Sec. 2. Truth in Lending Act amendments
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The Truth in Lending Act ( 15 U.S.C. 1601 et seq. ) is amended— in section 128 ( 15 U.S.C. 1638 )— in subsection (e)— in the subsection heading, by striking ; private in paragraph (1)(O), by striking paragraph
(6)and inserting paragraph
(9); in paragraph (2)(L), by striking paragraph
(6)and inserting paragraph
(9); in paragraph (4)(C), by striking paragraph
(7)and inserting paragraph
(10); by redesignating paragraphs
(5)through
(11)as paragraphs
(8)through (14), respectively; by inserting after paragraph
(4)the following: Not fewer than 30 days and not more than 150 days before the first fully amortized payment on a postsecondary education loan is due from the borrower, the postsecondary educational lender shall disclose to the borrower, clearly and conspicuously— the information described in— paragraph (2)(A) (adjusted, as necessary, for the rate of interest in effect on the date the first fully amortized payment on a postsecondary education loan is due); subparagraphs
(B)through
(G)of paragraph (2); paragraph (2)(H) (adjusted, as necessary, for the rate of interest in effect on the date the first fully amortized payment on a postsecondary education loan is due); paragraph (2)(K); and subparagraphs
(O)and
(P)of paragraph (2); the scheduled date upon which the first fully amortized payment is due; the name of the lender and servicer, and the address to which communications and payments should be sent including a telephone number and website where the borrower may obtain additional information; a description of alternative repayment plans, including loan consolidation or refinancing, and servicemember or veteran benefits under the Servicemembers Civil Relief Act (50 U.S.C. App. 501 et seq.) or other Federal or State law related to postsecondary education loans; and a statement that a Servicemember and Veterans Liaison designated under paragraph (15)(I) is available to answer inquiries about servicemember and veteran benefits related to postsecondary education loans, including the toll-free telephone number to contact the Liaison pursuant to paragraph (15)(I). Not fewer than 5 days after a borrower becomes 30 days delinquent on a postsecondary education loan, the postsecondary educational lender shall disclose to the borrower, clearly and conspicuously— the date on which the loan will be charged-off (as defined in paragraph (15)(A)) or assigned to collections, including the consequences of such charge-off or assignment to collections, if no payment is made; the minimum payment that the borrower must make to avoid the loan being charged off (as defined in paragraph (15)(A)) or assigned to collection, and the minimum payment that the borrower must make to bring the loan current; a statement informing the borrower that a payment of less than the minimum payment described in subparagraph
(B)could result in the loan being charged off (as defined in paragraph (15)(A)) or assigned to collection; and a statement that a Servicemember and Veterans Liaison designated under paragraph (15)(I) is available to answer inquiries about servicemember and veteran benefits related to postsecondary education loans, including the toll-free telephone number to contact the Liaison pursuant to paragraph (15)(I). Not fewer than 5 days after a borrower notifies a postsecondary educational lender that the borrower is having difficulty making payment or a borrower becomes 60 days delinquent on a postsecondary education loan, the postsecondary educational lender shall— complete a full review of the borrower’s postsecondary education loan and make a reasonable effort to obtain the information necessary to determine— if the borrower is eligible for an alternative repayment plan, including loan consolidation or refinancing; and if the borrower is eligible for servicemember or veteran benefits under the Servicemembers Civil Relief Act (50 U.S.C. App. 501 et seq.) or other Federal or State law related to postsecondary education loans; provide the borrower, in writing, in simple and understandable terms, information about alternative repayment plans and benefits for which the borrower is eligible, including all terms, conditions, and fees or costs associated with such repayment plan, pursuant to paragraph (8)(D); allow the borrower not less than 30 days to apply for an alternative repayment plan or benefits, if eligible; and notify the borrower that a Servicemember and Veterans Liaison designated under paragraph (15)(I) is available to answer inquiries about servicemember and veteran benefits related to postsecondary education loans, including the toll-free telephone number to contact the Liaison pursuant to paragraph (15)(I). If a borrower notifies the postsecondary educational lender that a long-term alternative repayment plan is not appropriate, the postsecondary educational lender may comply with this paragraph by providing the borrower, in writing, in simple and understandable terms, information about short-term options to address an anticipated short-term difficulty in making payments, such as forbearance or deferment options, including all terms, conditions, and fees or costs associated with such options pursuant to paragraph (8)(D). Each postsecondary educational lender shall establish a process, in accordance subparagraph (A), for a borrower to notify the lender that— the borrower is having difficulty making payments on a postsecondary education loan; and a long-term alternative repayment plan is not needed. The Director of the Bureau of Consumer Financial Protection, in consultation with the Secretary of Education, shall promulgate rules establishing minimum standards for postsecondary educational lenders in carrying out the requirements of this paragraph and a model form for borrowers to notify postsecondary educational lenders of the information