Sec. 301. Removal of adverse information for certain private education loan borrowers
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The Fair Credit Reporting Act ( 15 U.S.C. 1681 et seq.), as amended by section 405, is further amended by inserting after section 605D the following new section: A consumer reporting agency may not furnish any consumer report containing any adverse item of information relating to a delinquent or defaulted private education loan of a borrower if the borrower has rehabilitated the borrower’s credit with respect to such loan by making nine on-time monthly payments (in accordance with the terms and conditions of the borrower’s original loan agreement or any other repayment agreement that antedates the original agreement) during a period of 10 consecutive months on such loan after the date on which the delinquency or default occurred.
A borrower may stop making consecutive monthly payments and be granted a grace period after which the 10-month period described in subsection
(a)shall resume. Such grace period shall be provided under the following circumstances: With respect to a borrower who is a member of the Armed Forces entitled to incentive pay for the performance of hazardous duty under section 301 of title 37, United States Code, hazardous duty pay under section 351 of such title, or other assignment or special duty pay under section 352 of such title, the grace period shall begin on the date on which the borrower begins such assignment or duty and end on the date that is 6 months after the completion of such assignment or duty. With respect to a borrower who resides or works in an area affected by a major disaster or emergency declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, the grace period shall begin on the initial date of the incident period of the major disaster or emergency and end on the date that is the earlier of— 6 months after the date on which the major disaster or emergency was declared; and the later of— 3 months after the date on which the major disaster or emergency was declared; and the date that the Director of the Bureau, in consultation with the Administrator of the Federal Emergency Management Agency, determines is the date on which substantially all provision of assistance by the Federal Emergency Management Agency under such major disaster or emergency declaration has concluded. The Bureau may allow a borrower demonstrating hardship to stop making consecutive monthly payments and be granted a grace period after which the 10-month period described in subsection
(a)shall resume. In this paragraph, the term borrower demonstrating hardship means a borrower or a class of borrowers who, as determined by the Bureau, is facing or has experienced unusual extenuating life circumstances or events that result in severe financial or personal barriers, including homelessness (as defined by the Secretary of Housing and Urban Development), such that the borrower or class of borrowers does not have the capacity to comply with the requirements of subsection (a). The Bureau shall establish procedures to implement the credit rehabilitation described in this section, including— the manner, content, and form for requesting credit rehabilitation; the method for validating that the borrower is satisfying the requirements of subsection (a); the manner, content, and form for notifying the private educational loan holder of— the borrower’s participation in credit rehabilitation under subsection (a); the requirements described in subsection (d); and the restrictions described in subsection (f); the manner, content, and form for notifying a consumer reporting agency of— the borrower’s participation in credit rehabilitation under subsection (a); and the requirements described in subsection (d); the method for verifying whether a borrower qualifies for the grace period described in subsection (b); the manner, content, and form of notifying a consumer reporting agency and private educational loan holder that a borrower was granted a grace period. A consumer reporting agency shall develop standardized reporting codes for use by any private educational loan holder to identify and report a borrower’s status of making and completing nine on-time monthly payments during a period of 10 consecutive months on a delinquent or defaulted private education loan, including codes specifying the grace period described in subsection
(b)and any agreement to modify monthly payments. Such codes shall not appear on any report provided to a third party, and shall be removed from the consumer’s credit report upon the consumer’s completion of the rehabilitation period under this section as soon as possible, but in no case later than 5 days after such completion. A consumer report in which a private educational loan holder furnishes the standardized reporting codes described in subsection
(d)to a consumer reporting agency, or in which a consumer reporting agency includes such codes, shall be deemed to comply with the requirements for accuracy and completeness under sections 607(b), 623(a)(1), and 632. A private educational loan holder may not commence or proceed with any civil action against a borrower with respect to a delinquent or defaulted loan during the period of rehabilitation if the private educational loan holder has been notified, in accordance with the procedures established by the Bureau pursuant to subsection (c)— of such borrower’s intent to participate in rehabilitation; that such borrower has satisfied the requirements under subsection (a); or that such borrower was granted a grace period. Payments by a borrower on a private education loan that are made during and after a period of rehabilitation under this section shall have no effect on the statute of limitations with respect to payments that were due on such private education loan before the beginning of the period of rehabilitation. If a private educational loan holder enters into a payment plan with a borrower on a private education loan during a period of rehabilitation, such payment plan shall be reasonable and affordable, as determined by the Bureau. A borrower who satisfies the requirements under subsection
(a)shall be eligible for additional credit rehabilitation described in subsection
(a)with respect to any subsequent default or delinquency of the borrower on the rehabilitated private education loan. The grace period described in subsection (b)(1)(A) shall not apply if any regulation promulgated under section 987 of title 10, United States Code (commonly known as the Military Lending Act), or the Servicemembers Civil Relief Act ( 50 U.S.C. App. 501 et seq.) allows for a grace period or other interruption of the 10-month period described in subsection
(a)and such grace period or other interruption is longer than the period described in subsection (b)(1)(A) or otherwise provides greater protection or benefit to the borrower who is a member of the Armed Forces. . The table of contents of the Fair Credit Reporting Act, as amended by section 405, is further amended by inserting after the item relating to section 605D the following new item: 605E. Credit rehabilitation for distressed private education loan borrowers who demonstrate a history of loan repayment. . Section 623(a)(1) of the Fair Credit Reporting Act ( 15 U.S.C. 1681s-2(a)(1) ) is amended by striking subparagraph (E).
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Sec. 301
Removal of adverse information for certain private education loan borrowers
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