Student Borrower Protections Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 5294 To amend the Truth in Lending Act to establish a postsecondary education loan borrower bill of rights and to require certain creditors to obtain private loan certifications from institutions of higher education, to amend the Fair Credit Reporting Act to require the Bureau of Consumer Finan- cial Protection to issue rules to establish standards for reporting informa- tion related to student loans to consumer reporting agencies, and for other purposes. IN THE HOUSE OF REPRESENTATIVES DECEMBER 4, 2019 Ms. ADAMS introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Education and Labor, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the juris- diction of the committee concerned A BILL To amend the Truth in Lending Act to establish a postsec- ondary education loan borrower bill of rights and to require certain creditors to obtain private loan certifi- cations from institutions of higher education, to amend the Fair Credit Reporting Act to require the Bureau of Consumer Financial Protection to issue rules to estab- lish standards for reporting information related to stu- dent loans to consumer reporting agencies, and for other purposes. VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 2 •HR 5294 IH 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 Borrower Pro- 4 tections Act of 2019’’. 5 SEC. 2. POSTSECONDARY EDUCATION LOAN BORROWER 6 BILL OF RIGHTS. 7 Chapter 2 of the Truth in Lending Act (15 U.S.C. 8 1631 et seq.) is amended— 9 (1) by redesignating section 140A as section 10 140B; 11 (2) by inserting after section 140 the following: 12 ‘‘§ 140A. Postsecondary education loan borrower bill 13 of rights 14 ‘‘(a) DEFINITIONS.—In this paragraph: 15 ‘‘(1) BORROWER.—The term ‘borrower’ means 16 the person to whom a postsecondary education loan 17 is extended. 18 ‘‘(2) CHARGE OFF.—The term ‘charge off’ 19 means charge to profit and loss, or subject to any 20 similar action. 21 ‘‘(3) COVERED LENDER, SERVICER, OR AS- 22 SIGNEE.—The term ‘covered lender, servicer, or as- 23 signee’ means— 24 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 3 •HR 5294 IH ‘‘(A) an eligible lender (as defined under 1 section 435 of the Higher Education Act of 2 1965) of a loan made, insured, or guaranteed 3 under part B of title IV of the Higher Edu- 4 cation Act of 1965; 5 ‘‘(B) any entity with which the Secretary 6 of Education enters into a contract under sec- 7 tion 456 of the Higher Education Act of 1965 8 for origination, servicing, or collection described 9 in subsection (b) of such section 456 and is en- 10 gaged in the provision of, or offering, servicing, 11 or collections regardless of whether the Sec- 12 retary identifies the entity as a ‘servicer’ in 13 such contract; 14 ‘‘(C) a private educational lender (as de- 15 fined under section 140(a)); 16 ‘‘(D) any other person or entity engaged in 17 the business of securing, making, or extending 18 postsecondary education loans on behalf of a 19 person or entity described in subparagraph (A) 20 or (C); or 21 ‘‘(E) any other holder of a postsecondary 22 education loan other than the Secretary of Edu- 23 cation. 24 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 4 •HR 5294 IH ‘‘(4) POSTSECONDARY EDUCATION LOAN.—The 1 term ‘postsecondary education loan’ means— 2 ‘‘(A) a private education loan (as defined 3 under section 140(a)); or 4 ‘‘(B) a loan made, insured, or guaranteed 5 under title IV of the Higher Education Act of 6 1965. 7 ‘‘(5) QUALIFIED WRITTEN REQUEST.— 8 ‘‘(A) IN GENERAL.—The term ‘qualified 9 written request’ means a written correspond- 10 ence of a borrower (other than notice on a pay- 11 ment medium supplied by the postsecondary 12 educational lender or servicer) transmitted by 13 mail, facsimile, or electronically through an 14 email address or website designated by the cov- 15 ered lender, servicer, or assignee to receive com- 16 munications from borrowers that— 17 ‘‘(i) includes, or otherwise enables the 18 covered lender, servicer, or assignee to 19 identify, the name and account of the bor- 20 rower; and 21 ‘‘(ii) includes, to the extent applica- 22 ble— 23 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 5 •HR 5294 IH ‘‘(I) sufficient detail regarding 1 the information sought by the bor- 2 rower; or 3 ‘‘(II) a statement of the reasons 4 for the belief of the borrower that 5 there is an error regarding the ac- 6 count of the borrower. 7 ‘‘(B) CORRESPONDENCE DELIVERED TO 8 OTHER ADDRESSES.— 9 ‘‘(i) IN GENERAL.