Section 1 Short title
This Act may be cited as the “Bereaved Borrowers’ Bill of Rights Act of 2014”.
Bereaved Borrowers’ Bill of Rights Act of 2014
A BILL
To amend the Truth in Lending Act to establish requirements for releasing a cosigner from obligations of a private education loan, for the treatment of the loan upon the death or bankruptcy of a cosigner of the loan, and for other purposes.
Sec. 2 Requirements for private educational lenders
Section 140 of such Act is further amended by adding at the end the following new subsection:
“(g) Requirements regarding cosigners for a private education loan
“(1) Cosigner release requirements—If a private education loan has a cosigner who is jointly liable for such loan, a private educational lender shall include a process for releasing the cosigner from any obligations on the loan and in such process the lender—
“(A) shall make the criteria for obtaining the release clear, transparent, and easily accessible via the website of the private educational lender;
“(B) shall notify the borrower if the borrower is eligible to release a cosigner;
“(C) shall, if denying a request to release a cosigner, provide an explanation for the denial and offer the borrower an opportunity to correct the request; and
“(D) may not change the terms of the release to impose additional duties on the borrower or cosigner over the duration of the private education loan.
“(2) Additional requirements—Notwithstanding any provision in a private education loan agreement that contains a process for releasing a cosigner from obligations on the loan, a private educational lender shall, upon receiving notification of the death or bankruptcy of a cosigner—
“(A) notify the borrower about the borrower’s rights under the private education loan agreement regarding the release of the cosigner; and
“(B) if the borrower continues to make on-time payments (in the amount determined prior to the death or bankruptcy of the cosigner) on the private education loan, provide a period of time of not less than 90 days for the borrower to follow the process for release of the cosigner before deeming the borrower to be in default, changing the terms of the loan, accelerating the repayment terms of the loan, or notifying consumer reporting agencies (as defined in section 603(f)) of a change in the status of the loan.
“(3) Requirements in case of death or bankruptcy of a cosigner—Notwithstanding any provision in a private education loan agreement, a private educational lender shall, upon receiving notification of the death or bankruptcy of a cosigner who is jointly liable for the private education loan—
“(A) notify the borrower about the borrower’s rights under the private education loan agreement regarding identifying a new cosigner or refinancing the loan; and
“(B) if the borrower continues to make on-time payments (in the amount determined prior to the death or bankruptcy of the cosigner) on the private education loan, provide a period of time of not less than 90 days for a borrower to identify a new cosigner or refinance the loan before deeming the borrower to be in default, changing the terms of the loan, accelerating the repayment terms of the loan, or notifying consumer reporting agencies (as defined in section 603(f)) of a change in the status of the loan.”
Sec. 3 Prohibitions for consumer reporting agencies and furnishers of information to consumer reporting agencies related to private education loans
Prohibition for consumer reporting agencies— Subsection (a) of section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c(a)) is amended by adding at the end the following new paragraph:
“(7) Default on a private education loan (as defined in section 140(a)) resulting from accelerated repayment terms of the loan after the death or bankruptcy of a cosigner who is jointly liable for the loan.”
Prohibition for furnishers of information to consumer reporting agencies— Paragraph (1) of section 623(a) of such Act is amended by adding the following new subparagraph:
“(E) Reporting information on private education loans—A private educational lender (as defined in section 140(a)) or the servicer of a private education loan (as defined in such section) shall not furnish any information relating to the loan to any consumer reporting agency if the consumer defaulted on the loan due to accelerated repayment terms of the loan after the death or bankruptcy of a cosigner who is jointly liable for the loan.”