Sec. 4. Temporary authority to create a credit facility to increase market efficiency in the student loan market
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Upon a determination by the Secretary that borrowers are unable to secure adequate credit accommodations with existing private education loans, the Secretary, notwithstanding any provision of section 484 of the Higher Education Act of 1965 ( 20 U.S.C. 1091 ), is authorized to establish lending, purchase, and other credit facilities to— accommodate reasonable refinancing opportunities or other loan adjustments that— improve the sustainability of payments for the borrower; and reduce the likelihood of delinquency and default on private education loans; benefit borrowers that are most likely to have private student debt service obligations that represent a disproportionate share of their income; and ensure that borrowers pay lower interest rates that are commensurate with credit risk, so that they may pursue more economically productive activities, such as home purchases and small business formation.
Any determination under subparagraph
(A)shall be made jointly with the Secretary of Education and the Director of the Bureau of Consumer Financial Protection. Prior to establishing a facility under this subsection, the Secretary, or any administrator designated by the Secretary to establish a program to carry out the authority provided in this subsection, shall establish a compliance system in consultation with the Bureau of Consumer Financial Protection. Mechanisms established under this subsection shall not result in any net cost to the Federal Government, as determined jointly by the Secretary, the Secretary of Education, and the Director of the Office of Management and Budget. Prior to exercising any authority provided under subsection (a), the Secretary shall publish a notice in the Federal Register to seek comment from interested parties on its proposed exercise of such authority, including— the terms and conditions governing the lending, purchases, or other credit facilities authorized by subsection (a); an outline of methodology and factors considered in the purchase or restructuring of private education loans; private education loan modification options that may be available for existing loans; how they will ensure that borrowers whose education debt service obligations represent a disproportionate share of their income will be provided relief; and how the use of the methodology and factors, as proposed in the notice, will be used to ensure that any exercise of authority by the Secretary will result in no net cost to the Federal Government. Not later than 90 days after the date of enactment of this Act, the Secretary shall submit to the appropriate committees of Congress a report that includes— a plan of the Secretary to implement credit mechanisms under the authority of this Act; a description of macroeconomic benefits of increased efficiency and refinance activity in the student loan market; and a description of the benefits through the use of such authority to private education loan borrowers, including how any incidental net gain from the credit mechanism would be used to benefit student borrowers. Beginning 1 year after the date of the first use of the authority provided under this section, the Secretary shall provide an annual report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives describing the utilization, impact, and financial performance of any program established under the authority of this section. Not later than 60 days after the date of publication of a notice in the Federal Register pursuant to subsection (b), the Secretary, in consultation with the Secretary of Education and the Director of the Bureau of Consumer Financial Protection, shall begin a national awareness campaign to alert all private education loan borrowers who may benefit from any program or facilities established under this section. Such campaign shall include outreach to targeted populations of borrowers that are most likely to have private education loan debt service obligations that represent a disproportionate share of their income. Three years after the date on which a credit facility is established under this Act, and not later than 5 years after the date of enactment of this Act, any new lending, purchase, or other activity initiated through the facilities established by the Secretary under subsection
(a)shall cease.
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Sec. 4
Temporary authority to create a credit facility to increase market efficiency in the student loan market
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