LOAN Act

I 117TH CONGRESS 1ST SESSION H. R. 1143 To amend the Truth in Lending Act to modify obligations relating to private education loans due to the disability of a cosigner or borrower of the loan, to amend title 11 of the United States Code to make student loans dischargeable, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 18, 2021 Mr. KILDEE (for himself, Mr. CARSON, Mr. COHEN, Ms. DEAN, Ms. NORTON, Mr. PERLMUTTER, and Mr. VARGAS) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committees on the Judiciary, and Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consider- ation of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Truth in Lending Act to modify obligations relating to private education loans due to the disability of a cosigner or borrower of the loan, to amend title 11 of the United States Code to make student loans dischargeable, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Lenders Offer Assist- 4 ance Now Act’’ or the ‘‘LOAN Act’’. 5 VerDate Sep 11 2014 20:31 Mar 16, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1143.IH H1143 jbell on DSKJLSW7X2PROD with BILLS 2 •HR 1143 IH SEC. 2. DISABILITY OF A COSIGNER OR A BORROWER OF A 1 PRIVATE EDUCATION LOAN. 2 (a) IN GENERAL.—Section 140(g) of the Truth in 3 Lending Act (15 U.S.C. 1650(g)) is amended— 4 (1) in paragraph (1), by striking ‘‘bankruptcy 5 or death’’ and inserting ‘‘bankruptcy, death, or dis- 6 ability’’; and 7 (2) by adding at the end the following new 8 paragraphs: 9 ‘‘(3) DISCHARGE IN CASE OF DISABILITY.—A 10 lender that extends a private education loan shall 11 discharge the student obligor’s liability on the loan 12 if a student obligor experiences a disability. 13 ‘‘(4) DISABILITY DEFINED.—In this subsection, 14 the term ‘disability’ means a permanent and total 15 disability, as determined in accordance with the reg- 16 ulations of the Secretary of Education under section 17 437(a) of the Higher Education Act of 1965 (20 18 U.S.C. 1087(a)), or a determination by the Sec- 19 retary of Veterans Affairs that the individual is un- 20 employable due to a service-connected condition.’’. 21 (b) TAX TREATMENT OF DISCHARGE.—Section 22 108(f)(5)(A) of the Internal Revenue Code of 1986 is fur- 23 ther amended by striking ‘‘or’’ in clause (ii), by redesig- 24 nating clause (iii) as clause (iv), and by inserting after 25 clause (ii) the following new clause: 26 VerDate Sep 11 2014 20:31 Mar 16, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1143.IH H1143 jbell on DSKJLSW7X2PROD with BILLS 3 •HR 1143 IH ‘‘(iii) pursuant to paragraph (3) of 1 section 140(g) of the Truth in Lending 2 Act, or’’. 3 (c) IMPACT ON CERTAIN PROGRAMS.—Discharge of 4 a private education loan due to disability of a borrower 5 under paragraph (3) of section 140(g) of the Truth in 6 Lending Act, as added by subsection (a), shall not be re- 7 garded as income and shall not be regarded as a resource 8 for purposes of determining the eligibility of the borrower 9 of such loan (or the borrower’s spouse or family) for bene- 10 fits or assistance, or the amount or extent of benefits or 11 assistance, under any Federal program or under any State 12 or local program financed in whole or in part with Federal 13 funds. 14 (d) APPLICABILITY.—The amendments made by this 15 section shall apply to private education loan agreements 16 entered into on or after the date that is 180 days after 17 the date of enactment of this Act. 18 (e) PRIVATE EDUCATION LOAN DEFINED.—In this 19 section, the term ‘‘private education loan’’ has the mean- 20 ing given in section 140(a) of the Truth in Lending Act 21 (15 U.S.C. 1650(a)). 22 SEC. 3. EXCEPTION TO DISCHARGE. 23 (a) IN GENERAL.—Section 523(a) of title 11, United 24 States Code, is amended— 25 VerDate Sep 11 2014 20:31 Mar 16, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1143.IH H1143 jbell on DSKJLSW7X2PROD with BILLS 4 •HR 1143 IH (1) by striking paragraph (8); and 1 (2) by redesignating paragraphs (9) through 2 (14B) as paragraphs (8) through (14A), respec- 3 tively. 4 (b) CONFORMING AMENDMENTS.—Title 11, United 5 States Code, is amended— 6 (1) in section 704(c)(1)(C)(iv)(I) by striking 7 ‘‘(14A)’’ and inserting ‘‘(14)’’; 8 (2) in section 1106(c)(1)(C)(iv)(I) by striking 9 ‘‘(14A)’’ and inserting ‘‘(14)’’; 10 (3) in section 1202(c)(1)(C)(iv)(I) by striking 11 ‘‘(14A)’’ and inserting ‘‘(14)’’; and 12 (4) in section 1328(a)(2) by striking ‘‘(8), or 13 (9)’’ and inserting ‘‘or (8)’’. 14 (c) EFFECTIVE DATE; APPLICATION OF AMEND- 15 MENTS.— 16 (1) EFFECTIVE DATE.—Except as provided in 17 paragraph (2), this section and the amendments 18 made by this section shall take effect on the date of 19 the enactment of this Act. 20 (2) APPLICATION OF AMENDMENTS.—The 21 amendments made by this section shall apply only 22 with respect to cases commenced under title 11 of 23 VerDate Sep 11 2014 20:31 Mar 16, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1143.IH H1143 jbell on DSKJLSW7X2PROD with BILLS 5 •HR 1143 IH the United States Code on or after the date of the 1 enactment of this Act. 2 Æ VerDate Sep 11 2014 20:31 Mar 16, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H1143.IH H1143 jbell on DSKJLSW7X2PROD with BILLS