Bill Introduced to Curtail Private Education Lenders Also Impacts Direct Loan Counseling 

By Joan Berkes, Policy & Federal Relations Staff

Sen. Bob Menendez (D-NJ) reintroduced a bill on August 5 to require more transparent disclosures by private education loan lenders. The Christopher Bryski Student Loan Protection Act (Christopher’s Law) mostly amends the Truth in Lending Act (TILA), but also affects the Higher Education Act (HEA). NASFAA has expressed support for this bill in the past.

The bill would require private education loan lenders to disclose, clearly and conspicuously, a borrower’s and co-signer’s obligations in the event of each other’s death, disability, or inability to engage in any substantial gainful activity. It would prohibit the lender from automatically declaring a performing loan to be in default or take other adverse action if such circumstances arise. It would also require private education loan lenders to automatically release co-signers from their obligations if certain conditions are met.

The bill would provide an opportunity for a borrower to designate an individual who can legally act for the borrower in the event of the borrower’s death, disability, or inability to engage in any substantial gainful activity. This designation is voluntary and could be made for federal student loans as well as for private loans. As currently proposed, the bill would incorporate the designation for federal student loans into the FAFSA, but specifies that the student’s Title IV eligibility cannot be adversely affected by failing to designate anyone.

The bill would add three new elements to Direct Loan entrance counseling, related to the same circumstances:

  • Conditions required to discharge the loan due to the death, disability, or inability to engage in any substantial gainful activity of the borrower;
  • Repayment, refinance, deferment, forbearance, or forgiveness opportunities available to the borrower, or co-signer, in the event of either individual’s death, disability, or inability to engage in any substantial gainful activity;
  • The effect that death, disability, or inability to engage in any substantial gainful activity of the borrower would have on the obligations of the borrower and any co-signer of the loan.

 

Publication Date: 8/6/2015


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