under this paragraph. ; in paragraph (8), as redesignated by clause (v), by adding at the end the following: Not later than 2 years after the date of enactment of the Student Loan Borrower Bill of Rights , the Director of the Bureau of Consumer Financial Protection, in consultation with the Secretary of Education, shall develop and issue model forms to allow borrowers to compare alternative repayment plans, forbearance, and deferment options with the borrower’s existing repayment plan with respect to a postsecondary education loan. Such forms shall include the following: The total amount to be paid over the life of the loan. The total amount in interest to be paid over the life of the loan. The monthly payment amount. The expected pay-off date. Related fees and costs. Eligibility requirements, and how the borrower can apply for the alternative repayment plan, forbearance, or deferment option. Any relevant consequences due to action or inaction, such as default, including any actions that would result in the loss of eligibility for alternative repayment plans, forbearance, or deferment options. ; in paragraph (11), as redesignated by clause (v), by striking paragraph
(7)and inserting paragraph
(10); by striking paragraph (13), as redesignated by clause (v), and inserting the following: In this subsection— the terms covered educational institution , private educational lender , and private education loan have the same meanings as in section 140; and the term postsecondary education loan means— a private education loan; or a loan made, insured, or guaranteed under part B, D, or E of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1071 et seq. , 1087a et seq., and 1087aa et seq.). ; in paragraph (14), as redesignated by clause (v), by striking paragraph
(5)and inserting paragraph
(8); and by adding at the end the following: In this paragraph: The term borrower means the person to whom a postsecondary education loan is extended. The term charge off means charge to profit and loss, or subject to any similar action. The term qualified written request means a written correspondence of a borrower (other than notice on a payment medium supplied by the student loan servicer) transmitted by mail, facsimile, or electronically through an email address or website designated by the student loan servicer to receive communications from borrowers that— includes, or otherwise enables the student loan servicer to identify, the name and account of the borrower; and includes, to the extent applicable— sufficient detail regarding the information sought by the borrower; or a statement of the reasons for the belief of the borrower that there is an error regarding the account of the borrower. A written correspondence of a borrower is a qualified written request if the written correspondence is transmitted to and received by a student loan servicer at a mailing address, facsimile number, email address, or website address other than the address or number designated by that student loan servicer to receive communications from borrowers but the written correspondence meets the requirements under items
(aa)and
(bb)of subclause (I). A student loan servicer shall, within a reasonable period of time, transfer a written correspondence of a borrower received by the student loan servicer at a mailing address, facsimile number, email address, or website address other than the address or number designated by that student loan servicer to receive communications from borrowers to the correct address or appropriate office or other unit of the student loan servicer. A written correspondence of a borrower transferred in accordance with item
(bb)shall be deemed to be received by the student loan servicer on the date on which the written correspondence is transferred to the correct address or appropriate office or other unit of the student loan servicer. The term servicer means the person responsible for the servicing of a postsecondary education 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 postsecondary education 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. If the sale, other transfer, assignment, or transfer of servicing obligations of a postsecondary education 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, in simple and understandable terms, not fewer than 45 days before transferring a legally enforceable right to receive payment from the borrower on such loan, of— the sale or other transfer, assignment, or transfer of servicing obligations; 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 transferor will stop accepting payment; and the date on which the transferee will begin accepting payment; and forward any payment from a borrower with respect to such postsecondary education loan to the transferee, immediately upon receiving such payment, during the 60-day period beginning on the date on which the transferor stops accepting payment of such postsecondary education loan; and the transferee shall— notify the borrower, in writing, in simple and understandable terms, not fewer than 45 days before acquiring a legally enforceable right to receive payment from the borrower on such loan, of— the sale or other transfer, assignment, or transfer of servicing obligations; 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, assignment, or transfer of servicing obligations; the date on which the transferor will stop accepting payment; and the date on which the transferee will begin accepting payment; accept as on-time and may not impose any late fee or finance charge for any payment from a borrower with respect to such postsecondary education loan that is forwarded from the transferor during the 60-day period beginning on the date on which the transferor stops accepting payment, if the transferor receives such payment 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 of such postsecondary education loan. If a servicer makes