Sec. 1012. Mandatory certification

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Section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ) is amended— by striking paragraph

(3)and inserting the following: Except as provided in subparagraph (B), before a creditor may issue any funds with respect to an extension of credit described in this subsection, the creditor shall obtain from the relevant institution of higher education at which such loan is to be used for a student, such institution's certification of— the enrollment status of the student; the student's cost of attendance at the institution as determined by the institution under part F of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087kk et seq.); and the difference between— such cost of attendance; and the student's estimated financial assistance, including financial assistance received under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) if the student pursued such assistance, and other financial assistance known to the institution, as applicable. A creditor shall not issue funds with respect to an extension of credit described in this subsection in an amount that is greater than the amount described in subparagraph (A)(iii). Notwithstanding subparagraph (A), a creditor may issue funds with respect to an extension of credit described in this subsection without obtaining from the relevant institution of higher education such institution’s certification if such institution fails to provide within 15 business days of the creditor’s request for such certification— the requested certification; a notification of a refusal to certify pursuant to section 487(a)(28)(A)(i)(II) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a)(28)(A)(i)(II) ); or notification that the institution has received the request for certification and will need additional time to comply with the certification request. If a creditor issues funds without obtaining a certification, as described in subparagraph (C), such creditor shall report the issuance of such funds in a manner determined by the Director of the Bureau. ; by redesignating paragraphs (9), (10), and

(11)as paragraphs (10), (11), and (12), respectively; by inserting after paragraph

(8)the following: A creditor that issues any funds with respect to an extension of credit described in this subsection shall send loan statements, where such loan is to be used for a student, to borrowers of such funds not less than once every 3 months during the time that such student is enrolled at an institution of higher education. Each statement described in clause

(i)shall— report the borrower's total remaining principal balance, including accrued but unpaid interest and capitalized interest; report any increases in the principal balance since the last statement; and list the current interest rate for each loan. On or before the date a creditor issues any funds with respect to an extension of credit described in this subsection, the creditor shall notify the relevant institution of higher education, in writing, of the amount of the extension of credit and the student on whose behalf credit is extended. The form of such written notification shall be subject to the regulations of the Bureau of Consumer Financial Protection. A creditor that offers to issue funds with respect to an extension of credit described in this subsection shall prepare and submit an annual report to the Bureau of Consumer Financial Protection containing the required information about private education loans described in clause (ii). Each annual report required under clause

(i)shall include the following information: The number of borrowers who request a private education loan who have not exhausted the financial assistance available under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. ). The number of borrowers who request a private education loan above the cost of attendance. The number of borrowers who request a private education loan who have not exhausted their financial assistance available under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. ) who then after the institutional certification process under section 487(a)(28)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a)(28)(A) ) is complete, reduce the amount of their private education loan. The number of borrowers who request a private education loan who have not exhausted their financial assistance available under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. ) who then after the institutional certification process under section 487(a)(28)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a)(28)(A) ) is complete, do not take out a private education loan. Any other information the Bureau of Consumer Financial Protection, in consultation with the Secretary of Education, requires. ; and by adding at the end the following: Each private educational lender shall submit to the Director of the Bureau and the Secretary of Education for inclusion in the National Student Loan Data System established under section 485B of the Higher Education Act of 1965 ( 20 U.S.C. 1092b ) such information as may be determined necessary by the Director and the Secretary under subparagraph (B). Not later than 1 year after the date of enactment of the Higher Education Affordability Act, the Director, in coordination with the Secretary of Education, shall promulgate a regulation regarding the private education loan information required to be submitted under subparagraph (A), including what private education loan information shall be required to be submitted and the method and format for submission. Each private educational lender shall establish and maintain an Internet site on which the private educational lender shall post the written agreement between the private educational lender and the borrower for each private education loan account. Each private educational lender shall also describe the number of private education loans, along with the average loan amount at the time of disbursement, associated with each private education loan of the borrower. A private educational lender may not post individual borrower information on the Internet site established and maintained under clause (i). Each private educational lender shall provide to the Bureau, in electronic format, the private education loan agreements that it publishes on the Internet site of the private educational lender pursuant to subparagraph (A). The Bureau shall establish and maintain on the publicly available Internet site of the Bureau a central repository of the private education loan agreements received by the Bureau pursuant to clause (i), which shall be easily accessible and retrievable by the public. The Bureau may not post individual borrower information on the Internet site described in clause (ii). This paragraph does not apply to individually negotiated changes to contractual terms, including individually modified workouts or renegotiations of amounts owed by a borrower under a private educational loan. The Bureau may, in consultation with the other Federal banking agencies (as that term is defined in section 603 of the Truth in Lending Act ( 15 U.S.C. 1681a )), issue regulations to implement this paragraph, including regulations— specifying the format in which a private educational lender shall publish private education loan agreements on the Internet site of the private educational lender; and establishing exceptions to subparagraphs

(A)and (B)(i) in any case in which the administrative burden outweighs the benefit of increased transparency, including when a postsecondary education loan product has a de minimis number of consumer account holders. A borrower may not waive any right or remedy relating to a private education loan that is available to the borrower against a private educational lender, postsecondary education lender, loan holder, or student loan servicer (as such terms are defined in section 188) before the dispute as to which the right or remedy relates arises. Any such waiver agreed to before, on, or after the date of enactment of the Higher Education Affordability Act shall not be enforceable and shall have no force or effect. An agreement entered before, on, or after the date of enactment of the Higher Education Affordability Act to arbitrate a dispute relating to a private education loan that had not arisen at the time the agreement was entered shall not be enforceable and shall have no force or effect. Each private education loan shall include terms that provide that the liability to repay the loan shall be cancelled— upon the death of the borrower; if the borrower becomes permanently and totally disabled, as determined under paragraph

(1)or

(3)of section 437(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1087(a) ) and the regulations promulgated by the Secretary of Education under that section; and if the Secretary of Veterans Affairs or the Secretary of Defense determines that the borrower is unemployable due to a service-connected condition or disability, in accordance with the requirements of section 437(a)(2) of that Act and the regulations promulgated by the Secretary of Education under that section. . Not later than 1 year after the date of enactment of this Act, the Director of the Bureau of Consumer Financial Protection shall issue final regulations implementing paragraphs

(3)and

(9)of section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ), as amended by subsection (a). Such regulations shall become effective not later than 6 months after their date of issuance. Not later than 2 years after the issuance of the regulations required under subsection (b), and at any other time determined appropriate by the Director of the Bureau of Consumer Financial Protection and the Secretary of Education jointly, the Director and the Secretary shall jointly submit to Congress a report on the compliance of institutions of higher education and private educational lenders with section 128(e)(3) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ), as amended by subsection (a), and section 487(a)(28) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a)(28) ), as amended by section 491(b). Such report shall be based on the annual reports submitted under section 128(e)(9) of the Truth in Lending Act, as amended by subsection (a), and shall include information about the degree to which specific institutions utilize certifications in effectively encouraging the exhaustion of Federal student loan eligibility and lowering student private education loan debt.

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Sec. 1012

Mandatory certification

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