[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2405 Introduced in Senate (IS)]
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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 Pensions
_______________________________________________________________________
A BILL
To establish additional protections and disclosures for students and
cosigners with respect to student 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; FINDINGS.
(a) Short Title.--This Act may be cited as the ``Christopher Bryski
Student Loan Protection Act'' or ``Christopher's Law''.
(b) Findings.--Congress finds the following:
(1) The Bureau of Consumer Financial Protection (referred
to in this section as the ``CFPB'') Student Loan Ombudsman
stated the following:
(A) ``The CFPB received more than 7,700 private
student loan complaints and approximately 2,300 debt
collection complaints related to student loans between
September 1, 2016, and August 31, 2017.''.
(B) ``cosigners complain that information about
discharge or alternative arrangements in the case of
death of the primary borrower is not readily available
and that decisions are made on a case-by-case basis,
giving cosigners little understanding of how the
process works, or if they will be successful.''.
(C) ``The complaints and input received by the CFPB
resemble many of the same issues experienced by
mortgage borrowers, such as improper application of
payments, untimeliness in error resolution, and
inability to contact appropriate personnel in times of
hardship.''.
(D) ``The difference between Federal and private
student loans in periods of disability was not well-
understood.''.
(2) An estimated 2,500,000 individuals sustain a traumatic
brain injury each year and older adolescents between 15 and 19
years of age are more likely to sustain a traumatic brain
injury than individuals in other age groups.
(3) It has been estimated that the annual incidence of
spinal cord injury, not including those individuals who die at
the scene of an accident, is approximately 54 cases per
1,000,000 individuals in the United States, or approximately
17,000 new cases each year. These injuries can lead to
permanent disability or loss of movement and can prohibit the
victim from engaging in any substantial gainful activity.
(4) According to the CFPB, more than 90 percent of new
private student loans are co-signed.
(5) According to the CFPB, private student loan companies
provide cosigner release to less than 1 percent of eligible
borrowers.
SEC. 2. ADDITIONAL STUDENT LOAN PROTECTIONS.
(a) In General.--Section 140(g) of the Truth in Lending Act (15
U.S.C. 1650(g)) is amended to read as follows:
``(g) Additional Protections Relating to Borrower or Cosigner of a
Private Education Loan.--
``(1) Clear and conspicuous description of obligation of
borrower and cosigner.--In the case of any private educational
lender that provides a private education loan, the lender shall
clearly and conspicuously describe, in writing, the obligations
of a cosigner with respect to the loan, including the effect
that the death, disability, or inability to engage in any
substantial gainful activity of the borrower or any cosigner
would have on any such obligation, in language that the Bureau
determines would give a reasonable person a reasonable
understanding of the obligation being assumed by becoming a
cosigner for the loan.
``(2) Prohibition on automatic default with respect to a
performing loan.--
``(A) Death, disability, or bankruptcy of
cosigner.--If a private education loan includes a
cosigner, a private educational lender may not take any
adverse action (including declaring a default,
accelerating any loan obligation, increasing the
interest rate, or altering any obligations under the
private education loan in a way that is adverse to the
borrower) against the borrower based on--
``(i) the death, disability, or inability
to engage in any substantial gainful activity
of the cosigner; or
``(ii) the bankruptcy of the cosigner.
``(B) Bankruptcy of borrower.--If a private
education loan includes a cosigner, a private
educational lender may not take any adverse action
(including declaring a default, accelerating any loan
obligation, increasing the interest rate, or altering
any obligations under the private education loan in a
way that is adverse to any cosigner) against the
cosigner based on the bankruptcy of the borrower.
