US Codex
Pub. L.
Notes

Title VI — Protections for Student Borrowers

115th Congress · Approved May 24, 2018 · 132 Stat. 1296

TITLE VI Protections for Student Borrowers

SEC. 601. Protections in the Event of Death or Bankruptcy.

(a)
In General.— Section 140 of the Truth in Lending Act (15 U.S.C. 1650) is amended—
(1)
in subsection (a)—
(A)
by redesignating paragraphs (1) through (8) as paragraphs (2) through (9), respectively; and
(B)
by inserting before paragraph (2), as so redesignated, the following:

“(1) the term ‘cosigner’—

“(A) means any individual who is liable for the obligation of another without compensation, regardless of how designated in the contract or instrument with respect to that obligation, other than an obligation under a private education loan extended to consolidate a consumer’s pre-existing private education loans;

“(B) includes any person the signature of which is requested as condition to grant credit or to forbear on collection; and

“(C) does not include a spouse of an individual described in subparagraph (A), the signature of whom is needed to perfect the security interest in a loan.”

; and

(2)
by adding at the end the following:

“(g) Additional Protections Relating to Borrower or Cosigner of a Private Education Loan.—

“(1) Prohibition on automatic default in case of death or bankruptcy of non-student obligor.—With respect to a private education loan involving a student obligor and 1 or more cosigners, the creditor shall not declare a default or accelerate the debt against the student obligor on the sole basis of a bankruptcy or death of a cosigner.

“(2) Cosigner release in case of death of borrower.—

“(A) Release of cosigner.—The holder of a private education loan, when notified of the death of a student obligor, shall release within a reasonable timeframe any cosigner from the obligations of the cosigner under the private education loan.

“(B) Notification of release.—A holder or servicer of a private education loan, as applicable, shall within a reasonable time-frame notify any cosigners for the private education loan if a cosigner is released from the obligations of the cosigner for the private education loan under this paragraph.

“(C) Designation of individual to act on behalf of the borrower.—Any lender that extends a private education loan shall provide the student obligor an option to designate an individual to have the legal authority to act on behalf of the student obligor with respect to the private education loan in the event of the death of the student obligor.”

(b)
Applicability.— The amendments made by subsection (a) shall only apply to private education loan agreements entered into on or after the date that is 180 days after the date of enactment of this Act.

SEC. 602. Rehabilitation of Private Education Loans.

(a)
In General.— Section 623(a)(1) of the Fair Credit Reporting Act (15 U.S.C. 1681s–2(a)(1)) is amended by adding at the end the following:

“(E) Rehabilitation of private education loans.—

“(i) In general.—Notwithstanding any other provision of this section, a consumer may request a financial institution to remove from a consumer report a reported default regarding a private education loan, and such information shall not be considered inaccurate, if—

“(I) the financial institution chooses to offer a loan rehabilitation program which includes, without limitation, a requirement of the consumer to make consecutive on-time monthly payments in a number that demonstrates, in the assessment of the financial institution offering the loan rehabilitation program, a renewed ability and willingness to repay the loan; and

“(II) the requirements of the loan rehabilitation program described in subclause (I) are successfully met.

“(ii) Banking agencies.—

“(I) In general.—If a financial institution is supervised by a Federal banking agency, the financial institution shall seek written approval concerning the terms and conditions of the loan rehabilitation program described in clause (i) from the appropriate Federal banking agency.

“(II) Feedback.—An appropriate Federal banking agency shall provide feedback to a financial institution within 120 days of a request for approval under subclause (I).

“(iii) Limitation.—

“(I) In general.—A consumer may obtain the benefits available under this subsection with respect to rehabilitating a loan only 1 time per loan.

“(II) Rule of construction.—Nothing in this subparagraph may be construed to require a financial institution to offer a loan rehabilitation program or to remove any reported default from a consumer report as a consideration of a loan rehabilitation program, except as described in clause (i).

“(iv) Definitions.—For purposes of this subparagraph—

“(I) the term ‘appropriate Federal banking agency’ has the meaning given the term in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and

“(II) the term ‘private education loan’ has the meaning given the term in section 140(a) of the Truth in Lending Act (15 U.S.C. 1650(a)).”

(b)
GAO Study.—
(1)
Study.— The Comptroller General of the United States shall conduct a study, in consultation with the appropriate Federal banking agencies, regarding—
(A)
the implementation of subparagraph (E) of section 623(a)(1) of the Fair Credit Reporting Act (15 U.S.C. 1681s–2(a)(1)) (referred to in this paragraph as “the provision”), as added by subsection (a);
(B)
the estimated operational, compliance, and reporting costs associated with the requirements of the provision;
(C)
the effects of the requirements of the provision on the accuracy of credit reporting;
(D)
the risks to safety and soundness, if any, created by the loan rehabilitation programs described in the provision; and
(E)
a review of the effectiveness and impact on the credit of participants in any loan rehabilitation programs described in the provision and whether such programs improved the ability of participants in the programs to access credit products.
(2)
Report.— Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to Congress a report that contains all findings and determinations made in conducting the study required under paragraph (1).

SEC. 603. Best Practices for Higher Education Financial Literacy.

Section 514(a) of the Financial Literacy and Education Improvement Act (20 U.S.C. 9703(a)) is amended by adding at the end the following:

“(3) Best practices for teaching financial literacy.—

“(A) In general.—After soliciting public comments and consulting with and receiving input from relevant parties, including a diverse set of institutions of higher education and other parties, the Commission shall, by not later than 1 year after the date of enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act, establish best practices for institutions of higher education regarding methods to—

“(i) teach financial literacy skills; and

“(ii) provide useful and necessary information to assist students at institutions of higher education when making financial decisions related to student borrowing.

“(B) Best practices.—The best practices described in subparagraph (A) shall include the following:

“(i) Methods to ensure that each student has a clear sense of the student’s total borrowing obligations, including monthly payments, and repayment options.

“(ii) The most effective ways to engage students in financial literacy education, including frequency and timing of communication with students.

“(iii) Information on how to target different student populations, including part-time students, first-time students, and other nontraditional students.

“(iv) Ways to clearly communicate the importance of graduating on a student’s ability to repay student loans.

“(C) Maintenance of best practices.—The Commission shall maintain and periodically update the best practices information required under this paragraph and make the best practices available to the public.

“(D) Rule of construction.—Nothing in this paragraph shall be construed to require an institution of higher education to adopt the best practices required under this paragraph.”