Christopher’s Law

II 116TH CONGRESS 1ST SESSION S. 2405 To establish additional protections and disclosures for students and cosigners with respect to student loans, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 31, 2019 Mr. MENENDEZ (for himself, Mr. BOOKER, Ms. WARREN, Mr. BROWN, and Mrs. GILLIBRAND) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pen- sions A BILL To establish additional protections and disclosures for stu- dents and cosigners with respect to student loans, 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; FINDINGS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Christopher Bryski Student Loan Protection Act’’ or 5 ‘‘Christopher’s Law’’. 6 (b) FINDINGS.—Congress finds the following: 7 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 2405 IS (1) The Bureau of Consumer Financial Protec- 1 tion (referred to in this section as the ‘‘CFPB’’) 2 Student Loan Ombudsman stated the following: 3 (A) ‘‘The CFPB received more than 7,700 4 private student loan complaints and approxi- 5 mately 2,300 debt collection complaints related 6 to student loans between September 1, 2016, 7 and August 31, 2017.’’. 8 (B) ‘‘cosigners complain that information 9 about discharge or alternative arrangements in 10 the case of death of the primary borrower is not 11 readily available and that decisions are made on 12 a case-by-case basis, giving cosigners little un- 13 derstanding of how the process works, or if they 14 will be successful.’’. 15 (C) ‘‘The complaints and input received by 16 the CFPB resemble many of the same issues 17 experienced by mortgage borrowers, such as im- 18 proper application of payments, untimeliness in 19 error resolution, and inability to contact appro- 20 priate personnel in times of hardship.’’. 21 (D) ‘‘The difference between Federal and 22 private student loans in periods of disability 23 was not well-understood.’’. 24 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 2405 IS (2) An estimated 2,500,000 individuals sustain 1 a traumatic brain injury each year and older adoles- 2 cents between 15 and 19 years of age are more like- 3 ly to sustain a traumatic brain injury than individ- 4 uals in other age groups. 5 (3) It has been estimated that the annual inci- 6 dence of spinal cord injury, not including those indi- 7 viduals who die at the scene of an accident, is ap- 8 proximately 54 cases per 1,000,000 individuals in 9 the United States, or approximately 17,000 new 10 cases each year. These injuries can lead to perma- 11 nent disability or loss of movement and can prohibit 12 the victim from engaging in any substantial gainful 13 activity. 14 (4) According to the CFPB, more than 90 per- 15 cent of new private student loans are co-signed. 16 (5) According to the CFPB, private student 17 loan companies provide cosigner release to less than 18 1 percent of eligible borrowers. 19 SEC. 2. ADDITIONAL STUDENT LOAN PROTECTIONS. 20 (a) IN GENERAL.—Section 140(g) of the Truth in 21 Lending Act (15 U.S.C. 1650(g)) is amended to read as 22 follows: 23 ‘‘(g) ADDITIONAL PROTECTIONS RELATING TO BOR- 24 ROWER OR COSIGNER OF A PRIVATE EDUCATION LOAN.— 25 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 2405 IS ‘‘(1) CLEAR AND CONSPICUOUS DESCRIPTION 1 OF OBLIGATION OF BORROWER AND COSIGNER.—In 2 the case of any private educational lender that pro- 3 vides a private education loan, the lender shall clear- 4 ly and conspicuously describe, in writing, the obliga- 5 tions of a cosigner with respect to the loan, includ- 6 ing the effect that the death, disability, or inability 7 to engage in any substantial gainful activity of the 8 borrower or any cosigner would have on any such 9 obligation, in language that the Bureau determines 10 would give a reasonable person a reasonable under- 11 standing of the obligation being assumed by becom- 12 ing a cosigner for the loan. 13 ‘‘(2) PROHIBITION ON AUTOMATIC DEFAULT 14 WITH RESPECT TO A PERFORMING LOAN.— 15 ‘‘(A) DEATH, DISABILITY, OR BANKRUPTCY 16 OF COSIGNER.—If a private education loan in- 17 cludes a cosigner, a private educational lender 18 may not take any adverse action (including de- 19 claring a default, accelerating any loan obliga- 20 tion, increasing the interest rate, or altering 21 any obligations under the private education loan 22 in a way that is adverse to the borrower) 23 against the borrower based on— 24 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 2405 IS ‘‘(i) the death, disability, or inability 1 to engage in any substantial gainful activ- 2 ity of the cosigner; or 3 ‘‘(ii) the bankruptcy of the cosigner. 