Student Loan Borrower Bill of Rights

II 116TH CONGRESS 1ST SESSION S. 1354 To require certain protections for student loan borrowers, and for other purposes. IN THE SENATE OF THE UNITED STATES MAY 7, 2019 Mr. DURBIN (for himself, Mr. REED, and Ms. WARREN) introduced the fol- lowing bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To require certain protections for student loan borrowers, 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 ‘‘Student Loan Bor- 4 rower Bill of Rights’’. 5 SEC. 2. HIGHER EDUCATION ACT OF 1965 AMENDMENTS. 6 (a) STUDENT LOAN INFORMATION BY ELIGIBLE 7 LENDERS.—Section 433 of the Higher Education Act of 8 1965 (20 U.S.C. 1083) is amended— 9 (1) in subsection (b)— 10 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 1354 IS (A) in paragraph (12), by striking ‘‘and’’ 1 after the semicolon; 2 (B) in paragraph (13), by striking the pe- 3 riod at the end and inserting ‘‘; and’’; and 4 (C) by adding at the end the following: 5 ‘‘(14) a statement that— 6 ‘‘(A) the borrower may be entitled to serv- 7 icemember and veteran benefits under the 8 Servicemembers Civil Relief Act (50 U.S.C. 9 App. 501 et seq.) and other Federal or State 10 laws; and 11 ‘‘(B) a Servicemember and Veterans Liai- 12 son designated under section 128(e)(16)(K)(i) 13 of the Truth in Lending Act (15 U.S.C. 14 1638(e)(16)(K)(i)) is available to answer in- 15 quiries about servicemember and veteran bene- 16 fits, including the toll-free telephone number to 17 contact the Liaison pursuant to such section.’’; 18 and 19 (2) in subsection (e)— 20 (A) in paragraph (2), by adding at the end 21 the following: 22 ‘‘(D) A statement that— 23 ‘‘(i) the borrower may be entitled to 24 servicemember and veteran benefits under 25 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 1354 IS the Servicemembers Civil Relief Act (50 1 U.S.C. App. 501 et seq.) and other Fed- 2 eral or State laws; and 3 ‘‘(ii) a Servicemember and Veterans 4 Liaison designated under section 5 128(e)(16)(K)(i) of the Truth in Lending 6 Act (15 U.S.C. 1638(e)(16)(K)(i)) is avail- 7 able to answer inquiries about servicemem- 8 ber and veteran benefits, including the toll- 9 free telephone number to contact the Liai- 10 son pursuant to such section. 11 ‘‘(E) A statement that a repayment spe- 12 cialist office or unit designated under section 13 128(e)(16)(J)(i) of the Truth in Lending Act 14 (15 U.S.C. 1638(e)(16)(J)(i)) is available to 15 answer inquiries related to alternative repay- 16 ment options, including the toll-free telephone 17 number to contact the specialist pursuant to 18 section 128(e)(16)(J)(iii) of such Act.’’; and 19 (B) in paragraph (3), by adding at the end 20 the following: 21 ‘‘(F) A statement that— 22 ‘‘(i) the borrower may be entitled to 23 servicemember and veteran benefits under 24 the Servicemembers Civil Relief Act (50 25 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 1354 IS U.S.C. App. 501 et seq.) and other Fed- 1 eral or State laws; and 2 ‘‘(ii) a Servicemember and Veterans 3 Liaison designated under section 4 128(e)(16)(K)(i) of the Truth in Lending 5 Act (15 U.S.C. 1638(e)(16)(K)(i)) is avail- 6 able to answer inquiries about servicemem- 7 ber and veteran benefits, including the toll- 8 free telephone number to contact the Liai- 9 son pursuant to such section. 10 ‘‘(G) A statement that a repayment spe- 11 cialist office or unit designated under section 12 128(e)(16)(J)(i) of the Truth in Lending Act 13 (15 U.S.C. 1638(e)(16)(J)(i)) is available to 14 answer inquiries related to alternative repay- 15 ment options, including the toll-free telephone 16 number to contact the specialist pursuant to 17 section 128(e)(16)(J)(iii) of such Act.’’. 18 (b) TERMS AND CONDITIONS OF LOANS.—Section 19 455 of the Higher Education Act of 1965 (20 U.S.C. 20 1087e) is amended by adding at the end the following: 21 ‘‘(r) PREPAYMENT AND PAYMENT APPLICATION.— 22 ‘‘(1) IN GENERAL.—A borrower may prepay all 23 or part of a loan made under this part at any time 24 without penalty. 25 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 1354 IS ‘‘(2) PREPAYMENT.— 1 ‘‘(A) IN GENERAL.—If a borrower pays 2 any amount in excess of the amount due for a 3 loan made under this part, the excess amount 4 shall be a prepayment. 5 ‘‘(B) APPLICATION OF PREPAYMENT.—If a 6 prepayment equals or exceeds the monthly re- 7 payment amount under the borrower’s repay- 8 ment plan with respect to a loan made under 9 this part, the Secretary shall— 10 ‘‘(i) apply the prepaid amount accord- 11 ing to the terms of the promissory note 12 signed by the borrower; and 13 ‘‘(ii) upon request of the borrower, ad- 14 vance the due date of the next payment 15 and notify the borrower of any revised due 16 date for the next payment.’’