``(3) Borrower requirements regarding death or disability
of borrower.--In the event of the death, disability, or
inability to engage in any substantial gainful activity of a
borrower of a private education loan--
``(A) the borrower, the estate of the borrower, and
any cosigner of the private education loan shall not be
obligated to repay the outstanding principal and
interest on the loan; and
``(B) the private educational lender with respect
to, or the servicer of, the private education loan, as
applicable, shall, upon notification of the death,
disability, or inability to engage in any substantial
gainful activity, discharge the liability of the
borrower, estate of the borrower, and any cosigner of
the private education loan.
``(4) Cosigner release.--
``(A) Requirements for automatic release of
cosigner.--
``(i) Criteria established by the bureau.--
Not later than 180 days after the date of
enactment of this subsection, the Bureau shall
establish criteria, which, if met by the
borrower of a private education loan, shall
require the private educational lender with
respect to, or servicer of, the private
education loan, as applicable, to promptly
release any cosigner from the obligations of
the cosigner under the loan without requiring
any action on behalf of the borrower.
``(ii) Criteria established by lender.--A
private educational lender may establish
criteria for automatic release that are
different from the criteria described in clause
(i) if the criteria established by the lender
are not more restrictive with respect to the
borrower or any cosigner of the private
education loan than the criteria established
under clause (i).
``(B) Disclosure of criteria for cosigner
release.--A private educational lender shall--
``(i) include in the promissory note of a
private education loan the criteria under which
a cosigner may be released from the obligation
of the cosigner under a private education loan
under this paragraph; and
``(ii) disclose to the borrower and any
cosigner at the time the private education loan
is consummated, clearly and conspicuously, the
criteria under which a cosigner may be released
from the obligation of the cosigner under a
private education loan.
``(C) Modifications to criteria.--If a private
education loan has a cosigner, the private educational
lender with respect to, or servicer of, the private
education loan, as applicable, may not modify the
criteria under which the cosigner may be released from
the obligation of the cosigner under the private
education loan without the consent of the borrower and
the cosigner if the modification would be adverse to
the borrower.
``(D) Notification on release.--A private
educational lender with respect to, or servicer of, a
private education loan, as applicable, shall promptly
notify the borrower and any cosigners for the private
education loan if a cosigner is released from the
obligations of the cosigner under the private education
loan under this paragraph.
``(E) Modification of evaluation of
creditworthiness, credit standing, or credit
capacity.--In determining whether the criteria for a
cosigner release are met, a private educational lender
with respect to, or servicer of, a private education
loan, as applicable, may not evaluate the
creditworthiness, credit standing, or credit capacity
of the borrower or a cosigner of the private education
loan using a standard that would be more adverse to the
borrower or cosigner, as applicable, than the standard
the private educational lender used to evaluate the
creditworthiness, credit standing, or credit capacity
of the borrower or cosigner on the date on which the
private education loan was consummated.
``(5) Designation of individual to act on behalf of the
borrower.--In the case of any private educational lender that
extends a private education loan, the lender shall provide the
borrower an option to designate an individual to have the legal
authority to act on behalf of the borrower with respect to the
private education loan in the event of the death, disability,
or inability to engage in any substantial gainful activity of
the borrower.
``(6) Counseling.--In the case of any private educational
lender that extends a private education loan, the lender shall
ensure that the borrower, and any cosigner, receives
comprehensive information on the terms and conditions of the
loan and of the responsibilities the borrower has with respect
to the loan, including the information required under
subparagraphs (H), (I), (K), (L), (M), and (N) of section
485(l)(2) of the Higher Education Act of 1965 (20 U.S.C.
1092(l)(2)).
``(7) Model form.--The Bureau shall publish a model form
under section 105 for describing the obligation of a cosigner
for the purposes of paragraph (1).
``(8) Definition of death, disability, or inability to
engage in any substantial gainful activity.--For the purposes
of this subsection with respect to a borrower or cosigner, the
term `death, disability, or inability to engage in any
substantial gainful activity'--
``(A) means any condition described in section
437(a) of the Higher Education Act of 1965 (20 U.S.C.
