[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3621 Introduced in House (IH)]
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116th CONGRESS
1st Session
H. R. 3621
To amend the Fair Credit Reporting Act to remove adverse information
for certain defaulted or delinquent private education loan borrowers
who demonstrate a history of loan repayment, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 5, 2019
Ms. Pressley introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Fair Credit Reporting Act to remove adverse information
for certain defaulted or delinquent private education loan borrowers
who demonstrate a history of loan repayment, 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 Borrower Credit Improvement
Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) The October 2014 report of the Consumer Financial
Protection Bureau titled ``Annual Report of the CFPB Student
Loan Ombudsman'' noted many private education loan borrowers,
who sought to negotiate a modified repayment plan when they
were experiencing a period of financial distress, were unable
to get assistance from their loan holders, which often
resulting in them defaulting on their loans. This pattern
resembles the difficulty that a significant number of mortgage
loan borrowers experienced when they sought to take responsible
steps to work with their mortgage loan servicer to avoid
foreclosure during the Great Recession.
(2) Although private student loan holders may allow a
borrower to postpone payments while enrolled in school full-
time, many limit this option to a certain time period, usually
48 to 66 months. This limited time period may not be sufficient
for those who need additional time to obtain their degree or
who want to continue their education by pursing a graduate or
professional degree. The Consumer Bureau found that borrowers
who were unable to make payments often defaulted or had their
accounts sent to collections before they were even able to
graduate.
SEC. 3. REMOVES ADVERSE INFORMATION FOR CERTAIN DEFAULTED OR DELINQUENT
PRIVATE EDUCATION LOAN BORROWERS WHO DEMONSTRATE A
HISTORY OF LOAN REPAYMENT.
(a) In General.--The Fair Credit Reporting Act (15 U.S.C. 1681 et
seq.) is amended by inserting after section 605B the following new
section:
``Sec. 605C. Credit rehabilitation for distressed private education
loan borrowers who demonstrate a history of loan
repayment
``(a) In General.--A consumer reporting agency may not furnish any
consumer report containing any adverse item of information relating to
a delinquent or defaulted private education loan of a borrower if the
borrower has rehabilitated the borrower's credit with respect to such
loan by making 9 on-time monthly payments (in accordance with the terms
and conditions of the borrower's original loan agreement or any other
repayment agreement that antedates the original agreement) during a
period of 10 consecutive months on such loan after the date on which
the delinquency or default occurred.
``(b) Interruption of 10-Month Period for Certain Consumers Facing
Unusual Extenuating Life Events.--
``(1) Permissible interruption of the 10-month period.--A
borrower may stop making consecutive monthly payments and be
granted a grace period after which the 10-month period
described in subsection (a) shall resume. Such grace period
shall be provided under the following circumstances:
``(A) With respect to a borrower who is a member of
the Armed Forces entitled to incentive pay for the
performance of hazardous duty under section 301 of
title 37, United States Code, hazardous duty pay under
section 351 of such title, or other assignment or
special duty pay under section 352 of such title, the
grace period shall begin on the date on which the
borrower begins such assignment or duty and end on the
date that is 6 months after the completion of such
assignment or duty.
``(B) With respect to a borrower who resides in an
area affected by a major disaster or emergency declared
under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5121 et seq.), the
grace period shall begin on the date on which the major
disaster or emergency was declared and end on the date
that is 3 months after such date.
``(2) Other circumstances.--
``(A) In general.--The Bureau may allow a borrower
demonstrating hardship to stop making consecutive
monthly payments and be granted a grace period after
which the 10-month period described in subsection (a)
shall resume.
``(B) Borrower demonstrating hardship defined.--In
this paragraph, the term `borrower demonstrating
hardship' means a borrower or a class of borrowers who,
as determined by the Bureau, is facing or has
experienced unusual extenuating life circumstances or
events that result in severe financial or personal
barriers such that the borrower or class or borrowers
does not have the capacity to comply with the
requirements of subsection (a).