. 17 (c) CONTRACTS.—Section 456 of the Higher Edu- 18 cation Act of 1965 (20 U.S.C. 1087f) is amended— 19 (1) in subsection (a), by striking paragraph (3) 20 and inserting the following: 21 ‘‘(3) RULES OF CONSTRUCTION.— 22 ‘‘(A) CONSORTIA.—Nothing in this section 23 shall be construed as a limitation of the author- 24 ity of any State agency to enter into an agree- 25 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 1354 IS ment for the purposes of this section as a mem- 1 ber of a consortium of State agencies. 2 ‘‘(B) COMPLIANCE WITH STATE AND FED- 3 ERAL LAWS.—Nothing in this section shall be 4 construed as altering, limiting, or affecting any 5 obligation by an entity with which the Secretary 6 enters into a contract under this section to 7 comply with any applicable Federal or State 8 law, including any Federal consumer financial 9 law, as defined in section 1002(14) of the Con- 10 sumer Financial Protection Act of 2010 (12 11 U.S.C. 5481(14)). 12 ‘‘(C) AUTHORITIES.—Nothing in this sec- 13 tion shall be construed as altering, limiting, or 14 affecting the authority of a State attorney gen- 15 eral or any other State regulatory or enforce- 16 ment agency or authority to bring an action or 17 other regulatory proceeding arising solely under 18 the law of such State.’’; and 19 (2) by adding at the end the following: 20 ‘‘(d) APPLICABILITY OF PROVISIONS UNDER THE 21 CONSUMER FINANCIAL PROTECTION ACT OF 2010.— 22 ‘‘(1) CONSUMER FINANCIAL PRODUCT OR SERV- 23 ICE.—A consumer financial product or service of- 24 fered by an entity with which the Secretary enters 25 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 1354 IS into a contract under this section for origination, 1 servicing, or collection described in subsection (b), as 2 part of such contract, shall have the meaning given 3 the term in section 1002 of the Consumer Financial 4 Protection Act of 2010 (12 U.S.C. 5481). 5 ‘‘(2) COVERED PERSON.—Any entity with which 6 the Secretary enters into a contract under this sec- 7 tion for origination, servicing, or collection described 8 in subsection (b) shall be considered a ‘covered per- 9 son’ (as defined in section 1002 of the Consumer Fi- 10 nancial Protection Act of 2010 (12 U.S.C. 5481)) 11 and subject to the provisions of the Consumer Fi- 12 nancial Protection Act of 2010 (12 U.S.C. 5481 et 13 seq.). 14 ‘‘(3) POSTSECONDARY EDUCATIONAL LENDER 15 OR SERVICER.—Any entity with which the Secretary 16 enters into a contract under this section for origina- 17 tion, servicing, or collection, as described in sub- 18 section (b), and is engaged in the provision of, or of- 19 fering, servicing shall be considered a ‘postsecondary 20 educational lender or servicer’ (as defined in section 21 128(e) of the Truth in Lending Act (15 U.S.C. 22 1638(e))), and subject to the provisions of section 23 128(e) of the Truth in Lending Act (12 U.S.C. 24 1638(e)). 25 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 1354 IS ‘‘(e) COMPLAINTS FROM STUDENT LOAN BOR- 1 ROWERS.—In awarding any contract under this section for 2 origination, servicing, or collection described in subsection 3 (b), the Secretary shall require, as part of such contract, 4 any entity receiving such an award— 5 ‘‘(1) to respond to consumer complaints sub- 6 mitted to any Federal, State, or local agency that 7 accepts complaints from student loan borrowers, in- 8 cluding the Bureau of Consumer Financial Protec- 9 tion, by borrowers who owe loans made under this 10 part; and 11 ‘‘(2) to share information about consumer com- 12 plaints with the Secretary, the Bureau of Consumer 13 Financial Protection, the Federal Trade Commis- 14 sion, the Department of Veterans Affairs, any State 15 attorney general, or any other Federal or State reg- 16 ulatory or enforcement agency that compiles infor- 17 mation about such complaints. 18 ‘‘(f) LIMITATIONS ON CONTRACTS.—Any entity with 19 which the Secretary enters into a contract under this sec- 20 tion shall be prohibited, as part of such contract, from 21 marketing to the borrower of a loan made, insured, or 22 guaranteed under this title a financial product or serv- 23 ice— 24 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 1354 IS ‘‘(1) using data obtained as a result of the con- 1 tract or the relationship with the borrower stemming 2 from the contract; 3 ‘‘(2) during any outreach or contact with the 4 borrower resulting from the contract or the relation- 5 ship with the borrower stemming from the contract; 6 or 7 ‘‘(3) on any platform or through any method 8 resulting from the contract or the relationship with 9 the borrower stemming from the contract. 