[Congressional Record Volume 165, Number 121 (Thursday, July 18, 2019)]
[Senate]
[Pages S4952-S4953]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DURBIN (for himself, Mr. Reed, Mr. Brown, Mr. Cardin, Ms. 
        Baldwin, and Ms. Smith):
  S. 2184. A bill to amend the Truth in Lending Act and the Higher 
Education Act of 1965 to require certain creditors to obtain 
certifications from institutions of higher education, and for other 
purposes; to the Committee on Banking, Housing, and Urban Affairs.
  Mr. DURBIN. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2184

       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 ``Know Before You Owe Private 
     Education Loan Act of 2019''.

     SEC. 2. AMENDMENTS TO THE TRUTH IN LENDING ACT.

       (a) In General.--Section 128(e) of the Truth in Lending Act 
     (15 U.S.C. 1638(e)) is amended--
       (1) by striking paragraph (3) and inserting the following:
       ``(3) Institutional certification required.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     before a creditor may issue any funds with respect to an 
     extension of credit described in this subsection, the 
     creditor shall obtain from the relevant institution of higher 
     education where such loan is to be used for a student, such 
     institution's certification of--
       ``(i) the enrollment status of the student;
       ``(ii) the student's cost of attendance at the institution 
     as determined by the institution under part F of title IV of 
     the Higher Education Act of 1965; and
       ``(iii) the difference between--

       ``(I) such cost of attendance; and
       ``(II) the student's estimated financial assistance, 
     including such assistance received under title IV of the 
     Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) and 
     other financial assistance known to the institution, as 
     applicable.

       ``(B) Exception.--Notwithstanding subparagraph (A), a 
     creditor may issue funds with respect to an extension of 
     credit described in this subsection without obtaining from 
     the relevant institution of higher education such 
     institution's certification if such institution fails to 
     provide within 15 business days of the creditor's request for 
     such certification--
       ``(i) notification of the institution's refusal to certify 
     the request; or
       ``(ii) notification that the institution has received the 
     request for certification and will need additional time to 
     comply with the certification request.
       ``(C) Loans disbursed without certification.--If a creditor 
     issues funds without obtaining a certification, as described 
     in subparagraph (B), such creditor shall report the issuance 
     of such funds in a manner determined by the Director of the 
     Consumer Financial Protection Bureau.'';
       (2) by redesignating paragraphs (9), (10), and (11) as 
     paragraphs (10), (11), and (12), respectively; and
       (3) by inserting after paragraph (8) the following:
       ``(9) Provision of information.--
       ``(A) Provision of information to students.--
       ``(i) Loan statement.--A creditor that issues any funds 
     with respect to an extension of credit described in this 
     subsection shall send loan statements, where such loan is to 
     be used for a student, to borrowers of such funds not less 
     than once every 3 months during the time that such student is 
     enrolled at an institution of higher education.
       ``(ii) Contents of loan statement.--Each statement 
     described in clause (i) shall--

       ``(I) report the borrower's total remaining debt to the 
     creditor, including accrued but unpaid interest and 
     capitalized interest;
       ``(II) report any debt increases since the last statement; 
     and
       ``(III) list the current interest rate for each loan.

       ``(B) Notification of loans disbursed without 
     certification.--On or before the date a creditor issues any 
     funds with respect to an extension of credit described in 
     this subsection, the creditor shall notify the relevant 
     institution of higher education, in writing, of the amount of 
     the extension of credit and the student on whose behalf 
     credit is extended. The form of such written notification 
     shall be subject to the regulations of the Bureau.
       ``(C) Annual report.--A creditor that issues funds with 
     respect to an extension of credit described in this 
     subsection shall prepare and submit an annual report to the 
     Bureau containing the required information about private 
     student loans to be determined by the Director of the Bureau, 
     in consultation with the Secretary of Education.''.
       (b) Definition of Private Education Loan.--Section 
     140(a)(8)(A) of the Truth in Lending Act (15 U.S.C. 
     1650(a)(8)(A)) is amended--
       (1) by redesignating clause (ii) as clause (iii);
       (2) in clause (i), by striking ``and'' after the semicolon; 
     and
       (3) by adding after clause (i) the following:
       ``(ii) is not made, insured, or guaranteed under title VII 
     or title VIII of the Public

[[Page S4953]]

     Health Service Act (42 U.S.C. 292 et seq. and 296 et seq.); 
     and''.
       (c) Regulations.--Not later than 365 days after the date of 
     enactment of this Act, the Director of the Consumer Financial 
     Protection Bureau shall issue regulations in final form to 
     implement paragraphs (3) and (9) of section 128(e) of the 
     Truth in Lending Act (15 U.S.C. 1638(e)), as amended by 
     subsection (a). Such regulations shall become effective not 
     later than 6 months after their date of issuance.