a change in the mailing address, office, or procedures for handling payments with respect to any postsecondary education 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 postsecondary education loan. Unless otherwise directed by the borrower of a postsecondary education loan, upon receipt of a payment, the servicer shall apply amounts first to the interest and fees owed on the payment due date, and then to the principal balance of the postsecondary education loan bearing the highest annual percentage rate, and then to each successive interest and fees and then principal balance bearing the next highest annual percentage rate, until the payment is exhausted. A borrower may instruct or expressly authorize the servicer to apply payments in a different manner. Unless otherwise directed by the borrower of a postsecondary education loan, upon receipt of a payment, the servicer shall apply amounts in excess of the minimum payment amount first to the interest and fees owed on the payment due date, and then to the principal balance of the postsecondary education loan balance bearing the highest annual percentage rate, and then to each successive interest and fees and principal balance bearing the next highest annual percentage rate, until the payment is exhausted. A borrower may instruct or expressly authorize the servicer to apply such excess payments in a different manner. A borrower may also voluntarily increase the periodic payment amount, including by increasing their recurring electronic payment, with the right to return to their original amortization schedule at any time. Servicers shall provide a simple, online method to allow borrowers to make voluntary one-time additional payments, voluntarily increase the amount of their periodic payment, and return to their original amortization schedule. Unless otherwise directed by the borrower of a postsecondary education loan, a servicer shall apply payments to a borrower’s account on the date the payment is received. The Director of the Bureau of Consumer Financial Protection, in consultation with the Secretary of Education, may promulgate rules for the application of postsecondary education loan payments that— implements the requirements in this section; 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 instruct the servicer to apply payments in a manner preferred by the borrower, including excess payments. In promulgating the rules under clause (iv), the Director of the Bureau of Consumer Financial Protection shall choose the application method that best benefits the borrower and is compatible with existing repayment options. A late fee may not be charged to a borrower for a postsecondary education loan under any of the following circumstances, either individually or in combination: On a per-loan basis when a borrower has multiple postsecondary education loans in a billing group. In an amount greater than 4 percent of the amount of the payment past due. Before the end of the 15-day period beginning on the date the payment is due. More than once with respect to a single late payment. The borrower fails to make a singular, non-successive regularly-scheduled payment on the postsecondary education loan. No late fee may be charged to a borrower for a postsecondary education loan relating to an insufficient payment if the payment is made on or before the due date of the payment, or within any applicable grace period for the payment, if the insufficiency is attributable only to a late fee relating to an earlier payment, and the payment is otherwise a full payment for the applicable period. If a borrower of a private education loan successfully and voluntarily makes 9 payments within 20 days of the due date during 10 consecutive months of amounts owed on the private education loan, or otherwise brings the private education loan current after the loan is charged-off, the loan shall be considered rehabilitated, and the lender or servicer shall request that any consumer reporting agency to which the charge-off was reported remove the delinquency that led to the charge-off and the charge-off from the borrower’s credit history. If a borrower of a postsecondary education loan submits a qualified written request to the student loan servicer for information relating to the student loan servicing of the postsecondary education loan, the student loan servicer shall provide a written response acknowledging receipt of the qualified written request within 5 business days unless any action requested by the borrower is taken within such period. Not later than 30 business days after the receipt from a borrower of a qualified written request under subclause
(I)and, if applicable, before taking any action with respect to the qualified written request of the borrower, the student loan servicer shall— make appropriate corrections in the account of the borrower, including the crediting of any late fees, and transmit to the borrower a written notification of such correction (which shall include the name and toll-free or collect-call telephone number of a representative of the student loan servicer who can provide assistance to the borrower); after conducting an investigation, provide the borrower with a written explanation or clarification that includes— to the extent applicable, a statement of the reasons for which the student loan servicer believes the account of the borrower is correct as determined by the student loan servicer; and the name and toll-free or collect-call telephone number of an individual employed by, or the office or department of, the student loan servicer who can provide assistance to the borrower; or after conducting an investigation, provide the borrower with a written explanation or clarification that includes— information requested by the borrower or explanation of why the information requested is unavailable or cannot be obtained by the student loan servicer; and the name and toll-free or collect-call telephone number of an individual employed by, or the office or department of, the student loan servicer who can provide assistance to the borrower. There may be 1 extension of the 30-day period described in subclause