10 ‘‘(g) STUDENT LOAN SERVICING INTERAGENCY 11 WORKING GROUP.— 12 ‘‘(1) IN GENERAL.—Not later than 30 days 13 after the date of enactment of the Student Loan 14 Borrower Bill of Rights, the Secretary shall establish 15 a student loan servicing interagency working group 16 co-chaired by the Secretary and the Director of the 17 Bureau of Consumer Financial Protection and in- 18 cluding the Chief Operating Officer of the Office of 19 Federal Student Aid, the Director of the Office of 20 Management and Budget, the Secretary of the 21 Treasury, and the heads of any other relevant Fed- 22 eral departments or agencies. 23 ‘‘(2) ADVISORY REPORT ON RULEMAKING.— 24 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 1354 IS ‘‘(A) IN GENERAL.—Not later than 120 1 days after the date the working group under 2 paragraph (1) is established, the working group 3 shall publish an advisory report making rec- 4 ommendations to the Director of the Bureau of 5 Consumer Financial Protection related to the 6 promulgation of regulations under section 7 128(e)(17)(A) of the Truth in Lending Act (15 8 U.S.C. 1638(e)(17)(A)) with respect to entities 9 with which the Secretary has entered into a 10 contract under this section. 11 ‘‘(B) PUBLIC FEEDBACK.—Following the 12 publication of the advisory report required 13 under subparagraph (A), the Secretary shall ac- 14 cept, for not less than 60 days, from the public 15 specific feedback on the recommendations in- 16 cluded in the report. 17 ‘‘(3) PUBLICATION OF FINAL RECOMMENDA- 18 TIONS.—Not later than 30 days following the con- 19 clusion of the public feedback process described in 20 paragraph (2)(B), the Secretary shall publish final 21 recommendations for the Director of the Bureau of 22 Consumer Financial Protection related to the pro- 23 mulgation of regulations under section 24 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 1354 IS 128(e)(17)(A) of the Truth in Lending Act (15 1 U.S.C. 1638(e)(17)(A)). 2 ‘‘(4) POLICY DIRECTION TO FEDERAL STUDENT 3 AID.—The working group shall develop policy direc- 4 tion for the Office of Federal Student Aid to incor- 5 porate, into contracts awarded under this section, 6 applicable requirements and standards promulgated 7 under section 128(e)(17)(A) of the Truth in Lending 8 Act (15 U.S.C. 1638(e)(17)(A)) or described in sec- 9 tion 128(e)(17)(B)(i)(II) of such Act. 10 ‘‘(5) MEETINGS.—After the Secretary publishes 11 final recommendations under paragraph (3), the 12 working group shall meet not less often than once 13 per year including to— 14 ‘‘(A) evaluate the application of regulations 15 promulgated under section 128(e)(17)(A) of the 16 Truth in Lending Act (15 U.S.C. 17 1638(e)(17)(A)) on entities with which the Sec- 18 retary has entered into a contract under this 19 section; 20 ‘‘(B) evaluate the Office of Federal Stu- 21 dent Aid’s implementation of policy direction 22 developed pursuant to paragraph (4); 23 ‘‘(C) develop and implement an oversight 24 plan to ensure compliance by entities with 25 VerDate Sep 11 2014 23:22 May 11, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1354.IS S1354 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 1354 IS which the Secretary has entered into a contract 1 under this section with policy direction devel- 2 oped under paragraph (4) and regulations pro- 3 mulgated under section 128(e)(17)(A) of the 4 Truth in Lending Act (15 U.S.C. 5 1638(e)(17)(A)) or described in section 6 128(e)(17)(B)(i)(II) of such Act; and 7 ‘‘(D) undertake other activities to improve 8 coordination among the members of the work- 9 ing group as it relates to the Secretary’s admin- 10 istration of the Federal Direct Loan Program. 11 ‘‘(6) RULE OF CONSTRUCTION.—Nothing in 12 this subsection shall be considered to alter, limit, or 13 restrict the Bureau of Consumer Financial Protec- 14 tion’s obligations under chapter 5 of title 5, United 15 States Code (commonly known as the ‘Administra- 16 tive Procedures Act’), including the Director’s obli- 17 gation to provide notice, solicit public comment, and 18 respond to such comment when issuing regula- 19 tions.’’. 20 SEC. 3. TRUTH IN LENDING AC [Text truncated for display. Full text available on Congress.gov.]