``(c) Procedures.--The Bureau shall establish procedures to
implement the credit rehabilitation described in this section,
including--
``(1) the manner, content, and form for requesting credit
rehabilitation;
``(2) the method for validating that the borrower is
satisfying the requirements of subsection (a);
``(3) the manner, content, and form for notifying the
private educational loan holder of--
``(A) the borrower's participation in credit
rehabilitation under subsection (a);
``(B) the requirements of subsection (d); and
``(C) the restrictions of subsection (f);
``(4) the manner, content, and form for notifying a
consumer reporting agency of--
``(A) the borrower's participation in credit
rehabilitation under subsection (a); and
``(B) the requirements of subsection (d);
``(5) the method for verifying whether a borrower qualifies
for the grace period described in subsection (b);
``(6) the manner, content, and form of notifying a consumer
reporting agency and private educational loan holder that a
borrower was granted a grace period; and
``(7) the method for a borrower to demonstrate that the
borrower has successfully satisfied the requirements under
subsection (a) and for notifying a consumer reporting agency
and private educational loan holder.
``(d) Standardized Reporting Codes.--A consumer reporting agency
shall develop standardized reporting codes for use by any private
educational loan holder to identify and report a borrower's status of
making and completing 9 on-time monthly payments during a period of 10
consecutive months on a delinquent or defaulted private education loan,
including codes specifying the grace period described in subsection (b)
and any agreement to modify monthly payments. Such codes shall not
appear on any report provided to a third party, and shall be removed
from the consumer's credit report upon the consumer's completion of the
rehabilitation period under this section.
``(e) Eliminating Barriers to Credit Rehabilitation.--A consumer
report in which a private educational loan holder furnishes the
standardized reporting codes described in subsection (d) to a consumer
reporting agency, or in which a consumer reporting agency includes such
codes, shall be deemed to comply with the requirements for accuracy and
completeness required under sections 623(a)(1) and 630.
``(f) Prohibition on Civil Actions for Consumers Pursuing
Rehabilitation.--A private educational loan holder may not commence or
proceed with any civil action against a borrower with respect to a
delinquent or defaulted loan during the period of rehabilitation if the
loan holder has been notified--
``(1) under subsection (c)(3) of a borrower's intent to
participate in rehabilitation;
``(2) under subsection (c)(6) that a borrower was granted
the grace period; or
``(3) under subsection (c)(7) that the borrower has
successfully satisfied the requirements under subsection (a).
``(g) Rehabilitation Does Not Affect Statute of Limitations for
Prior Debt.--Payments by a borrower on a private education loan that
are made during and after a period of rehabilitation under this section
shall have no effect on the statute of limitations with respect to
payments that were due on such private education loan before the
beginning of the period of rehabilitation.
``(h) Requirement for Payment Plans.--If a private educational loan
holder enters into a payment plan with a borrower on a private
education loan during a period of rehabilitation, such payment plan
shall be reasonable and affordable, as determined by the Bureau.
``(i) Rules of Construction.--
``(1) Application to subsequent default or delinquency.--A
borrower who satisfies the requirements under subsection (a)
shall be eligible for additional credit rehabilitation
described in subsection (a) with respect to any subsequent
default or delinquency of the borrower on the rehabilitated
private education loan.
``(2) Interruption of the consecutive payment period
requirement.--The grace period described in subsection
(b)(1)(A) shall not apply if any regulation promulgated under
section 987 of title 10, United States Code (commonly known as
the Military Lending Act), or the Servicemembers Civil Relief
Act (50 U.S.C. App. 501 et seq.) allows for a grace period or
other interruption of the 10-month period described in
subsection (a) and such grace period or other interruption is
longer than the period described in subsection (b)(1)(A) or
otherwise provides greater protection or benefit to the
borrower who is a member of the Armed Forces.''.
(b) Conforming Amendment.--Section 623(a)(1) of the Fair Credit
Reporting Act (15 U.S.C. 1681s-2(a)(1)) is amended by striking
subparagraph (E).
(c) Table of Contents Amendment.--The table of contents of the Fair
Credit Reporting Act is amended by inserting after the item relating to
section 605B the following new item:
``605C. Credit rehabilitation for distressed private education loan
borrowers who demonstrate a history of loan
repayment.''.
SEC. 4. PRIVATE EDUCATION LOAN DEFINITIONS.
Section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a) is
amended by adding at the end the following new subsection:
``(bb) Private Education Loan Definitions.--The terms `private
education loan' and `private educational lender' have the meanings
given such terms, respectively, in section 140(a) of the Truth in
Lending Act.''.
SEC. 5. GENERAL BUREAU RULEMAKING.
Except as otherwise provided, not later than the end of the 2-year
period beginning on the date of the enactment of this Act, the Bureau
of Consumer Financial Protection shall issue final rules to implement
the amendments made by this Act.
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