4 ‘‘(B) BANKRUPTCY OF BORROWER.—If a 5 private education loan includes a cosigner, a 6 private educational lender may not take any ad- 7 verse action (including declaring a default, ac- 8 celerating any loan obligation, increasing the in- 9 terest rate, or altering any obligations under 10 the private education loan in a way that is ad- 11 verse to any cosigner) against the cosigner 12 based on the bankruptcy of the borrower. 13 ‘‘(3) BORROWER REQUIREMENTS REGARDING 14 DEATH OR DISABILITY OF BORROWER.—In the event 15 of the death, disability, or inability to engage in any 16 substantial gainful activity of a borrower of a private 17 education loan— 18 ‘‘(A) the borrower, the estate of the bor- 19 rower, and any cosigner of the private edu- 20 cation loan shall not be obligated to repay the 21 outstanding principal and interest on the loan; 22 and 23 ‘‘(B) the private educational lender with 24 respect to, or the servicer of, the private edu- 25 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 2405 IS cation loan, as applicable, shall, upon notifica- 1 tion of the death, disability, or inability to en- 2 gage in any substantial gainful activity, dis- 3 charge the liability of the borrower, estate of 4 the borrower, and any cosigner of the private 5 education loan. 6 ‘‘(4) COSIGNER RELEASE.— 7 ‘‘(A) REQUIREMENTS FOR AUTOMATIC RE- 8 LEASE OF COSIGNER.— 9 ‘‘(i) CRITERIA ESTABLISHED BY THE 10 BUREAU.—Not later than 180 days after 11 the date of enactment of this subsection, 12 the Bureau shall establish criteria, which, 13 if met by the borrower of a private edu- 14 cation loan, shall require the private edu- 15 cational lender with respect to, or servicer 16 of, the private education loan, as applica- 17 ble, to promptly release any cosigner from 18 the obligations of the cosigner under the 19 loan without requiring any action on behalf 20 of the borrower. 21 ‘‘(ii) CRITERIA ESTABLISHED BY 22 LENDER.—A private educational lender 23 may establish criteria for automatic release 24 that are different from the criteria de- 25 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 2405 IS scribed in clause (i) if the criteria estab- 1 lished by the lender are not more restric- 2 tive with respect to the borrower or any co- 3 signer of the private education loan than 4 the criteria established under clause (i). 5 ‘‘(B) DISCLOSURE OF CRITERIA FOR CO- 6 SIGNER RELEASE.—A private educational lend- 7 er shall— 8 ‘‘(i) include in the promissory note of 9 a private education loan the criteria under 10 which a cosigner may be released from the 11 obligation of the cosigner under a private 12 education loan under this paragraph; and 13 ‘‘(ii) disclose to the borrower and any 14 cosigner at the time the private education 15 loan is consummated, clearly and conspicu- 16 ously, the criteria under which a cosigner 17 may be released from the obligation of the 18 cosigner under a private education loan. 19 ‘‘(C) MODIFICATIONS TO CRITERIA.—If a 20 private education loan has a cosigner, the pri- 21 vate educational lender with respect to, or 22 servicer of, the private education loan, as appli- 23 cable, may not modify the criteria under which 24 the cosigner may be released from the obliga- 25 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 2405 IS tion of the cosigner under the private education 1 loan without the consent of the borrower and 2 the cosigner if the modification would be ad- 3 verse to the borrower. 4 ‘‘(D) NOTIFICATION ON RELEASE.—A pri- 5 vate educational lender with respect to, or 6 servicer of, a private education loan, as applica- 7 ble, shall promptly notify the borrower and any 8 cosigners for the private education loan if a co- 9 signer is released from the obligations of the co- 10 signer under the private education loan under 11 this paragraph. 12 ‘‘(E) MODIFICATION OF EVALUATION OF 13 CREDITWORTHINESS, CREDIT STANDING, OR 14 CREDIT CAPACITY.—In determining whether the 15 criteria for a cosigner release are met, a private 16 educational lender with respect to, or servicer 17 of, a private education loan, as applicable, may 18 not evaluate the creditworthiness, credit stand- 19 ing, or credit capacity of the borrower or a co- 20 signer of the private education loan using a 21 standard that would be more adverse to the 22 borrower or cosigner, as applicable, than the 23 standard the private educational lender used to 24 evaluate the creditworthiness, credit standing, 25 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 2405 IS or credit capacity of the borrower or cosigner 1 on the date on which the private education loan 2 was consummated. 