—A written cor- 10 respondence of a borrower is a qualified 11 written request if the written correspond- 12 ence is transmitted to and received by a 13 covered lender, servicer, or assignee at a 14 mailing address, facsimile number, email 15 address, or website address other than the 16 address or number designated by that cov- 17 ered lender, servicer, or assignee r to re- 18 ceive communications from borrowers but 19 the written correspondence meets the re- 20 quirements under clauses (i) and (ii) of 21 subparagraph (A). 22 ‘‘(ii) DUTY TO TRANSFER.—A covered 23 lender, servicer, or assignee shall, within a 24 reasonable period of time, transfer a writ- 25 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 6 •HR 5294 IH ten correspondence of a borrower received 1 by the covered lender, servicer, or assignee 2 at a mailing address, facsimile number, 3 email address, or website address other 4 than the address or number designated by 5 that covered lender, servicer, or assignee to 6 receive communications from borrowers to 7 the correct address or appropriate office or 8 other unit of the covered lender, servicer, 9 or assignee. 10 ‘‘(iii) DATE OF RECEIPT.—A written 11 correspondence of a borrower transferred 12 in accordance with clause (i) shall be 13 deemed to be received by the covered lend- 14 er, servicer, or assignee on the date on 15 which the written correspondence is trans- 16 ferred to the correct address or appro- 17 priate office or other unit of the covered 18 lender, servicer, or assignee. 19 ‘‘(6) SERVICING.—The term ‘servicing’ means 20 one or more of the following: 21 ‘‘(A) Receiving any scheduled periodic pay- 22 ments from a borrower or notification of such 23 payments pursuant to the terms of a postsec- 24 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 7 •HR 5294 IH ondary education loan or contract governing the 1 servicing. 2 ‘‘(B) Applying payments to the borrower’s 3 account pursuant to the terms of the postsec- 4 ondary education loan or the contract governing 5 the servicing. 6 ‘‘(C) Maintaining account records for a 7 postsecondary education loan. 8 ‘‘(D) Communicating with a borrower re- 9 garding a postsecondary education loan on be- 10 half of the covered lender, servicer, or assignee. 11 ‘‘(E) Interactions with a borrower, includ- 12 ing activities to help prevent default on obliga- 13 tions arising from postsecondary education 14 loans, conducted to facilitate the activities de- 15 scribed in subparagraph (A) or (B). 16 ‘‘(b) SALE, TRANSFER, OR ASSIGNMENT.—If the 17 sale, other transfer, assignment, or transfer of servicing 18 obligations of a postsecondary education loan results in 19 a change in the identity of the party to whom the borrower 20 must send subsequent payments or direct any communica- 21 tions concerning the loan— 22 ‘‘(1) the transferor shall— 23 ‘‘(A) notify the borrower, in writing, in 24 simple and understandable terms, not fewer 25 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 8 •HR 5294 IH than 45 days before transferring a legally en- 1 forceable right to receive payment from the bor- 2 rower on such loan, of— 3 ‘‘(i) the sale or other transfer, assign- 4 ment, or transfer of servicing obligations; 5 ‘‘(ii) the identity of the transferee; 6 ‘‘(iii) the name, address, and email 7 address of the party to whom subsequent 8 payments or communications must be sent; 9 ‘‘(iv) the telephone numbers and 10 websites of both the transferor and the 11 transferee; 12 ‘‘(v) the effective date of the sale, 13 transfer, or assignment; 14 ‘‘(vi) the date on which the transferor 15 will stop accepting payment; and 16 ‘‘(vii) the date on which the transferee 17 will begin accepting payment; 18 ‘‘(B) forward any payment from a bor- 19 rower with respect to such postsecondary edu- 20 cation loan to the transferee, immediately upon 21 receiving such payment, during the 60-day pe- 22 riod beginning on the date on which the trans- 23 feror stops accepting payment of such postsec- 24 ondary education loan; 25 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 9 •HR 5294 IH ‘‘(C) provide to the transferee all borrower 1 information and complete payment history in- 2 formation for any such postsecondary education 3 loans; and 4 ‘‘(2) the transferee shall— 5 ‘‘(A) notify the borrower, in writing, in 6 simple and understandable terms, not fewer 7 than 45 days before acquiring a legally enforce- 8 able right to receive payment from the borrower 9 on such loan, of— 10 ‘‘(i) the sale or other transfer, assign- 