1087(a)); and
``(B) shall be interpreted by the Bureau in such a
manner as to conform with the regulations prescribed by
the Secretary of Education under section 437(a) of the
Higher Education Act of 1965 (20 U.S.C. 1087(a)) to the
fullest extent practicable, including safeguards to
prevent fraud and abuse.''.
(b) Rulemaking.--Not later than 1 year after the date of enactment
of this Act, the Bureau of Consumer Financial Protection shall issue
regulations to carry out subsection (g) of section 140 of the Truth in
Lending Act (15 U.S.C. 1650), as amended by this section.
SEC. 3. FEDERAL STUDENT LOANS.
(a) Counseling Information.--Section 485(l)(2) of the Higher
Education Act of 1965 (20 U.S.C. 1092(l)(2)) is amended by adding at
the end the following:
``(L) Information regarding the conditions required
to discharge the loan due to the death, disability, or
inability to engage in any substantial gainful activity
of the borrower in accordance with section 437(a).
``(M) Any repayment, refinance, deferment,
forbearance, or forgiveness opportunities available to
the borrower or cosigner in the event of the death,
disability, or inability to engage in any substantial
gainful activity of the borrower or cosigner.
``(N) The effect that the death, disability, or
inability to engage in any substantial gainful activity
of the borrower would have on the obligations of the
borrower and any cosigner of the loan.''.
(b) Designation of Individual To Act on Behalf of the Borrower.--
Section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091) is
amended--
(1) in subsection (a), by striking paragraph (4) and
inserting the following:
``(4) file with the Secretary, as part of the original
financial aid application process, a certification, which need
not be notarized, but which--
``(A) shall include--
``(i) a statement of educational purpose
stating that the money attributable to such
grant, loan, or loan guarantee will be used
solely for expenses related to attendance or
continued attendance at such institution; and
``(ii) such student's social security
number; and
``(B) may include a designation by such student of
an individual who shall have the legal authority to act
on behalf of the student with respect to any loan to
the student under this title in the event of the
student's death, disability, or inability to engage in
any substantial gainful activity;''; and
(2) by adding at the end the following:
``(u) Option To Designate Individual To Act on Behalf of the
Borrower in Clear and Conspicuous Manner.--The option for a student to
make a designation described in subsection (a)(4)(B) shall be provided
in a clear and conspicuous manner to the student.''.
(c) Cancellation of Loans for Parent Borrowers in Case of
Disability of a Student.--Section 437(d) of the Higher Education Act of
1965 (20 U.S.C. 1087(d)) is amended by inserting ``becomes permanently
and totally disabled, or is unable to engage in any substantial gainful
activity, as determined for purposes of subsection (a)(1),'' after
``dies,''.
SEC. 4. RULE OF CONSTRUCTION.
Nothing in this Act, or any amendment made by this Act, may be
construed to adversely affect the eligibility of a student to receive
any grant, loan, or work assistance under part C or part G of title IV
of the Higher Education Act of 1965 (20 U.S.C. 1087-51 et seq. and 20
U.S.C. 1088 et seq.) based on a designation, or the lack of a
designation, under section 484(a)(4)(B) of that Act (20 U.S.C.
1091(a)(4)(B)), as added by section 3(b)(1).
SEC. 5. APPLICABILITY.
(a) Private Educational Loans.--Paragraphs (2), (3), and
subparagraphs (A), (C), (D) and (E) of section 140(g)(4) of the Truth
in Lending Act (15 U.S.C. 1650(g)), as amended by section 2 of this
Act, shall apply to any outstanding private educational loan received
by a borrower before, on, or after the date of enactment of this Act.
(b) Federal Loans.--The amendment made by section 3(c) of this Act
shall apply to any outstanding loan received by a parent before, on, or
after the date of enactment of this Act.
(c) Date of Onset.--The provisions described in subsections (a) and
(b) shall apply without regard to the date of the onset of any
disability or impairment, the date of death, or the date of bankruptcy
filing.
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