[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3948 Introduced in House (IH)]

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114th CONGRESS
  1st Session
                                H. R. 3948

   To amend the Truth in Lending Act to include requirements for the 
 transfer of servicing of postsecondary education loans, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 5, 2015

  Mr. Deutch introduced the following bill; which was referred to the 
 Committee on Financial Services, and in addition to the Committee on 
Education and the Workforce, for a period to be subsequently determined 
 by the Speaker, in each case for consideration of such provisions as 
        fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To amend the Truth in Lending Act to include requirements for the 
 transfer of servicing of postsecondary education loans, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Loan Transfers Disclosure 
Act of 2015''.

SEC. 2. IMPROVED CONSUMER PROTECTIONS FOR STUDENT LOAN SERVICING.

    (a) In General.--Chapter 2 of title I of the Truth in Lending Act 
(15 U.S.C. 1601 et seq.) is amended by adding at the end the following 
new section:
``Sec. 140B. Transfer of servicing of postsecondary education loans
    ``(a) Transfer of Servicing.--
            ``(1) Disclosure required.--A postsecondary education 
        lender shall disclose to each person who applies for a 
        postsecondary education loan, at the time of application for 
        such loan, whether there may be a transfer of servicing of such 
        loan at any time during which a balance is due on such loan.
            ``(2) No liability.--A postsecondary education lender shall 
        not be liable to a borrower for failure to comply with 
        paragraph (1) if the application for a postsecondary education 
        loan was made before the rules or regulations established under 
        subsection (f) take effect.
    ``(b) Notice by Transferor Servicer at Time of Transfer of 
Servicing.--
            ``(1) In general.--A transferor servicer shall notify the 
        borrower under a postsecondary education loan of any transfer 
        of student loan servicing for the postsecondary education loan. 
        Such notice shall be made to the borrower--
                    ``(A) not later than 15 days before the effective 
                date of transfer of the student loan servicing; or
                    ``(B) not more than 30 days after the effective 
                date of transfer of the student loan servicing, if the 
                transfer of such servicing is preceded by--
                            ``(i) termination of the contract for such 
                        servicing for cause;
                            ``(ii) commencement of bankruptcy 
                        proceedings of the transferor servicer; or
                            ``(iii) any other situation in which the 
                        Bureau determines that such exception is 
                        warranted.
            ``(2) Contents of notice.--The notice required under 
        paragraph (1) shall be made in writing and, if the transferor 
        servicer has an email address for the borrower, sent by email, 
        and shall include--
                    ``(A) the effective date of the transfer;
                    ``(B) the name, address, website, and toll-free or 
                collect-call telephone number of the transferee 
                servicer;
                    ``(C) a toll-free or collect-call telephone number 
                for an individual employed by the transferor servicer, 
                or the office or department of, the transferor servicer 
                that the borrower may contact for inquiries relating to 
                the transfer of servicing;
                    ``(D) the name and toll-free or collect-call 
                telephone number for an individual employed by the 
                transferee servicer, or the office or department of, 
                the transferee servicer that the borrower may contact 
                for inquiries relating to the transfer of servicing;
                    ``(E) the date on which the transferor servicer 
                will stop accepting payments relating to the 
                postsecondary education loan to be transferred and the 
                date on which the transferee servicer will begin to 
                accept such payments;
                    ``(F) a statement that the transfer of student loan 
                servicing of the postsecondary education loan does not 
                affect any term or condition of the postsecondary 
                education loan other than terms directly related to 
                such student loan servicing;
                    ``(G) a statement disclosing--
                            ``(i) whether borrower authorization for 
                        recurring electronic funds transfers will be 
                        transferred to the transferee servicer; and
                            ``(ii) if any such recurring electronic 
                        funds transfers cannot be transferred, 
                        information as to how the borrower may 
                        establish new recurring electronic funds 
                        transfers in connection with transfer of 
                        servicing to the transferee servicer;
