,i #aadth ,,congress #ast ,session ,h4 ,r4 #cidh ,,in ,,the ,,house ,,of ,,representatives ,november #e1 #bjae ,mr4 ,deutch introduced the following bill2 which was referred to the ,committee on ,financial ,services1 and in addition to the ,committee on ,education and the ,workforce1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to amend the ,truth in ,lending ,act to include requirements for the transfer of servicing of postsecondary education loans1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,student ,loan ,transfers ,disclosure ,act of #bjae4 #b4 ,improved consumer protections for student loan servicing 7a7 ,in general ,chapter #b of title ,i of the ,truth in ,lending ,act 7#ae ,u4,s4,c4 #afja et seq47 is amended by adding at the end the following new section3 #adj;,b4 ,transfer of servicing of postsecondary education loans 7a7 ,transfer of servicing 7#a7 ,disclosure required ,a postsecondary education lender shall disclose to each person who applies for a postsecondary education loan1 at the time of application for such loan1 whether there may be a transfer of servicing of such loan at any time during which a balance is due on such loan4 7#b7 ,no liability ,a postsecondary education lender shall not be liable to a borrower for failure to comply with paragraph 7#a7 if the application for a postsecondary education loan was made before the rules or regulations established under subsection 7f7 take effect4 7b7 ,notice by transferor servicer at time of transfer of servicing 7#a7 ,in general ,a transferor servicer shall notify the borrower under a postsecondary education loan of any transfer of student loan servicing for the postsecondary education loan4 ,such notice shall be made to the borrower-- 7,a7 not later than #ae days before the effective date of transfer of the student loan servicing2 or 7,b7 not more than #cj days after the effective date of transfer of the student loan servicing1 if the transfer of such servicing is preceded by-- 7i7 termination of the contract for such servicing for cause2 7ii7 commencement of bankruptcy proceedings of the transferor servicer2 or 7iii7 any other situation in which the ,bureau determines that such exception is warranted4 7#b7 ,contents of notice ,the notice required under paragraph 7#a7 shall be made in writing and1 if the transferor servicer has an email address for the borrower1 sent by email1 and shall include-- 7,a7 the effective date of the transfer2 7,b7 the name1 address1 website1 and toll-free or collect-call telephone number of the transferee servicer2 7,c7 a toll-free or collect-call telephone number for an individual employed by the transferor servicer1 or the office or department of1 the transferor servicer that the borrower may contact for inquiries relating to the transfer of servicing2 7,d7 the name and toll-free or collect-call telephone number for an individual employed by the transferee servicer1 or the office or department of1 the transferee servicer that the borrower may contact for inquiries relating to the transfer of servicing2 7,e7 the date on which the transferor servicer will stop accepting payments relating to the postsecondary education loan to be transferred and the date on which the transferee servicer will begin to accept such payments2 7,f7 a statement that the transfer of student loan servicing of the postsecondary education loan does not affect any term or condition of the postsecondary education loan other than terms directly related to such student loan servicing2 7,g7 a statement disclosing-- 7i7 whether borrower authorization for recurring electronic funds transfers will be transferred to the transferee servicer2 and 7ii7 if any such recurring electronic funds transfers cannot be transferred1 information as to how the borrower may establish new recurring electronic funds transfers in connection with transfer of servicing to the transferee servicer2 7,h7 a statement disclosing-- 7i7 the application of all payments and charges relating to the postsecondary education loan to be transferred as of the effective date of the transfer1 including-- 7,i7 the date the last payment of the borrower was received2 7,,ii7 the date the last late fee1 arrearage1 or other charge was applied2 and 7,,iii7 the amount of the last payment allocated to principal1 interest1 and other charges2 7ii7 the status of such loan as of the effective date of the transfer1 including whether the borrower is in default on the loan2 7iii7 whether any application for an alternative repayment arrangement submitted by the borrower is pending2 and 7iv7 an itemization and explanation for all arrearages claimed to be due as of the effective date of the transfer2 7,i7 a detailed description of any benefit1 alternative repayment arrangement1 or other term or condition arranged between the transferor servicer and the borrower that is not included in the terms of the loan agreement2 7,j7 a detailed description of any item under subparagraph 7,h7 that will not apply upon transfer1 including an explanation of why such item will not apply2 and 7,k7 information on how to file a complaint against the transferor servicer with the ,bureau4 7#c7 ,notice by transferee servicer at time of transfer of servicing 7,a7 ,in general ,a transferee servicer shall notify the borrower under a postsecondary education loan1 in writing1 of any transfer of student loan servicing of a postsecondary education loan4 ,such notice shall be made to the borrower-- 7i7 not later than #ae days before the effective date of transfer of the student loan servicing2 or 7ii7 not more than #cj days after the effective date of transfer of the student loan servicing1 if the transfer of such servicing is preceded by-- 7,i7 termination of the contract for such servicing for cause2 7,,ii7 commencement of bankruptcy proceedings of the transferor servicer2 or 7,,iii7 any other situation in which the ,bureau determines that such exception is warranted4 7,b7 ,contents of notice ,the notice required under subparagraph 7,a7 shall be made in the same manner and include the same information1 as applicable1 as described in paragraph 7#b74 7c7 ,treatment of improperly received loan payments during transfer period 7#a7 ,in general ,during the #fj-;day period beginning on the effective date of transfer relating to a postsecondary education loan to be transferred1 a late fee may not be imposed on the borrower with respect to any payment on such loan1 and no such payment may be treated as late for any other purposes if-- 7,a7 the payment is received by the transferor servicer instead of the transferee servicer 7who should properly receive payment7 before the due date applicable to such payment2 or 7,b7 the payment is received by the transferee servicer instead of the transferor servicer 7who should properly receive payment7 before the transfer is complete4 7#b7 ,notice ,to the maximum extent practicable1 a transferor servicer shall notify a borrower1 both in writing and by telephone1 regarding any payment described in paragraph 7#a74 7d7 ,electronic fund transfer authority ,a transferee servicer shall make available to a borrower whose student loan servicing is transferred to the transferee servicer a simple1 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 servicer4 7e7 ,servicer liability 7#a7 ,effective date of regulations ,a student loan servicer shall not be liable to a borrower for failure to comply with the requirements of subsection 7b7 with respect to a transfer of student loan servicing before the regulations under subsection 7f7 take effect4 7#b7 ,mitigating action ,a student loan servicer or a postsecondary education lender shall not be liable to a borrower for failure to comply with a requirement under this section if1 not later than #fj days after discovering an error and before the commencement of an action under section #acj or the receipt of written notice of the error from the borrower1 the student loan servicer notifies the borrower of the error and makes any adjustments in the appropriate account that are necessary to ensure that the borrower will not be required to pay an amount greater than the amount that the borrower otherwise would have paid4 7f7 ,rulemaking ,the ,bureau1 in consultation with the ,secretary of ,education1 is authorized to prescribe such rules and regulations1 make such interpretations1 and grant such reasonable exemptions1 in accordance with1 and as may be necessary to achieve the purposes of1 this chapter4 7g7 ,definitions ,in this section1 the following definitions shall apply3 7#a7 ,alternative repayment arrangement ,the term alternative repayment arrangement means an agreed upon arrangement between a loan holder 7or1 for a ,federal ,direct ,loan or a ,federal ,perkins ,loan1 the ,secretary of ,education or the institution of higher education that made such loan1 respectively7 or student loan servicer and a borrower-- 7,a7 that is different than the terms of an existing postsecondary education loan arrangement or agreement2 and 7,b7 pursuant to which remittance of a monthly payment-- 7i7 satisfies the terms of the postsecondary education loan2 or 7ii7 is not required for a period of #a or more months in order to satisfy the terms of the postsecondary education loan arrangement or agreement4 7#b7 ,effective date of transfer ,the term effective date of transfer means the date on which the first payment is due to a transferee servicer from a borrower under a postsecondary education loan4 7#c7 ,federal ,direct ,loan ,the term ,federal ,direct ,loan means a loan made under part ,d of title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajhg;a et seq474 7#d7 ,federal ,perkins ,loan ,the term ,federal ,perkins ,loan means a loan made under part ,e of title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajhg;aa et seq474 7#e7 ,institution of higher education ,the term institution of higher education has the meaning given that term in section #ajb of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajjb74 7#f7 ,late fee ,the term late fee means a late fee1 penalty1 or adjustment to principal1 imposed because of a late payment or delinquency by the borrower under a postsecondary education loan4 7#g7 ,loan holder ,the term loan holder means a person who owns the title to or promissory note for a postsecondary education loan 7except for a ,federal ,direct ,loan or a ,federal ,perkins ,loan74 7#h7 ,postsecondary education expense ,the term postsecondary