Sec. 5. Improved consumer protections for private education loans
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Section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ), as amended by section 3, is further amended— by adding at the end the following: 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 section 437(a)(1) of the Higher Education Act of 1965 ( 20 U.S.C. 1087(a)(1) ) and the regulations promulgated by the Secretary under that section; or 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 such Act and the regulations promulgated by the Secretary under that section.
Each private education loan shall include terms that clearly define the requirements to release a co-borrower from the obligation. Except as provided in subparagraph (B), a private education loan executed after the date of enactment of this paragraph may not include a provision that permits the private educational lender, loan holder, or entity engaged in servicing such loan to accelerate, in whole or in part, payments on the private education loan. A private education loan may include a provision that permits acceleration of the loan in cases of payment default.
A private educational lender may not deny or refuse credit to an individual who is entitled to any right or protection provided under the Servicemembers Civil Relief Act ( 50 U.S.C. 3901 et seq. ) or subject, solely by reason of such entitlement, such individual to any other action described in paragraphs
(1)through
(6)of section 108 of such Act. 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 entity engaged in servicing such loan 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. No private educational lender shall offer a borrower rehabilitation of loans where the payment required to rehabilitate a defaulted private education loan is less than the monthly payment amount required upon completion of rehabilitation. ; in paragraph (1)— by striking subparagraph
(D)and inserting the following: requirements for a co-borrower, including— any changes in the applicable interest rates without a co-borrower; and any conditions the borrower is required meet in order to release a co-borrower from the private education loan obligation; ; by redesignating subparagraphs (O), (P), (Q), and
(R)as subparagraphs (P), (Q), (R), and (S), respectively; and by inserting after subparagraph
(N)the following: in the case of a refinancing of education loans that include a Federal student loan made, insured, or guaranteed under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. )— a list containing each loan to be refinanced, which shall identify whether the loan is— a private education loan; a Federal student loan made, insured, or guaranteed under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. ); or a loan made, insured, or guaranteed under title VII or title VIII of the Public Health Service Act ( 42 U.S.C. 292 et seq. and 296 et seq.); and benefits that the borrower may be forfeiting, including income-driven repayment options, opportunities for loan forgiveness, forbearance or deferment options, interest subsidies, and tax benefits; ; and in paragraph (2)— by redesignating subparagraphs
(O)and
(P)as subparagraphs
(P)and (Q), respectively; and by inserting after subparagraph
(N)the following: in the case of a refinancing of education loans that include a Federal student loan made, insured, or guaranteed under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. )— a list containing each loan to be refinanced, which shall identify whether the loan is— a private education loan; a Federal student loan made, insured, or guaranteed under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. ); or a loan made, insured, or guaranteed under title VII or title VIII of the Public Health Service Act ( 42 U.S.C. 292 et seq. and 296 et seq.); and benefits that the borrower may be forfeiting, including income-driven repayment options, opportunities for loan forgiveness, forbearance or deferment options, interest subsidies, and tax benefits; .
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U.S. Code
- Transactions other than under an open end credit plan§ 1638
- Repayment by Secretary of loans of bankrupt, deceased, or disabled borrowers; treatment of borrowers attending schools that fail to provide a refund, attending closed schools, or falsely certified as eligible to borrow§ 1087
- Short title§ 3901
- Statement of purpose; program authorization§ 1070
- Statement of purpose§ 292
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Sec. 5
Improved consumer protections for private education loans
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