[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4119 Introduced in House (IH)]
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117th CONGRESS
1st Session
H. R. 4119
To amend the Fair Credit Reporting Act to remove adverse information
for certain defaulted or delinquent private education loan borrowers
who demonstrate a history of loan repayment, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 24, 2021
Ms. Pressley introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Fair Credit Reporting Act to remove adverse information
for certain defaulted or delinquent private education loan borrowers
who demonstrate a history of loan repayment, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Student Borrower Credit Improvement
Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) The October 2014 report of the Bureau of Consumer
Financial Protection titled ``Annual Report of the CFPB Student
Loan Ombudsman'' noted many private education loan borrowers,
who sought to negotiate a modified repayment plan when they
were experiencing a period of financial distress, were unable
to get assistance from their loan holders, which often
resulting in them defaulting on their loans. This pattern
resembles the difficulty that a significant number of mortgage
loan borrowers experienced when they sought to take responsible
steps to work with their mortgage loan servicer to avoid
foreclosure during the Great Recession.
(2) Although private student loan holders may allow a
borrower to postpone payments while enrolled in school full-
time, many limit this option to a certain time period, usually
48 to 66 months. This limited time period may not be sufficient
for those who need additional time to obtain their degree or
who want to continue their education by pursing a graduate or
professional degree. The Bureau of Consumer Financial
Protection found that borrowers who were unable to make
payments often defaulted or had their accounts sent to
collections before they were even able to graduate.
SEC. 3. REMOVAL OF ADVERSE INFORMATION FOR CERTAIN PRIVATE EDUCATION
LOAN BORROWERS.
(a) In General.--The Fair Credit Reporting Act (15 U.S.C. 1681 et
seq.) is amended by inserting after section 605B the following new
section:
``Sec. 605C. Credit rehabilitation for distressed private education
loan borrowers.
``(a) In General.--A consumer reporting agency may not furnish any
consumer report containing any adverse item of information relating to
a delinquent or defaulted private education loan of a borrower if the
borrower has rehabilitated the borrower's credit with respect to such
loan by making 9 on-time monthly payments (in accordance with the terms
and conditions of the borrower's original loan agreement or any other
repayment agreement that antedates the original agreement) during a
period of 10 consecutive months on such loan after the date on which
the delinquency or default occurred.
``(b) Interruption of 10-Month Period for Certain Consumers.--
``(1) Permissible interruption of the 10-month period.--A
borrower may stop making consecutive monthly payments and be
granted a grace period after which the 10-month period
described in subsection (a) shall resume. Such grace period
shall be provided under the following circumstances:
``(A) With respect to a borrower who is a member of
the Armed Forces entitled to incentive pay for the
performance of hazardous duty under section 301 of
title 37, United States Code, hazardous duty pay under
section 351 of such title, or other assignment or
special duty pay under section 352 of such title, the
grace period shall begin on the date on which the
borrower begins such assignment or duty and end on the
date that is 6 months after the completion of such
assignment or duty.
``(B) With respect to a borrower who resides in an
area affected by a major disaster or emergency declared
under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, the grace period shall begin
on the date on which the major disaster or emergency
was declared and end on the date that is 3 months after
such date.
``(2) Other circumstances.--
``(A) In general.--The Bureau may allow a borrower
demonstrating hardship to stop making consecutive
monthly payments and be granted a grace period after
which the 10-month period described in subsection (a)
shall resume.
``(B) Borrower demonstrating hardship defined.--In
this paragraph, the term `borrower demonstrating
hardship' means a borrower or a class of borrowers who,
as determined by the Bureau, is facing or has
experienced unusual extenuating life circumstances or
events that result in severe financial or personal
barriers such that the borrower or class of borrowers
does not have the capacity to comply with the
requirements of subsection (a).