11 ment, or transfer of servicing obligations; 12 ‘‘(ii) the identity of the transferor; 13 ‘‘(iii) the name, address, and email 14 address of the party to whom subsequent 15 payments or communications must be sent; 16 ‘‘(iv) the telephone numbers and 17 websites of both the transferor and the 18 transferee; 19 ‘‘(v) the effective date of the sale, 20 transfer, assignment, or transfer of serv- 21 icing obligations; 22 ‘‘(vi) the date on which the transferor 23 will stop accepting payment; and 24 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 10 •HR 5294 IH ‘‘(vii) the date on which the transferee 1 will begin accepting payment; 2 ‘‘(B) accept as on-time and may not im- 3 pose any late fee or finance charge for any pay- 4 ment from a borrower with respect to such 5 postsecondary education loan that is forwarded 6 from the transferor during the 90-day period 7 beginning on the date on which the transferor 8 stops accepting payment, if the transferor re- 9 ceives such payment on or before the applicable 10 due date, including any grace period; 11 ‘‘(C) provide borrowers a simple, online 12 process for transferring existing electronic fund 13 transfer authority; and 14 ‘‘(D) honor any promotion or benefit avail- 15 able or granted to the borrower or advertised by 16 the previous owner or transferor of such post- 17 secondary education loan. 18 ‘‘(c) MATERIAL CHANGE IN MAILING ADDRESS OR 19 PROCEDURE FOR HANDLING PAYMENTS.— 20 ‘‘(1) IN GENERAL.—If a covered lender, 21 servicer, or assignee makes a change in the mailing 22 address, office, or procedures for handling payments 23 with respect to any postsecondary education loan, 24 the covered lender, servicer, or assignee shall clearly 25 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 11 •HR 5294 IH and conspicuously notify the borrower in writing and 1 through the borrower’s preferred or designated 2 method of communication not less than 45 calendar 3 days in advance of such change. 4 ‘‘(2) BORROWER PROTECTION WINDOW.—If a 5 change described in paragraph (1) causes a delay in 6 the crediting of the account of the borrower made 7 during the 90-day period following the date on which 8 such change took effect, the covered lender, servicer, 9 or assignee may not impose on the borrower any 10 negative consequences, including negative credit re- 11 porting, lost eligibility in borrower benefits, late fees, 12 interest capitalization, or other financial injury. 13 ‘‘(3) LOAN FORGIVENESS PROGRAMS.—For pur- 14 poses of any public or private loan forgiveness pro- 15 gram that applies to a postsecondary education loan, 16 such program shall not be tolled during the 90-day 17 period following the date on which a change de- 18 scribed under paragraph (1) takes effect. 19 ‘‘(d) INTEREST RATE AND TERM CHANGES FOR CER- 20 TAIN POSTSECONDARY EDUCATION LOANS.— 21 ‘‘(1) NOTIFICATION REQUIREMENTS.— 22 ‘‘(A) IN GENERAL.—Except as provided in 23 paragraph (3), a covered lender, servicer, or as- 24 signee shall provide written notice to a borrower 25 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5294.IH H5294 kjohnson on DSK79L0C42 with BILLS 12 •HR 5294 IH of any material change in the terms of the post- 1 secondary education loan, including an increase 2 in the interest rate, not later than 45 days be- 3 fore the effective date of the change or increase. 4 ‘‘(B) MATERIAL CHANGES IN TERMS.—The 5 Bureau shall, by regulation, establish guidelines 6 for determining which changes in terms are ma- 7 terial under subparagraph (A). 8 ‘‘(2) LIMITS ON INTEREST RATE AND FEE IN- 9 CREASES APPLICABLE TO OUTSTANDING BAL- 10 ANCE.—Except as provided in paragraph (3), a cov- 11 ered lender, servicer, or assignee may not increase 12 the interest rate or other fee applicable to an out- 13 standing balance on a postsecondary education loan. 14 ‘‘(3) EXCEPTIONS.—The requirements under 15 paragraphs (1) and (2) shall not apply to— 16 ‘‘(A) an increase based on an applicable 17 variable interest rate incorporated in the terms 18 of a postsecondary education loan that provides 19 for changes in the interest rate according to op- 20 eration of an index that is not under the control 21 of the covered lender, servicer, or assignee and 22 is published for viewing by the general public; 23 ‘‘(B) an increase in interest rate due to the 24 completion of a workout or temporary hardship 25 VerDate Sep 11 2014 21:09 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BI [Text truncated for display. 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