Sec. 6. Know before you owe

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Section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ), as amended by sections 3 and 5, is further 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 covered educational institution where 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 such assistance received under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. ) (except for Federal Direct PLUS Loans made on behalf of the student) and other financial assistance known to the institution, as applicable (except for loans made under the Public Health Service Act ( 42 U.S.C. 201 et seq. )). Notwithstanding subparagraph (A), a creditor may issue funds, not to exceed the amount described in subparagraph (A)(iii), with respect to an extension of credit described in this subsection without obtaining from the relevant covered educational institution such institution’s certification if such institution fails to provide within 15 business days of the creditor’s request for such certification— notification of the institution's refusal to certify the request; 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 (B), such creditor shall report the issuance of such funds in a manner determined by the Director. ; and by adding at the end 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 a covered educational institution. Each statement described in clause

(i)shall— report the borrower's total remaining debt to the creditor, including accrued but unpaid interest and capitalized interest; report any debt increases 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 covered educational institution, 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 issues 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 student loans to be determined by the Bureau of Consumer Financial Protection, in consultation with the Secretary. An extension of credit described in this subsection shall be void if made to a student to attend— a covered educational institution that, at the time of the execution of such extension of credit, was not lawfully authorized to operate in the State in which the student resided at the time; or a covered educational institution that engaged in any unfair, deceptive, or abusive acts or practices, as those terms are described in section 1031 of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5531 ), related to the student’s recruitment, enrollment, instruction, job placement, or other interactions with the covered educational institution or its agents. . Section 140(a)(8) of the Truth in Lending Act ( 15 U.S.C. 1650(a)(8) ) is amended— in subparagraph (A)— by redesignating clause

(ii)as clause (iii); in clause (i), by striking and after the semicolon; by adding after clause

(i)the following: is not 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 ; and in clause (iii), as redesignated by clause (i), by striking regardless of and all that follows through educational lender and inserting the following: “regardless of— whether the loan is provided through the institution or provider of postsecondary education that the subject student attends or directly to the borrower from the private educational lender; or whether some or all of the postsecondary education financed by the private education loan has already been provided; ; and by striking subparagraph

(B)and inserting the following: does not include— an extension of credit under an open-end consumer credit plan, unless such open-end credit is extended expressly for postsecondary education expenses; a reverse mortgage transaction; a residential mortgage transaction; or any other loan that is secured by real property or a dwelling; and . Not later than 365 days after the date of enactment of this Act, the Director of the Bureau of Consumer Financial Protection shall issue regulations in final form to implement paragraphs (3), (24), and

(25)of section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ), as amended by paragraph (1). Such regulations shall become effective not later than 6 months after their date of issuance. Section 487(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a) ) is amended by striking paragraph

(28)and inserting the following: Upon the request of a private educational lender, acting in connection with an application initiated by a borrower for a private education loan in accordance with section 128(e)(3) of the Truth in Lending Act ( 15 U.S.C. 1638(e)(3) ), the institution shall within 15 days of receipt of a certification request— provide such certification to such private educational lender— that the student who initiated the application for the private education loan, or on whose behalf the application was initiated, is enrolled or is scheduled to enroll at the institution; of such student's cost of attendance at the institution as determined under part F of this title; and of the difference between— the cost of attendance at the institution; and the student's estimated financial assistance received under this title (except for Federal Direct PLUS Loans made on behalf of the student) and other assistance known to the institution, as applicable (except for loans made under the Public Health Service Act ( 42 U.S.C. 201 et seq. )); notify the creditor that the institution has received the request for certification and will need additional time to comply with the certification request; or provide notice to the private educational lender of the institution’s refusal to certify the private education loan under subparagraph (D). With respect to a certification request described in subparagraph (A), and prior to providing such certification under subparagraph (A)(i) or providing notice of the refusal to provide certification under subparagraph (A)(iii), the institution shall— determine whether the student who initiated the application for the private education loan, or on whose behalf the application was initiated, has applied for and exhausted the Federal financial assistance available to such student under this title and inform the student accordingly; and provide the borrower whose loan application has prompted the certification request by a private educational lender, as described in subparagraph (A)(i), with the following information and disclosures: The availability of, and the borrower’s potential eligibility for, Federal financial assistance under this title, including disclosing the terms, conditions, interest rates, and repayment options and programs of Federal student loans. The borrower's ability to select a private educational lender of the borrower's choice. The impact of a proposed private education loan on the borrower's potential eligibility for other financial assistance, including Federal financial assistance under this title. The borrower’s right to accept or reject a private education loan within the 30-day period following a private educational lender’s approval of a borrower’s application and about a borrower’s 3-day right to cancel period. For purposes of this paragraph, the terms private educational lender and ‘private education loan’ have the meanings given such terms in section 140 of the Truth in Lending Act ( 15 U.S.C. 1650 ). An institution shall not provide a certification with respect to a private education loan under this paragraph unless the private education loan includes terms that provide— the borrower alternative repayment options, including loan consolidation or refinancing; and for the discharge of the borrower and co-borrower's, if applicable, liability to repay the loan pursuant to paragraphs

(19)and

(20)of section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ). In this paragraph, the term disability means a permanent and total disability, as determined in accordance with the regulations of the Secretary of Education, or a determination by the Secretary of Veterans Affairs that the borrower is unemployable due to a service connected-disability. . The amendment made by paragraph

(1)shall take effect on the effective date of the regulations described in subsection (a)(3). Section 151(8)(A)(ii) of the Higher Education Act of 1965 ( 20 U.S.C. 1019(8)(A)(ii) ) is amended by inserting certifying, after promoting, . Not later than 24 months after the issuance of regulations under subsection (a)(3), the Director of the Bureau of Consumer Financial Protection and the Secretary of Education shall jointly submit to Congress a report on the compliance of— 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 institutions of higher education with section 487(a)(28) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a) ), as amended by subsection (b). The report under paragraph

(1)shall include information about the degree to which specific institutions utilize certifications in effectively— encouraging the exhaustion of Federal student loan eligibility by borrowers prior to taking on private education loan debt; and lowering student private education loan debt by borrowers.

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