S.Amdt. 2068

SA 2068. Ms. WARREN submitted an amendment intended to be proposed by
her to the bill S. 2155, to promote economic growth, provide tailored
regulatory relief, and enhance consumer protections, and for other
purposes; which was ordered to lie on the table; as follows:

At the end of title III, add the following:

SEC. 308. IMPROVED CONSUMER PROTECTIONS FOR PRIVATE EDUCATION
LOANS.

(a) In General.--Section 128(e) of the Truth in Lending Act
(15 U.S.C. 1638(e)) is amended by adding at the end the
following:
``(12) Discharge of private education loans in the event of
death or disability of the borrower.--Each private education
loan shall include terms that provide that the liability to
repay the loan shall be cancelled--
``(A) upon the death of the borrower;
``(B) if the borrower becomes permanently and totally
disabled, as determined under paragraph (1) or (3) of section
437(a) of the Higher Education Act of 1965 (20 U.S.C.
1087(a)) and the regulations promulgated by the Secretary of
Education under that section; and
``(C) if the Secretary of Veterans Affairs or the Secretary
of Defense determines that the borrower is unemployable due
to a service-connected condition or disability, in accordance
with the requirements of section 437(a)(2) of that Act and
the regulations promulgated by the Secretary of Education
under that section.
``(13) Transfer of servicing.--
``(A) Disclosure to applicant relating to transfer of
servicing.--A private education lender shall disclose to each
person who applies for a private education loan, at

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the time of application for the private education loan,
whether there may be a transfer of servicing of the private
education loan at any time during which the private education
loan is outstanding.
``(B) Notice by transferor servicer at time of transfer of
servicing.--
``(i) Notice requirement.--A transferor servicer shall
notify the borrower under a private education loan, in
writing, of any transfer of student loan servicing for the
private education loan (with respect to which such notice is
made).
``(ii) Time of notice.--

``(I) In general.--Except as provided under subclause (II),
the notice required under clause (i) shall be made to the
borrower not less than 15 days before the effective date of
transfer of the student loan servicing of the private
education loan.
``(II) Exception for certain proceedings.--The notice
required under clause (i) shall be made to the borrower not
more than 30 days after the effective date of transfer of the
student loan servicing of the borrower's private education
loan if the transfer of student loan servicing is preceded
by--

``(aa) termination of the contract for student loan
servicing of the private education loan for cause;
``(bb) commencement of bankruptcy proceedings of the
transferor servicer; or
``(cc) any other situation in which the Bureau determines
that such exception is warranted.
``(C) Contents of notice.--The notice required under
subparagraph (B) shall--
``(i) be made in writing and, if the transferor servicer
has an email address for the borrower, by email; and
``(ii) include--

``(I) the effective date of the transfer;
``(II) the name, address, website, and toll-free or
collect-call telephone number of the transferee servicer;
``(III) a toll-free or collect-call telephone number for an
individual employed by the transferor servicer, or the office
or department of, the transferor servicer that can be
contacted by the borrower to answer inquiries relating to the
transfer of servicing;
``(IV) the name and toll-free or collect-call telephone
number for an individual employed by the transferee servicer,
or the office or department of, the transferee servicer that
can be contacted by the borrower to answer inquiries relating
to the transfer of servicing;
``(V) the date on which the transferor servicer will cease
to accept payments relating to the borrower's private
education loan and the date on which the transferee servicer
will begin to accept such payments;
``(VI) a statement that the transfer of student loan
servicing of the private education loan does not affect any
term or condition of the private education loan other than
terms directly related to the student loan servicing of the
private education loan;
``(VII) a statement disclosing--

``(aa) whether borrower authorization for recurring
electronic funds transfers will be transferred to the
transferee servicer; and
``(bb) if any such recurring electronic funds transfers
cannot be transferred, information as to how the borrower may
establish new recurring electronic funds transfers in
connection with transfer of servicing to the transferee
servicer;

``(VIII) a statement disclosing--

``(aa) the application of all payments and charges relating
to the borrower's private education loan as of the effective
date of the transfer, including--
``(AA) the date the last payment of the borrower was
received;
``(BB) the date the last late fee, arrearages, or other
charge was applied; and
``(CC) the amount of the last payment allocated to
principal, interest, and other charges;
``(bb) the status of the borrower's private education loan
as of the effective date of the transfer, including whether
the loan is in default;
``(cc) whether any application for an alternative repayment
arrangement submitted by the borrower is pending; and
``(dd) an itemization and explanation for all arrearages
claimed to be due as of the effective date of the transfer;

``(IX) a detailed description of any benefit, alternative
repayment arrangement, or other term or condition arranged
between the transferor servicer and the borrower that is not
included in the terms of the promissory note;
``(X) a detailed description of any item identified under
subclause (VIII) that will cease to apply upon transfer,
including an explanation; and
``(XI) information on how to file a complaint with the
Bureau.