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

       (a) Amendment to the Higher Education Act of 1965.--Section 
     487(a) of the Higher Education Act of 1965 (20 U.S.C. 
     1094(a)) is amended by striking paragraph (28) and inserting 
     the following:
       ``(28)(A) Upon the request of a private educational lender, 
     acting in connection with an application initiated by a 
     borrower for a private education loan in accordance with 
     section 128(e)(3) of the Truth in Lending Act, the 
     institution shall within 15 days of receipt of the request--
       ``(i) provide certification to such private educational 
     lender--
       ``(I) that the student who initiated the application for 
     the private education loan, or on whose behalf the 
     application was initiated, is enrolled or is scheduled to 
     enroll at the institution;
       ``(II) of such student's cost of attendance at the 
     institution as determined under part F of this title; and
       ``(III) of the difference between--

       ``(aa) the cost of attendance at the institution; and
       ``(bb) the student's estimated financial assistance 
     received under this title and other assistance known to the 
     institution, as applicable;

       ``(ii) notify the creditor that the institution has 
     received the request for certification and will need 
     additional time to comply with the certification request; or
       ``(iii) provide notice to the private educational lender of 
     the institution's refusal to certify the private education 
     loan pursuant to subparagraph (D).
       ``(B) With respect to a certification request described in 
     subparagraph (A), and prior to providing such certification 
     under subparagraph (A)(i) or providing notice of the refusal 
     to provide certification under subparagraph (A)(iii), the 
     institution shall--
       ``(i) determine whether the student who initiated the 
     application for the private education loan, or on whose 
     behalf the application was initiated, has applied for and 
     exhausted the Federal financial assistance available to such 
     student under this title and inform the student accordingly; 
     and
       ``(ii) provide the borrower whose loan application has 
     prompted the certification request by a private educational 
     lender, as described in subparagraph (A)(i), with the 
     following information and disclosures:
       ``(I) The amount of additional Federal student assistance 
     for which the borrower is eligible and the advantages of 
     Federal loans under this title, including disclosure of the 
     fixed interest rates, deferments, flexible repayment options, 
     loan forgiveness programs, and additional protections, and 
     the higher student loan limits for dependent students whose 
     parents are not eligible for a Federal Direct PLUS Loan.
       ``(II) The borrower's ability to select a private 
     educational lender of the borrower's choice.
       ``(III) The impact of a proposed private education loan on 
     the borrower's potential eligibility for other financial 
     assistance, including Federal financial assistance under this 
     title.
       ``(IV) The borrower's right to accept or reject a private 
     education loan within the 30-day period following a private 
     educational lender's approval of a borrower's application and 
     about a borrower's 3-day right to cancel period.
       ``(C) For purposes of this paragraph, the terms `private 
     educational lender' and `private education loan' have the 
     meanings given such terms in section 140 of the Truth in 
     Lending Act (15 U.S.C. 1650).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the effective date of the regulations 
     described in section 2(c).
       (c) Preferred Lender Arrangement.--Section 151(8)(A)(ii) of 
     the Higher Education Act of 1965 (20 U.S.C. 1019(8)(A)(ii)) 
     is amended by inserting ``certifying,'' after ``promoting,''.

     SEC. 4. REPORT.

       (a) In General.--Not later than 24 months after the 
     issuance of regulations under section 2(c), the Director of 
     the Consumer Financial Protection Bureau and the Secretary of 
     Education shall jointly submit to Congress a report on the 
     compliance of--
       (1) private educational lenders with section 128(e)(3) of 
     the Truth in Lending Act (15 U.S.C. 1638(e)(3)), as amended 
     by section 2; and
       (2) institutions of higher education with section 
     487(a)(28) of the Higher Education Act of 1965 (20 U.S.C. 
     1094(a)(28)), as amended by section 3.
       (b) Contents.--The contents of the report described in 
     subsection (a) shall include information about the degree to 
     which specific institutions utilize certifications in 
     effectively--
       (1) encouraging the exhaustion of Federal student loan 
     eligibility by borrowers prior to taking on private education 
     loan debt; and
       (2) lowering private education loan debt by borrowers.
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