                    ``(H) a statement disclosing--
                            ``(i) the application of all payments and 
                        charges relating to the postsecondary education 
                        loan to be transferred as of the effective date 
                        of the transfer, including--
                                    ``(I) the date the last payment of 
                                the borrower was received;
                                    ``(II) the date the last late fee, 
                                arrearage, or other charge was applied; 
                                and
                                    ``(III) the amount of the last 
                                payment allocated to principal, 
                                interest, and other charges;
                            ``(ii) the status of such loan as of the 
                        effective date of the transfer, including 
                        whether the borrower is in default on the loan;
                            ``(iii) whether any application for an 
                        alternative repayment arrangement submitted by 
                        the borrower is pending; and
                            ``(iv) an itemization and explanation for 
                        all arrearages claimed to be due as of the 
                        effective date of the transfer;
                    ``(I) a detailed description of any benefit, 
                alternative repayment arrangement, or other term or 
                condition arranged between the transferor servicer and 
                the borrower that is not included in the terms of the 
                loan agreement;
                    ``(J) a detailed description of any item under 
                subparagraph (H) that will not apply upon transfer, 
                including an explanation of why such item will not 
                apply; and
                    ``(K) information on how to file a complaint 
                against the transferor servicer with the Bureau.
            ``(3) Notice by transferee servicer at time of transfer of 
        servicing.--
                    ``(A) In general.--A transferee servicer shall 
                notify the borrower under a postsecondary education 
                loan, in writing, of any transfer of student loan 
                servicing of a postsecondary education loan. Such 
                notice shall be made to the borrower--
                            ``(i) not later than 15 days before the 
                        effective date of transfer of the student loan 
                        servicing; or
                            ``(ii) not more than 30 days after the 
                        effective date of transfer of the student loan 
                        servicing, if the transfer of such servicing is 
                        preceded by--
                                    ``(I) termination of the contract 
                                for such servicing for cause;
                                    ``(II) commencement of bankruptcy 
                                proceedings of the transferor servicer; 
                                or
                                    ``(III) any other situation in 
                                which the Bureau determines that such 
                                exception is warranted.
                    ``(B) Contents of notice.--The notice required 
                under subparagraph (A) shall be made in the same manner 
                and include the same information, as applicable, as 
                described in paragraph (2).
    ``(c) Treatment of Improperly Received Loan Payments During 
Transfer Period.--
            ``(1) In general.--During the 60-day period beginning on 
        the effective date of transfer relating to a postsecondary 
        education loan to be transferred, a late fee may not be imposed 
        on the borrower with respect to any payment on such loan, and 
        no such payment may be treated as late for any other purposes 
        if--
                    ``(A) the payment is received by the transferor 
                servicer instead of the transferee servicer (who should 
                properly receive payment) before the due date 
                applicable to such payment; or
                    ``(B) the payment is received by the transferee 
                servicer instead of the transferor servicer (who should 
                properly receive payment) before the transfer is 
                complete.
            ``(2) Notice.--To the maximum extent practicable, a 
        transferor servicer shall notify a borrower, both in writing 
        and by telephone, regarding any payment described in paragraph 
        (1).
    ``(d) Electronic Fund Transfer Authority.--A transferee servicer 
shall make available to a borrower whose student loan servicing is 
transferred to the transferee servicer a simple, online process through 
which the borrower may transfer to the transferee servicer any existing 
authority for an electronic fund transfer that the borrower had 
provided to the transferor servicer.
    ``(e) Servicer Liability.--
            ``(1) Effective date of regulations.--A student loan 
        servicer shall not be liable to a borrower for failure to 