``(D) Notice by transferee servicer at time of transfer of
servicing.--
``(i) Notice requirement.--A transferee servicer shall
notify the borrower under a private education loan, in
writing, of any transfer of servicing of the private
education loan.
``(ii) Time of notice.--

``(I) In general.--Except as provided in subclause (II),
the notice required under clause (i) shall be made to the
borrower not more than 15 days after the effective date of
transfer of the student loan servicing of the borrower's
private education loan.
``(II) Exception for certain proceedings.--The notice
required under clause (i) shall be made to the borrower not
more than 30 days after the effective date of transfer of the
student loan servicing of the student loan servicing of
borrower's private education loan if the transfer of
servicing is preceded by--

``(aa) termination of the contract for student loan
servicing the private education loan for cause;
``(bb) commencement of bankruptcy proceedings of the
transferor servicer; or
``(cc) any other situation in which the Bureau determines
that such exception is warranted.
``(E) Method of notification.--The notification required
under this subsection shall be provided in writing.
``(F) Treatment of loan payments during transfer period.--
``(i) In general.--During the 60-day period beginning on
the effective date of transfer relating to a borrower's
private education loan, a late fee may not be imposed on the
borrower with respect to any payment on the private education
loan, and no such payment may be treated as late for any
other purposes, if the payment is received by the transferor
servicer (rather than the transferee servicer who should
properly receive payment) before the due date applicable to
such payment.
``(ii) Notice.--To the maximum extent practicable, a
transferor servicer shall notify a borrower, both in writing
and by telephone, regarding any payment received by the
transferor servicer (rather than the transferee servicer who
should properly receive payment).
``(G) Electronic fund transfer authority.--A transferee
servicer shall make available to a borrower whose student
loan servicing is transferred to the transferee servicer a
simple, online process through which the borrower may
transfer to the transferee servicer any existing authority
for an electronic fund transfer that the borrower had
provided to the transferor servicer.
``(14) Payments and fees.--
``(A) Prohibition on recommending default.--A loan holder
or student loan servicer may not recommend or encourage
default or delinquency on an existing private education loan
prior to and in connection with the process of qualifying for
or enrolling in an alternative repayment arrangement,
including the origination of a new private education loan
that refinances all or any portion of such existing loan or
debt.
``(B) Late fees.--
``(i) In general.--A late fee may not be charged to a
borrower under a private education loan under any of the
following circumstances, either individually or in
combination:

``(I) On a per-loan basis when a borrower has multiple
private education loans in a billing group.
``(II) In an amount greater than 4 percent of the amount of
the payment past due.
``(III) Before the end of the 15-day period beginning on
the date the payment is due.
``(IV) More than once with respect to a single late
payment.
``(V) The borrower fails to make a singular, non successive
regularly-scheduled payment on the private education loan.

``(ii) Coordination with subsequent late fees.--No late fee
may be charged to a borrower under a private education loan
relating to an insufficient payment if the payment is made on
or before the due date of the payment, or within any
applicable grace period for the payment, if the insufficiency
is attributable only to a late fee relating to an earlier
payment, and the payment is otherwise a full payment for the
applicable period.
``(15)  Modification and deferral fees prohibited.--A loan
holder or student loan servicer may not charge a borrower any
fee to modify, renew, extend, or amend a private education
loan, or to defer any payment due under the terms of a
private education loan.''.
(b) Prohibition of Acceleration of Payments on Private
Education Loans.--
(1) In general.--Except as provided in paragraph (2), a
private education loan (as defined in section 140(a) of the
Truth in Lending Act (15 U.S.C. 1650(a)) executed after the
date of enactment of this Act may not include a provision
that permits the loan holder or student loan servicer to
accelerate, in whole or in part, payments on the private
education loan.
(2) Acceleration caused by a payment default.--A private
education loan may include a provision that permits
acceleration of the loan in cases of payment default.
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