S.Amdt. 2121

SA 2121. Mr. MENENDEZ submitted an amendment intended to be proposed
by him 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 appropriate place, insert the following:

SEC. ___. STUDENT LOAN PROTECTIONS.

(a) Findings.--Congress finds the following:
(1) The Bureau of Consumer Financial Protection (referred
to in this subsection 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) ``Co-signers 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 co-signers 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 co-signer release to less than 1 percent of eligible
borrowers.
(b) Additional Student Loan Protections.--
(1) In general.--The Truth in Lending Act (15 U.S.C. 1601
et seq.) is amended--
(A) in section 128(e) (15 U.S.C. 1638(e))--
(i) by striking paragraph (10);
(ii) by redesignating paragraph (11) as paragraph (10); and
(iii) by adding at the end the following:
``(11) Discharge of private education loans in the event of
death or disability of a borrower.--Each private education
loan shall include terms that provide that any liability to
repay the loan, including the liability of any co-signer (as
defined in section 140(a)) with respect to the loan, shall be
cancelled--
``(A) upon the death of the borrower;
``(B) if the borrower becomes permanently and totally
disabled, as determined under section 437(a)(1) of the Higher
Education Act of 1965 (20 U.S.C. 1087(a)(1)) and the
regulations promulgated by the Secretary of Education under
that section; or
``(C) if, under section 437(a)(2) of the Higher Education
Act of 1965 (20 U.S.C. 1087(a)(2)), the Secretary of Veterans
Affairs determines that the borrower is unemployable due to a
service-connected condition.
``(12) Definitions.--For purposes of this subsection, the
terms `covered educational institution', `private educational
lender', and `private education loan' have the same meanings
as in section 140.''; and
(B) in section 140 (15 U.S.C. 1650), by adding at the end
the following:
``(g) Additional Protections Relating to Borrower or Co-
Signer of a Private Education Loan.--
``(1) Clear and conspicuous description of obligation of
borrower and co-signer.--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 co-signer with respect to the
loan, including the effect that the death, disability, or
inability to engage in any substantial gainful activity of
the borrower (as provided in the terms required under section
128(e)(11)) or any co-signer 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 co-signer for the
loan.
``(2) Prohibition on automatic default with respect to a
performing loan.--
``(A) Death, disability, or bankruptcy of co-signer.--If a
private education loan includes a co-signer, 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 co-signer; or
``(ii) the bankruptcy of the co-signer.
``(B) Bankruptcy of borrower.--If a private education loan
includes a co-signer, 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 co-signer) against the
co-signer based on the bankruptcy of the borrower.
``(3) Co-signer release.--
``(A) Requirements for automatic release of co-signer.--
``(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 co-signer from the obligations of the co-signer
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 co-
signer of the private education loan than the criteria
established under clause (i).
``(B) Disclosure of criteria for co-signer release.--A
private educational lender shall--
``(i) include in the promissory note of a private education
loan the criteria under which a co-signer may be released
from the obligation of the co-signer under a private
education loan under this paragraph; and
``(ii) disclose to the borrower and any co-signer at the
time the private education loan is consummated, clearly and
conspicuously, the criteria under which a co-signer may be
released from the obligation of the co-signer under a private
education loan.
``(C) Modifications to criteria.--If a private education
loan has a co-signer, the private educational lender with
respect to, or servicer of, the private education loan, as
applicable, may not modify the criteria under which the co-
signer may be released from the obligation of the co-signer
under the private education loan without the consent of the
borrower and the co-signer 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 co-signers for the private education loan if a co-signer
is released from the obligations of the co-signer under the
private education loan under this paragraph.
``(E) Modification of evaluation of creditworthiness,
credit standing, or credit

[[Page S1488]]

capacity.--In determining whether the criteria for a co-
signer 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 co-signer
of the private education loan using a standard that would be
more adverse to the borrower or co-signer, as applicable,
than the standard the private educational lender used to
evaluate the creditworthiness, credit standing, or credit
capacity of the borrower or co-signer on the date on which
the private education loan was consummated.
``(4) 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.
``(5) Counseling.--In the case of any private educational
lender that extends a private education loan, the lender
shall ensure that the borrower, and any co-signer, receives
comprehensive information on the terms and conditions of the
loan and of the responsibilities the borrower has with
respect to the loan, including--
``(A) the information required under subparagraphs (H),
(I), and (K) of section 485(l)(2) of the Higher Education Act
of 1965 (20 U.S.C. 1092(l)(2)); and
``(B) the terms required under section 128(e)(11).
``(6) Model form.--The Bureau shall publish a model form
under section 105 for describing the obligation of a co-
signer for the purposes of paragraph (1).
``(7) 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 co-signer,
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.''.
(2) Definitions.--Section 140(a) of the Truth in Lending
Act (15 U.S.C. 1650(a)) is amended--
(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 `co-signer'--
``(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;
``(B) includes any person the signature of which is
requested as a 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;''.
(3) Technical and conforming amendment.--Section
108(f)(5)(B)(ii) of the Internal Revenue Code of 1986 is
amended by striking ``section 140(7) of the Consumer Credit
Protection Act (15 U.S.C. 1650(7)))'' and inserting ``section
140(a)(8) of the Truth in Lending Act (15 U.S.C.
1650(a)(8)))''.
(4) 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 added by paragraph (1)(B).
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