        comply with the requirements of subsection (b) with respect to 
        a transfer of student loan servicing before the regulations 
        under subsection (f) take effect.
            ``(2) Mitigating action.--A student loan servicer or a 
        postsecondary education lender shall not be liable to a 
        borrower for failure to comply with a requirement under this 
        section if, not later than 60 days after discovering an error 
        and before the commencement of an action under section 130 or 
        the receipt of written notice of the error from the borrower, 
        the student loan servicer notifies the borrower of the error 
        and makes any adjustments in the appropriate account that are 
        necessary to ensure that the borrower will not be required to 
        pay an amount greater than the amount that the borrower 
        otherwise would have paid.
    ``(f) Rulemaking.--The Bureau, in consultation with the Secretary 
of Education, is authorized to prescribe such rules and regulations, 
make such interpretations, and grant such reasonable exemptions, in 
accordance with, and as may be necessary to achieve the purposes of, 
this chapter.
    ``(g) Definitions.--In this section, the following definitions 
shall apply:
            ``(1) Alternative repayment arrangement.--The term 
        `alternative repayment arrangement' means an agreed upon 
        arrangement between a loan holder (or, for a Federal Direct 
        Loan or a Federal Perkins Loan, the Secretary of Education or 
        the institution of higher education that made such loan, 
        respectively) or student loan servicer and a borrower--
                    ``(A) that is different than the terms of an 
                existing postsecondary education loan arrangement or 
                agreement; and
                    ``(B) pursuant to which remittance of a monthly 
                payment--
                            ``(i) satisfies the terms of the 
                        postsecondary education loan; or
                            ``(ii) is not required for a period of 1 or 
                        more months in order to satisfy the terms of 
                        the postsecondary education loan arrangement or 
                        agreement.
            ``(2) Effective date of transfer.--The term `effective date 
        of transfer' means the date on which the first payment is due 
        to a transferee servicer from a borrower under a postsecondary 
        education loan.
            ``(3) Federal direct loan.--The term `Federal Direct Loan' 
        means a loan made under part D of title IV of the Higher 
        Education Act of 1965 (20 U.S.C. 1087a et seq.).
            ``(4) Federal perkins loan.--The term `Federal Perkins 
        Loan' means a loan made under part E of title IV of the Higher 
        Education Act of 1965 (20 U.S.C. 1087aa et seq.).
            ``(5) Institution of higher education.--The term 
        `institution of higher education' has the meaning given that 
        term in section 102 of the Higher Education Act of 1965 (20 
        U.S.C. 1002).
            ``(6) Late fee.--The term `late fee' means a late fee, 
        penalty, or adjustment to principal, imposed because of a late 
        payment or delinquency by the borrower under a postsecondary 
        education loan.
            ``(7) Loan holder.--The term `loan holder' means a person 
        who owns the title to or promissory note for a postsecondary 
        education loan (except for a Federal Direct Loan or a Federal 
        Perkins Loan).
            ``(8) Postsecondary education expense.--The term 
        `postsecondary education expense' means any expense that is 
        included as part of the cost of attendance (as that term is 
        defined in section 472 of the Higher Education Act of 1965 (20 
        U.S.C. 1087ll)) of a student.
            ``(9) Postsecondary education lender.--The term 
        `postsecondary education lender'--
                    ``(A) means--
                            ``(i) a financial institution, as defined 
                        in section 3 of the Federal Deposit Insurance 
                        Act (12 U.S.C. 1813) that solicits, makes, or 
                        extends postsecondary education loans;
                            ``(ii) a Federal credit union, as defined 
                        in section 101 of the Federal Credit Union Act 
                        (12 U.S.C. 1752) that solicits, makes, or 
                        extends postsecondary education loans; and
                            ``(iii) any other person engaged in the 
                        business of soliciting, making, or extending 
                        postsecondary education loans; and
                    ``(B) does not include--
                            ``(i) the Secretary of Education; or
                            ``(ii) an institution of higher education 
                        with respect to any Federal Perkins Loan made 
                        by the institution.
            ``(10) Postsecondary education loan.--The term 
        `postsecondary education loan' means a loan that is--
                    ``(A) made, insured, or guaranteed under part B, D, 
                or E of title IV of the Higher Education Act of 1965 
                (20 U.S.C. 1071 et seq., 1087a et seq., 1087aa et 
                seq.);
