Sec. 3. Student loan borrower bill of rights
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The Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq. ) is amended— in part G of title IV ( 20 U.S.C. 1088 et seq. ) by adding at the end the following: In this section: The term servicer means the person responsible for the servicing of any student loan, including any agent of such person or the person who makes, owns, or holds a loan if such person also services the loan. The term servicing means— receiving any scheduled periodic payments from a borrower pursuant to the terms of a student loan; making the payments of principal and interest and such other payments with respect to the amounts received from the borrower, as may be required pursuant to the terms of the loan; and performing other administrative services with respect to the loan.
The term student loan means a loan made, insured, or guaranteed under this title. If the sale, other transfer, or assignment of a student loan results in a change in the identity of the party to whom the borrower must send subsequent payments or direct any communications concerning the loan— the transferor shall— notify the borrower in writing not fewer than 45 days before transferring a legally enforceable right to receive payment from the borrower on such loan, of— the sale, transfer, or assignment; the identity of the transferee; the name and address of the party to whom subsequent payments or communications must be sent; the telephone numbers and websites of both the transferor and the transferee; the effective date of the sale, transfer, or assignment; the date on which the current servicer will stop accepting payments; and the date on which the transferee servicer will begin accepting payment; and forward to the transferee servicer any payment with respect to such student loan, immediately upon receiving such payment, from a borrower during the 60-day period beginning on the date on which the transferor servicer stops accepting payment for such student loan; and the transferee shall— notify the borrower in writing not fewer than 45 days before transferring a legally enforceable right to receive payment from the borrower on such loan, of— the sale, transfer, or assignment; the identity of the transferor; the name and address of the party to whom subsequent payments or communications must be sent; the telephone numbers and websites of both the transferor and the transferee; the effective date of the sale, transfer, or assignment; the date on which the current servicer will stop accepting payments; and the date on which the transferee servicer will begin accepting payment; accept as on-time and may not impose any late fee or finance charge with respect to such student loan for any payment forwarded from the transferor servicer during the 60-day period beginning on the date on which the transferor servicer stops accepting payment, if the transferor servicer received such payment from the borrower on or before the applicable due date, including any grace period; provide borrowers a simple, online process for transferring existing electronic fund transfer authority; and honor any promotion or benefit offered to the borrower or advertised by the previous owner or transferor servicer of such student loan.
If a servicer makes a change in the mailing address, office, or procedures for handling payments with respect to any student loan, and such change causes a delay in the crediting of the account of the borrower made during the 60-day period following the date on which such change took effect, the servicer may not impose any late fee or finance charge for a late payment on such student loan. The Director of the Consumer Financial Protection Bureau, in consultation with the Secretary, shall promulgate rules requiring lenders and servicers to— identify and contact borrowers who may be eligible for student loan discharge by the Secretary; provide the borrower, in writing, in simple and understandable terms, information about obtaining such discharge; and create a streamlined process for eligible borrowers to apply for and receive such discharge.
Notwithstanding any other provision of this Act, the Director of the Consumer Financial Protection Bureau, in consultation with the Secretary, shall issue rules for the application of student loan payments that— minimizes the amount of fees and interest incurred by the borrower and the total loan amount paid by the borrower; minimizes delinquencies, assignments to collection, and charge offs; requires servicers to apply payments on the date received; and allows the borrower to direct the servicer to apply payments in a manner preferred by the borrower.
In issuing the rules under paragraph (1), the Director of the Consumer Financial Protection Bureau shall choose the application method that best benefits the borrower and is compatible with existing repayment options. Each servicer of a student loan shall designate an employee to act as the servicemember and veterans liaison who is responsible for answering inquiries from servicemembers and veterans, and is specially trained on servicemember and veteran benefits and options under the Servicemembers Civil Relief Act (50 U.S.C.
App. 501 et seq.) and other Federal or State laws related to student loans. Each servicer of a student loan shall maintain a toll-free telephone number for the servicemember and veterans liaison designated under paragraph (1), which shall be made available on the primary Internet website of the servicer and on monthly billing statements. Notwithstanding any other provision of this Act, a servicer may not report a student loan as delinquent, assigned to collection (internally or by referral to a third party), charged off, or in default, to a credit reporting agency if the borrower is on active duty in the Armed Forces (as defined in section 101(d)(1) of title 10, United States Code) serving in a combat zone (as designated by the President under section 112(c) of the Internal Revenue Code of 1986).