(II)of not more than 15 days if, before the end of such 30-day period, the student loan servicer notifies the borrower of the extension and the reasons for the delay in responding. Each student loan servicer shall, on an annual basis, report to the Bureau the aggregate number of extensions sought by the student loan servicer under item (aa). During the 60-day period beginning on the date on which a student loan servicer receives a qualified written request from a borrower relating to a dispute regarding payments by the borrower, a student loan servicer may not provide negative credit information to any consumer reporting agency (as defined in section 603 of the Fair Credit Reporting Act ( 15 U.S.C. 1681a )) relating to the subject of the qualified written request or to such period, including any information relating to a late payment or payment owed by the borrower on the borrower’s postsecondary education loan. A student loan servicer shall designate an office or other unit of the student loan servicer to act as a point of contact regarding postsecondary education loans for— a borrower who is not less than 60 days delinquent under the postsecondary education loan; a borrower who seeks information regarding, seeks to enter an agreement for, or seeks to resolve an issue under a repayment option that requires subsequent submission of supporting documentation; and a borrower who seeks to modify the terms of the repayment of the postsecondary education loan because of hardship. Each servicer 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 under the Servicemembers Civil Relief Act (50 U.S.C. App. 501 et seq.) and other Federal or State laws related to postsecondary education loans. Each servicer shall maintain a toll-free telephone number that shall— connect directly to the servicemember and veterans liaison designated under clause (i); and be made available on the primary internet website of the servicer and on monthly billing statements. A lender or servicer may not charge off or report a postsecondary education loan as delinquent, assigned to collection (internally or by referral to a third party), in default, or charged-off 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 servicemembers and veteran benefits and option under the Servicemembers Civil Relief Act (50 U.S.C. App. 501 et seq.). A servicer shall make available through a secure website, or in writing upon request, the loan history of each borrower for each postsecondary education loan, separately designating— payment history; loan history, including any forbearances, deferrals, delinquencies, assignment to collection, and charge offs; 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 postsecondary education loan. The Director of the Bureau of Consumer Financial Protection, in consultation with the Secretary of Education, shall promulgate rules requiring servicers to establish error resolution procedures to allow borrowers to inquire about errors related to their postsecondary education loans and obtain timely resolution of such errors. The Director of the Bureau of Consumer Financial Protection, in consultation with the Secretary of Education, may establish additional servicing standards to reduce delinquencies, assignment to collections, defaults, and charge-offs, and to ensure borrowers understand their rights and obligations related to their postsecondary education loans. Any rights and remedies available to borrowers against servicers may not be waived by any agreement, policy, or form, including by a predispute arbitration agreement. No predispute arbitration agreement shall be valid or enforceable by a servicer, including as a third-party beneficiary or by estoppel, if the agreement requires arbitration of a dispute with respect to a postsecondary education loan. This subparagraph applies to predispute arbitration agreements entered into before the date of enactment of the Student Loan Borrower Bill of Rights , as well as on and after such date of enactment, if the violation that is the subject of the dispute occurred on or after such date of enactment. The provisions of this paragraph shall be enforced by the agencies specified in subsections
(a)through
(d)of section 108, in the manner set forth in that section or under any other applicable authorities available to such agencies by law. Nothing in this paragraph may be construed to preempt any provision of State law regarding postsecondary education loans where the State law provides stronger consumer protections. A servicer that fails to comply with any requirement imposed under this paragraph shall be deemed a creditor that has failed to comply with a requirement under this chapter for purposes of liability under section 130 and such servicer shall be subject to the liability provisions under such section, including the provisions under paragraphs (1), (2)(A)(i), (2)(B), and
(3)of section 130(a). The Director of the Bureau of Consumer Financial Protection, in consultation with the Secretary of Education, shall promulgate rules requiring lenders and servicers of loans described in paragraph (13)(B)(ii) 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. ; and by adding at the end the following: The information required to be disclosed under this section shall be made available at no charge to the borrower. ; and in section 130(a)— in paragraph (3), by striking 128(e)(7) and inserting 128(e)(10) ; and in the flush matter at the end, by striking or paragraph (4)(C), (6), (7), or
(8)of section 128(e), and inserting or paragraph (4)(C), (9), (10), or
(11)of section 128(e), .
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