                    ``(B) issued or made by a postsecondary education 
                lender and is--
                            ``(i) extended to a borrower with the 
                        expectation that the amounts extended will be 
                        used in whole or in part to pay postsecondary 
                        education expenses; or
                            ``(ii) extended for the purpose of 
                        refinancing or consolidating 1 or more loans 
                        described in subparagraph (A); or
                    ``(C) a private education loan (as defined in 
                section 140(a)).
            ``(11) Student loan servicer.--The term `student loan 
        servicer'--
                    ``(A) means a person who performs student loan 
                servicing;
                    ``(B) includes a person performing student loan 
                servicing for a postsecondary education loan on behalf 
                of an institution of higher education or the Secretary 
                of Education under a contract or other agreement;
                    ``(C) does not include the Secretary of Education 
                to the extent the Secretary directly performs student 
                loan servicing for a postsecondary education loan; and
                    ``(D) does not include an institution of higher 
                education, to the extent that the institution directly 
                performs student loan servicing for a Federal Perkins 
                Loan made by the institution.
            ``(12) Student loan servicing.--The term `student loan 
        servicing' means, with respect to a postsecondary education 
        loan, any of the following activities:
                    ``(A) Receiving any scheduled periodic payments, or 
                notification of such payments, from a borrower under a 
                postsecondary education loan.
                    ``(B) Applying payments described in subparagraph 
                (A) to an account of the borrower pursuant to the terms 
                of the postsecondary education loan or of the contract 
                governing the servicing of the postsecondary education 
                loan.
                    ``(C) During a period in which no payment is 
                required on the postsecondary education loan--
                            ``(i) maintaining account records for the 
                        loan; and
                            ``(ii) communicating with the borrower on 
                        behalf of the loan holder or, with respect to a 
                        Federal Direct Loan or Federal Perkins Loan, 
                        the Secretary of Education or the institution 
                        of higher education that made the loan, 
                        respectively.
                    ``(D) Interacting with a borrower to facilitate the 
                activities described in subparagraphs (A), (B), and 
                (C), including activities to help prevent default by 
                the borrower of the obligations arising from the 
                postsecondary education loan.
            ``(13) Transfer of servicing.--The term `transfer of 
        servicing' means the assignment, sale, or transfer of any 
        student loan servicing of a postsecondary education loan from a 
        transferor servicer to a transferee servicer.
            ``(14) Transferee servicer.--The term `transferee servicer' 
        means the student loan servicer to whom any student loan 
        servicing of a postsecondary education loan is assigned, sold, 
        or transferred.
            ``(15) Transferor servicer.--The term `transferor servicer' 
        means the student loan servicer who assigns, sells, or 
        transfers any student loan servicing of a postsecondary 
        education loan to another person.''.
    (b) Table of Contents Amendment.--The table of contents for chapter 
2 of title I of the Truth in Lending Act is amended by inserting after 
the item relating to section 140A the following new item:

``140B. Transfer of servicing of postsecondary education loans.''.

SEC. 3. AMENDMENTS TO THE HIGHER EDUCATION ACT OF 1965.

    The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is 
amended--
            (1) in section 487(a) (20 U.S.C. 1094(a)), by adding at the 
        end the following:
            ``(30) The institution will--
                    ``(A) comply with the disclosure requirements for 
                postsecondary education lenders under section 140B(a) 
                of the Truth in Lending Act; and
                    ``(B) ensure that each third party servicer with 
                which the institution has entered into a contract 
                complies with the applicable requirements for student 
                loan servicers under section 140B of such Act.''; and
            (2) in section 463A(b) (20 U.S.C. 1087cc-1(b))--
                    (A) by striking ``and'' at the end of paragraph 
                (8);
                    (B) by striking the period at the end of paragraph 
                (9) and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(10) the disclosures for postsecondary education lenders 
        and student loan services under section 140B of the Truth in 
        Lending Act.''.
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