Sec. 1812. Payments for private education loan borrowers, as a result of COVID–19
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The Secretary of the Treasury shall carry out a program under which the Secretary shall make payments, on behalf of a covered borrower, with respect to the private education loans of such borrower. Payments made under paragraph
(1)with respect to a covered borrower shall be in an amount equal to the lesser of— the total amount of each private education loan of the borrower; or $10,000. Not later than 15 days following the date of enactment of this subsection, the Secretary shall notify each covered borrower of— the requirements to make payments under this section; and the opportunity for such borrower to make an election under paragraph (4)(A) with respect to the application of such payments to the private education loans of such borrower. Not later than 45 days after a notice is sent under paragraph (3), a covered borrower may elect to apply the payments made under this subsection with respect to such borrower under paragraph
(1)to any private education loan of the borrower. In the case of a covered borrower who does not make an election under subparagraph
(A)before the date described in such subparagraph, the Secretary shall apply the amount determined with respect to such borrower under paragraph
(1)in order of the private education loan of the borrower with the highest interest rate. In case of two or more private education loans described in clause
(i)with equal interest rates, the Secretary shall apply the amount determined with respect to such borrower under paragraph
(1)first to the loan with the highest principal. Holders and servicers of private education loans made to covered borrowers shall report, to the satisfaction of the Secretary, the information necessary to calculate the amount to be paid under this subsection. To the extent that amounts appropriated to carry out this section are insufficient to fully comply with the payments required under paragraph (2), the Secretary shall distribute available funds by ratably reducing the amounts required to be paid under such paragraph. Each private education loan holder who receives a payment pursuant to subsection
(a)shall, before the first payment due on the private education loan after the receipt of such payment (and taking into account any suspension of payments that may be required under any other provision of law), modify the loan, based on the payment made under subsection (a), to lower monthly payments due on the loan. Such modification may take the form of a re-amortization, a lowering of the applicable interest rate, or any other modification that would lower such payments. Each private education loan holder who receives a payment pursuant to subsection
(a)shall modify all private education loan contracts with respect to covered borrowers that it holds to provide for the same repayment plan and forgiveness terms available to Direct Loans borrowers under section 685.209(c) of title 34, Code of Federal Regulations, in effect as of January 1, 2020. For a covered borrower who has defaulted on a private education loan under the terms of the promissory note prior to any loan payment made under subsection (a), no payment made under such subsection shall be considered an event that impacts the calculation of the applicable State statutes of limitation. A private education loan debt collector or creditor may not pressure a covered borrower to elect to apply any amount received pursuant to subsection
(a)to any private education loan. A violation of this paragraph is deemed— an unfair, deceptive, or abusive act or practice under Federal law in connection with any transaction with a consumer for a consumer financial product or service under section 1031 of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5531 ); and with respect to a violation by a debt collector, an unfair or unconscionable means to collect or attempt to collect any debt under section 808 of the Federal Debt Collection Practices Act ( 15 U.S.C. 1692f ). In this paragraph, the term pressure means any communication, recommendation, or other similar communication, other than providing basic information about a borrower’s options, urging a borrower to make an election described under subsection (a). In this section: The term covered borrower means a borrower of a private education loan. The terms creditor and debt collector have the meaning given those terms, respectively, under section 803 of the Fair Debt Collection Practices Act ( 15 U.S.C. 1692a ). The term private education loan has the meaning given the term in section 140 of the Truth in Lending Act ( 15 U.S.C. 1650 ). The term Secretary means the Secretary of the Treasury.
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Sec. 1812
Payments for private education loan borrowers, as a result of COVID–19
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