. Additional student loan protections
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Section 140 of the Truth in Lending Act ( 15 U.S.C. 1650 ) is amended by adding at the end the following: 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.
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. 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) ).
The Bureau shall publish a model form under section 105 for describing a cosigner’s obligation for purposes of paragraph (1). 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 — means any condition described in section 437(a) of the Higher Education Act of 1965 (20 U.S.C. 1087(a)); and 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) ) to the fullest extent practicable, including safeguards to prevent fraud and abuse. .
Subsection
(a)of section 140 of the Truth in Lending Act ( 15 U.S.C. 1650(a) ) is amended— by redesignating paragraphs
(1)through
(8)as paragraphs
(2)through (9), respectively; and by inserting before paragraph
(2)(as redesignated by paragraph (1)) the following: the term cosigner — means any individual who is liable for the obligation of another without compensation, regardless of how designated in the contract or instrument; includes any person whose signature is requested as condition to grant credit or to forbear on collection; and 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; . 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.
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U.S. Code
- Preventing unfair and deceptive private educational lending practices and eliminating conflicts of interest§ 1650
- Institutional and financial assistance information for students§ 1092
- Repayment by Secretary of loans of bankrupt, deceased, or disabled borrowers; treatment of borrowers attending schools that fail to provide a refund, attending closed schools, or falsely certified as eligible to borrow§ 1087
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