H. R. 5458
IN THE HOUSE OF REPRESENTATIVES
To amend the Truth in Lending Act and the Higher Education Act of 1965 to require additional disclosures and protections for students and cosigners with respect to student loans, and for other purposes.
Short title; findings
This Act may be cited as the
Christopher Bryski Student Loan Protection Act and
The Congress finds the following:
There is no requirement for Federal or private educational lenders to provide information with respect to creating a durable power of attorney for financial decisionmaking in accordance with State law to be used in the event of the death, incapacitation, or disability of the borrower or such cosigner (if any).
No requirement exists for private educational lenders’ master promissory notes to include a clear and conspicuous description of the responsibilities of a borrower and cosigner in the event the borrower or cosigner becomes disabled, incapacitated, or dies.
Of the 1,400,000 people who sustain a traumatic brain injury each year in the United States, 50,000 die; 235,000 are hospitalized; and 1,100,000 are treated and released from an emergency department.
It is estimated that the annual incidence of spinal cord injury, not including those who die at the scene of an accident, is approximately 40 cases per 1,000,000 people in the United States or approximately 12,000 new cases each year. Since there have not been any overall incidence studies of spinal cord injuries in the United States since the 1970s, it is not known if incidence has changed in recent years.
In the 2007–2008 academic year, 13 percent of students attending a 4-year public school, and 26.2 percent of students attending a 4-year private school, borrowed monies from private educational lenders.
According to Sallie Mae, in 2009, the number of cosigned private education loans increased from 66 percent to 84 percent of all private education loans.
Additional student loan protections
Section 140 of the Truth in Lending Act (15 U.S.C. 1650) is amended by adding at the end the following new subsection:
Additional protections relating to death or disability of borrower or cosigner of a private education loan
Obligation to discuss durable power of attorneys
In conjunction with—
any student loan counseling, if any, provided by a covered educational institution to any new borrower and cosigner (if any) at the time of any loan application, loan origination, or loan consolidation, or at the time the cosigner assumes responsibility for repayment, the institution shall provide information with respect to creating a durable power of attorney for financial decisionmaking, in accordance with State law; and
any application for a private education loan, the private educational lender involved in such loan shall provide information to the borrower, and cosigner (if any), concerning the creation of a durable power of attorney for financial decisionmaking, in accordance with State law, with respect to such loan.
Clear and conspicuous description of cosigner’s obligation
In the case of any private educational lender who extends a private education loan for which any cosigner is jointly liable, the lender shall clearly and conspicuously describe, in writing, the cosigner’s obligations with respect to the loan, including the effect the death, disability, or inability to engage in any substantial gainful activity of the borrower or cosigner (if any) would have on any such obligation, in language that the Board determines would give a reasonable person a reasonable understanding of the obligation being assumed by becoming a cosigner for the loan.
The Board shall publish model forms under section 105 for—
the information required under paragraph (1) with respect to a durable power of attorney for financial decisionmaking, for each State (and such model forms under this subparagraph shall be uniform for all States to the greatest extent possible); and
describing a cosigner’s obligation for purposes of paragraph (2).
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 cosigner, the term
death, disability, or inability to engage in any substantial gainful activity—
means any condition described in section 437(a) of the Higher Education Act of 1965 (20 U.S.C. 1087(a)); and
shall be interpreted by the Board in such a manner as to conform with the regulations prescribed by such 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.
Subsection (a) of section 140 of the Truth in Lending Act (15 U.S.C. 1650(a)) is amended by adding at the end the following new paragraphs:
Durable power of attorney
The term durable power of attorney—
means a written instruction recognized under State law (whether statutory or as recognized by the courts of the State), relating to financial decisionmaking in cases when the individual lacks the capacity to make such decisions; or
has the meaning given to such term in the Uniform Durable Power of Attorney Act of 2006 and sections 5-501 through 5-505 of the Uniform Probate Code, as in effect in any State.
The term cosigner—
means any individual who is liable for the obligation of another without compensation, regardless of how designated in the contract or instrument;
includes any person whose signature is requested as condition to grant credit or to forebear on collection; and
does not include a spouse of an individual referred to in subparagraph (A) whose signature is needed to perfect the security interest in the loan.
Federal student loans
Section 485(l)(2) of the Higher Education Act of 1965 (20 U.S.C. 1092(l)(2)) is amended by adding at the end the following:
Information on the conditions required to discharge the loan due to the death, disability, or inability to engage in any substantial gainful activity of the borrower in accordance with section 437(a), and an explanation that, in the case of a private education loan made through a private educational lender, the borrower, the borrower’s estate, and any consigner of a such a private education loan may be obligated to repay the full amount of the loan, regardless of the death or disability of the borrower or any other condition described in section 437(a).
The model form for the State in which the institution is located with respect to durable power of attorneys published by the Board of Governors of the Federal Reserve System in accordance with subsection (f)(3)(A) of section 140 of the Truth in Lending Act (15 U.S.C. 1650) and, in the case of a borrower who is not a resident of the State in which the institution is located, information on how to access such model form for the State in which the borrower is a resident.
Passed the House of Representatives September 28, 2010.
Lorraine C. Miller,