Private Loan Disability Discharge Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2498 To provide for the discharge of a private education loan in the case of death or total and permanent disability of a student obligor, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 14, 2021 Ms. DEAN introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdic- tion of the committee concerned A BILL To provide for the discharge of a private education loan in the case of death or total and permanent disability of a student obligor, 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 ‘‘Private Loan Disability 4 Discharge Act of 2021’’. 5 VerDate Sep 11 2014 22:59 Jun 07, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2498.IH H2498 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 2498 IH SEC. 2. PROTECTIONS FOR OBLIGORS AND COSIGNERS IN 1 CASE OF DEATH OR TOTAL AND PERMANENT 2 DISABILITY. 3 (a) IN GENERAL.—Section 140(g) of the Truth in 4 Lending Act (15 U.S.C. 1650(g)) is amended— 5 (1) in paragraph (2)— 6 (A) in the heading, by striking ‘‘IN CASE 7 OF DEATH OF BORROWER’’; 8 (B) in subparagraph (A), by inserting after 9 ‘‘of the death’’, the following: ‘‘or total and per- 10 manent disability’’; and 11 (C) in subparagraph (C), by inserting after 12 ‘‘of the death’’, the following: ‘‘or total and per- 13 manent disability’’; and 14 (2) by adding at the end the following: 15 ‘‘(3) DISCHARGE IN CASE OF DEATH OR TOTAL 16 AND PERMANENT DISABILITY OF BORROWER.—The 17 holder of a private education loan shall, when noti- 18 fied of the death or total and permanent disability 19 of a student obligor, discharge the liability of the 20 student obligor on the loan and may not, after such 21 notification— 22 ‘‘(A) attempt to collect on the outstanding 23 liability of the student obligor; and 24 ‘‘(B) in the case of total and permanent 25 disability, monitor the disability status of the 26 VerDate Sep 11 2014 22:59 Jun 07, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2498.IH H2498 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 2498 IH student obligor at any point after the date of 1 discharge. 2 ‘‘(4) TOTAL AND PERMANENT DISABILITY DE- 3 FINED.—For the purposes of this subsection and 4 with respect to an individual, the term ‘total and 5 permanent disability’ means the individual is totally 6 and permanently disabled, as such term is defined in 7 section 685.102(b) of title 34 of the Code of Federal 8 Regulations. 9 ‘‘(5) PRIVATE DISCHARGE IN CASES OF CER- 10 TAIN DISCHARGE FOR DEATH OR DISABILITY.—The 11 holder of a private education loan shall, when noti- 12 fied of the discharge of liability of a student obligor 13 on a loan described under section 108(f)(5)(A) of 14 the Internal Revenue Code of 1986, discharge any li- 15 ability of the student obligor (and any cosigner) on 16 any private education loan which the private edu- 17 cation loan holder holds and may not, after such no- 18 tification— 19 ‘‘(A) attempt to collect on the outstanding 20 liability of the student obligor; and 21 ‘‘(B) in the case of total and permanent 22 disability, monitor the disability status of the 23 student obligor at any point after the date of 24 discharge.’’. 25 VerDate Sep 11 2014 22:59 Jun 07, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2498.IH H2498 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 2498 IH (b) TAX LIABILITY.—Section 108(f)(5)(A) of the In- 1 ternal Revenue Code of 1986 (26 U.S.C. 108(f)(5)(A)) is 2 amended— 3 (1) by striking ‘‘, and before January 1, 2026’’; 4 (2) in clause (ii), by striking ‘‘or’’; 5 (3) by redesignating clause (iii) as clause (iv); 6 and 7 (4) by inserting after clause (ii) the following: 8 ‘‘(iii) pursuant to paragraph (3) or 9 (5) of section 140(g) of the Truth in Lend- 10 ing Act, or’’. 11 (c) RULEMAKING.—The Director of the Bureau of 12 Consumer Financial Protection may issue rules to imple- 13 ment the amendments made by subsection (a) as the Di- 14 rector determines appropriate. 15 (d) EFFECTIVE DATE.—The amendments made by 16 this section shall take effect 1 year after the date of the 17 enactment of this Act. 18 Æ VerDate Sep 11 2014 22:59 Jun 07, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H2498.IH H2498 pbinns on DSKJLVW7X2PROD with BILLS