The Secretary shall determine additional entities with whom borrowers interact, including guaranty agencies, that shall designate an employee to act as the servicemember and veterans liaison who is responsible for answering inquiries from servicemembers and veterans, and is specially trained on servicemember and veteran benefits and options under the Servicemembers Civil Relief Act (50 U.S.C. App. 501 et seq.) and other Federal or State laws related to student loans. A servicer of a student loan shall make available through a secure website, or in writing upon request, the loan history of each borrower for each student loan, separately designating— payment history; loan history, including any forbearances, deferrals, delinquencies, and defaults; annual percentage rate history; and key loan terms, including application of payments to interest, principal, and fees, origination date, principal, capitalized interest, annual percentage rate, including any cap, loan term, and any contractual incentives.
A servicer shall make available to the borrower, if requested, at no charge, copies of the original loan documents and the promissory note for each student loan. The Director of the Consumer Financial Protection Bureau, in consultation with the Secretary, shall promulgate rules requiring servicers to establish error resolution procedures to allow borrowers to inquire about errors related to their student loans and obtain timely resolution of such errors. The Director of the Consumer Financial Protection Bureau, in consultation with the Secretary, may establish additional servicing standards to reduce delinquencies, assignments to collection, and defaults, and to ensure borrowers understand their rights and obligations related to their student loans.
The Director of the Consumer Financial Protection Bureau, in consultation with the Secretary, shall promulgate rules implementing this section. ; in section 433 ( 20 U.S.C. 1083 )— in subsection (b)— in paragraph (12), by striking and after the semicolon; in paragraph (13), by striking the period at the end and inserting ; and ; and by adding at the end the following: a statement that— the borrower may be entitled to servicemember and veteran benefits under the Servicemembers Civil Relief Act (50 U.S.C.
App. 501 et seq.) and other Federal or State laws; and a Servicemember and Veterans Liaison designated under section 493E(f) is available to answer inquiries about servicemember and veteran benefits, including the toll-free telephone number to contact the Liaison pursuant to section 493E(f). ; and in subsection (e)— in paragraph (2), by adding at the end the following: A statement that— the borrower may be entitled to servicemember and veteran benefits under the Servicemembers Civil Relief Act (50 U.S.C.
App. 501 et seq.) and other Federal or State laws; and a Servicemember and Veterans Liaison designated under section 493E(f) is available to answer inquiries about servicemember and veteran benefits, including the toll-free telephone number to contact the Liaison pursuant to section 493E(f). ; in paragraph (3), by adding at the end the following: A statement that— the borrower may be entitled to servicemember and veteran benefits under the Servicemembers Civil Relief Act (50 U.S.C.
App. 501 et seq.) and other Federal or State laws; and a Servicemember and Veterans Liaison designated under section 493E(f) is available to answer inquiries about servicemember and veteran benefits, including the toll-free telephone number to contact the Liaison pursuant to section 493E(f). ; and by adding at the end the following: The Secretary shall require eligible lenders to, not later than 1 year after the date of enactment of the Student Loan Borrower Bill of Rights — notify borrowers, in writing, in simple and understandable terms, about alternative repayment options, including income-based repayment, income contingent repayment, consolidation, and forgiveness options, as well as servicemember or veteran benefits under the Servicemembers Civil Relief Act (50 U.S.C.
App. 501 et seq.) or other Federal or State laws; provide borrowers, in writing, in simple and understandable terms, information about alternative repayment plans, including all terms, conditions, and fees or costs associated with such repayment plans in a format that allows the borrower to compare the current repayment plan with alternative repayment plans; and offer to enroll such borrowers in alternative repayment plans, if eligible. ; and in section 455(d) ( 20 U.S.C. 1087e(d) ), by adding at the end the following:
The Secretary shall carry out, not later than 1 year after the date of enactment of the Student Loan Borrower Bill of Rights , the activities described in subparagraphs (A), (B), and
(C)of section 433(e)(4) with respect to loans made under this part. .
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