3 ‘‘(5) DESIGNATION OF INDIVIDUAL TO ACT ON 4 BEHALF OF THE BORROWER.—In the case of any 5 private educational lender that extends a private 6 education loan, the lender shall provide the borrower 7 an option to designate an individual to have the 8 legal authority to act on behalf of the borrower with 9 respect to the private education loan in the event of 10 the death, disability, or inability to engage in any 11 substantial gainful activity of the borrower. 12 ‘‘(6) COUNSELING.—In the case of any private 13 educational lender that extends a private education 14 loan, the lender shall ensure that the borrower, and 15 any cosigner, receives comprehensive information on 16 the terms and conditions of the loan and of the re- 17 sponsibilities the borrower has with respect to the 18 loan, including the information required under sub- 19 paragraphs (H), (I), (K), (L), (M), and (N) of sec- 20 tion 485(l)(2) of the Higher Education Act of 1965 21 (20 U.S.C. 1092(l)(2)). 22 ‘‘(7) MODEL FORM.—The Bureau shall publish 23 a model form under section 105 for describing the 24 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 2405 IS obligation of a cosigner for the purposes of para- 1 graph (1). 2 ‘‘(8) DEFINITION OF DEATH, DISABILITY, OR 3 INABILITY TO ENGAGE IN ANY SUBSTANTIAL GAIN- 4 FUL ACTIVITY.—For the purposes of this subsection 5 with respect to a borrower or cosigner, the term 6 ‘death, disability, or inability to engage in any sub- 7 stantial gainful activity’— 8 ‘‘(A) means any condition described in sec- 9 tion 437(a) of the Higher Education Act of 10 1965 (20 U.S.C. 1087(a)); and 11 ‘‘(B) shall be interpreted by the Bureau in 12 such a manner as to conform with the regula- 13 tions prescribed by the Secretary of Education 14 under section 437(a) of the Higher Education 15 Act of 1965 (20 U.S.C. 1087(a)) to the fullest 16 extent practicable, including safeguards to pre- 17 vent fraud and abuse.’’. 18 (b) RULEMAKING.—Not later than 1 year after the 19 date of enactment of this Act, the Bureau of Consumer 20 Financial Protection shall issue regulations to carry out 21 subsection (g) of section 140 of the Truth in Lending Act 22 (15 U.S.C. 1650), as amended by this section. 23 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 2405 IS SEC. 3. FEDERAL STUDENT LOANS. 1 (a) COUNSELING INFORMATION.—Section 485(l)(2) 2 of the Higher Education Act of 1965 (20 U.S.C. 3 1092(l)(2)) is amended by adding at the end the following: 4 ‘‘(L) Information regarding the conditions 5 required to discharge the loan due to the death, 6 disability, or inability to engage in any substan- 7 tial gainful activity of the borrower in accord- 8 ance with section 437(a). 9 ‘‘(M) Any repayment, refinance, deferment, 10 forbearance, or forgiveness opportunities avail- 11 able to the borrower or cosigner in the event of 12 the death, disability, or inability to engage in 13 any substantial gainful activity of the borrower 14 or cosigner. 15 ‘‘(N) The effect that the death, disability, 16 or inability to engage in any substantial gainful 17 activity of the borrower would have on the obli- 18 gations of the borrower and any cosigner of the 19 loan.’’. 20 (b) DESIGNATION OF INDIVIDUAL TO ACT ON BE- 21 HALF OF THE BORROWER.—Section 484 of the Higher 22 Education Act of 1965 (20 U.S.C. 1091) is amended— 23 (1) in subsection (a), by striking paragraph (4) 24 and inserting the following: 25 VerDate Sep 11 2014 02:42 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2405.IS S2405 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 2405 IS ‘‘(4) file with the Secretary, as part of the 1 original financial aid application process, a certifi- 2 cation, which need not be notarized, but which— 3 ‘‘(A) shall include— 4 ‘‘(i) a statement of educational pur- 5 pose stating that the money attributable to 6 such grant, loan, or loan guarantee will be 7 used solely for expenses related to attend- 8 ance or continued attendance at such insti- 9 tution; and 10 ‘‘(ii) such student’s social security 11 number; and 12 ‘‘(B) may include a designation by such 13 student of an individual who shall have the 14 legal authority to act on behalf of the student 15 with respect to any loan to the student under 16 this title in the event of the student’s death, 17 disability, or inability to engage in any sub [Text truncated for display. 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