[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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