education expense means any expense that is included as part of the cost of attendance 7as that term is defined in section #dgb of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajhgll77 of a student4 7#i7 ,postsecondary education lender ,the term postsecondary education lender-- 7,a7 means-- 7i7 a financial institution1 as defined in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac7 that solicits1 makes1 or extends postsecondary education loans2 7ii7 a ,federal credit union1 as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb7 that solicits1 makes1 or extends postsecondary education loans2 and 7iii7 any other person engaged in the business of soliciting1 making1 or extending postsecondary education loans2 and 7,b7 does not include-- 7i7 the ,secretary of ,education2 or 7ii7 an institution of higher education with respect to any ,federal ,perkins ,loan made by the institution4 7#aj7 ,postsecondary education loan ,the term postsecondary education loan means a loan that is-- 7,a7 made1 insured1 or guaranteed under part ,b1 ,d1 or ,e of title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajga et seq41 #ajhg;a et seq41 #ajhg;aa et seq472 7,b7 issued or made by a postsecondary education lender and is-- 7i7 extended to a borrower with the expectation that the amounts extended will be used in whole or in part to pay postsecondary education expenses2 or 7ii7 extended for the purpose of refinancing or consolidating #a or more loans described in subparagraph 7,a72 or 7,c7 a private education loan 7as defined in section #adj7;a774 7#aa7 ,student loan servicer ,the term student loan servicer-- 7,a7 means a person who performs student loan servicing2 7,b7 includes a person performing student loan servicing for a postsecondary education loan on behalf of an institution of higher education or the ,secretary of ,education under a contract or other agreement2 7,c7 does not include the ,secretary of ,education to the extent the ,secretary directly performs student loan servicing for a postsecondary education loan2 and 7,d7 does not include an institution of higher education1 to the extent that the institution directly performs student loan servicing for a ,federal ,perkins ,loan made by the institution4 7#ab7 ,student loan servicing ,the term student loan servicing means1 with respect to a postsecondary education loan1 any of the following activities3 7,a7 ,receiving any scheduled periodic payments1 or notification of such payments1 from a borrower under a postsecondary education loan4 7,b7 ,applying payments described in subparagraph 7,a7 to an account of the borrower pursuant to the terms of the postsecondary education loan or of the contract governing the servicing of the postsecondary education loan4 7,c7 ,during a period in which no payment is required on the postsecondary education loan-- 7i7 maintaining account records for the loan2 and 7ii7 communicating with the borrower on behalf of the loan holder or1 with respect to a ,federal ,direct ,loan or ,federal ,perkins ,loan1 the ,secretary of ,education or the institution of higher education that made the loan1 respectively4 7,d7 ,interacting with a borrower to facilitate the activities described in subparagraphs 7,a71 7,b71 and 7,c71 including activities to help prevent default by the borrower of the obligations arising from the postsecondary education loan4 7#ac7 ,transfer of servicing ,the term transfer of servicing means the assignment1 sale1 or transfer of any student loan servicing of a postsecondary education loan from a transferor servicer to a transferee servicer4 7#ad7 ,transferee servicer ,the term transferee servicer means the student loan servicer to whom any student loan servicing of a postsecondary education loan is assigned1 sold1 or transferred4 7#ae7 ,transferor servicer ,the term transferor servicer means the student loan servicer who assigns1 sells1 or transfers any student loan servicing of a postsecondary education loan to another person4 4 7b7 ,table of contents amendment ,the table of contents for chapter #b of title ,i of the ,truth in ,lending ,act is amended by inserting after the item relating to section #adj;,a the following new item3 #adj;,b4 ,transfer of servicing of postsecondary education loans4 4 #c4 ,amendments to the ,higher ,education ,act of #aife ,the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajja et seq47 is amended-- 7#a7 in section #dhg7;a7 7#bj ,u4,s4,c4 #ajid7;a771 by adding at the end the following3 7#cj7 ,the institution will-- 7,a7 comply with the disclosure requirements for postsecondary education lenders under section #adj;,b7a7 of the ,truth in ,lending ,act2 and 7,b7 ensure that each third party servicer with which the institution has entered into a contract complies with the applicable requirements for student loan servicers under section #adj;,b of such ,act4 2 and 7#b7 in section #dfc;,a7b7 7#bj ,u4,s4,c4 #ajhg;cc-#a7;b77-- 7,a7 by striking and at the end of paragraph 7#h72 7,b7 by striking the period at the end of paragraph 7#i7 and inserting 2 and2 and 7,c7 by adding at the end the following3 7#aj7 the disclosures for postsecondary education lenders and student loan services under section #adj;,b of the ,truth in ,lending ,act4 4