``(c) Procedures.--The Bureau shall establish procedures to
implement the credit rehabilitation described in this section,
including--
``(1) the manner, content, and form for requesting credit
rehabilitation;
``(2) the method for validating that the borrower is
satisfying the requirements of subsection (a);
``(3) the manner, content, and form for notifying the
private educational loan holder of--
``(A) the borrower's participation in credit
rehabilitation under subsection (a);
``(B) the requirements described in subsection (d);
and
``(C) the restrictions described in subsection (f);
``(4) the manner, content, and form for notifying a
consumer reporting agency of--
``(A) the borrower's participation in credit
rehabilitation under subsection (a); and
``(B) the requirements described in subsection (d);
``(5) the method for verifying whether a borrower qualifies
for the grace period described in subsection (b); and
``(6) the manner, content, and form of notifying a consumer
reporting agency and private educational loan holder that a
borrower was granted a grace period.
``(d) Standardized Reporting Codes.--A consumer reporting agency
shall develop standardized reporting codes for use by any private
educational loan holder to identify and report a borrower's status of
making and completing 9 on-time monthly payments during a period of 10
consecutive months on a delinquent or defaulted private education loan,
including codes specifying the grace period described in subsection (b)
and any agreement to modify monthly payments. Such codes shall not
appear on any report provided to a third party, and shall be removed
from the consumer's credit report upon the consumer's completion of the
rehabilitation period under this section.
``(e) Elimination of Barriers to Credit Rehabilitation.--A consumer
report in which a private educational loan holder furnishes the
standardized reporting codes described in subsection (d) to a consumer
reporting agency, or in which a consumer reporting agency includes such
codes, shall be deemed to comply with the requirements for accuracy and
completeness under sections 623(a)(1) and 630.
``(f) Prohibition on Civil Actions for Consumers Pursuing
Rehabilitation.--A private educational loan holder may not commence or
proceed with any civil action against a borrower with respect to a
delinquent or defaulted loan during the period of rehabilitation if the
private educational loan holder has been notified, in accordance with
the procedures established by the Bureau pursuant to subsection (c)--
``(1) of such borrower's intent to participate in
rehabilitation;
``(2) that such borrower has satisfied the requirements
under subsection (a); or
``(3) that such borrower was granted a grace period.
``(g) Impact on Statute of Limitations for Prior Debt.--Payments by
a borrower on a private education loan that are made during and after a
period of rehabilitation under this section shall have no effect on the
statute of limitations with respect to payments that were due on such
private education loan before the beginning of the period of
rehabilitation.
``(h) Payment Plans.--If a private educational loan holder enters
into a payment plan with a borrower on a private education loan during
a period of rehabilitation, such payment plan shall be reasonable and
affordable, as determined by the Bureau.
``(i) Rules of Construction.--
``(1) Application to subsequent default or delinquency.--A
borrower who satisfies the requirements under subsection (a)
shall be eligible for additional credit rehabilitation
described in subsection (a) with respect to any subsequent
default or delinquency of the borrower on the rehabilitated
private education loan.
``(2) Interruption of consecutive payment period
requirement.--The grace period described in subsection
(b)(1)(A) shall not apply if any regulation promulgated under
section 987 of title 10, United States Code (commonly known as
the Military Lending Act), or the Servicemembers Civil Relief
Act (50 U.S.C. App. 501 et seq.) allows for a grace period or
other interruption of the 10-month period described in
subsection (a) and such grace period or other interruption is
longer than the period described in subsection (b)(1)(A) or
otherwise provides greater protection or benefit to the
borrower who is a member of the Armed Forces.''.
(b) Conforming Amendment.--Section 623(a)(1) of the Fair Credit
Reporting Act (15 U.S.C. 1681s-2(a)(1)) is amended by striking
subparagraph (E).
(c) Table of Contents Amendment.--The table of contents of the Fair
Credit Reporting Act is amended by inserting after the item relating to
section 605B the following new item:
``605C. Credit rehabilitation for distressed private education loan
borrowers.''.
SEC. 4. PRIVATE EDUCATION LOAN DEFINITIONS.
Section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a) is
amended by adding at the end the following new subsection:
``(bb) Private Education Loan Definitions.--The terms `private
education loan' and `private educational lender' have the meanings
given such terms, respectively, in section 140(a) of the Truth in
Lending Act.''.
SEC. 5. RULEMAKING.
Except as otherwise provided, the Bureau of Consumer Financial
Protection shall, not later than the end of the 2-year period beginning
on the date of the enactment of this Act, issue final rules to
implement the amendments made by this Act.
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