15 U.S.C. § 1650 — Preventing unfair and deceptive private

Page 1532 TITLE 15—COMMERCE AND TRADE § 1650 (D) borrower-paid mortgage broker fees re- ferred to in section 1605(a)(6) of this title; (2) the form of written notice used by the creditor to inform the obligor of the rights of the obligor under section 1635 of this title if the creditor provided the obligor with a prop- erly dated form of written notice published and adopted by the Bureau or a comparable written notice, and otherwise complied with all the requirements of this section regarding notice; or (3) any disclosure relating to the finance charge imposed with respect to the trans- action if the amount or percentage actually disclosed— (A) may be treated as accurate for pur- poses of this subchapter if the amount dis- closed as the finance charge does not vary from the actual finance charge by more than $200; (B) may, under section 1605(f)(2) of this title, be treated as accurate for purposes of section 1635 of this title; or (C) is greater than the amount or percent- age required to be disclosed under this sub- chapter. (b) Exceptions Subsection (a) shall not apply to— (1) any individual action or counterclaim brought under this subchapter which was filed before June 1, 1995; (2) any class action brought under this sub- chapter for which a final order certifying a class was entered before January 1, 1995; (3) the named individual plaintiffs in any class action brought under this subchapter which was filed before June 1, 1995; or (4) any consumer credit transaction with re- spect to which a timely notice of rescission was sent to the creditor before June 1, 1995. (Pub. L. 90–321, title I, § 139, as added Pub. L. 104–29, § 4(a), Sept. 30, 1995, 109 Stat. 273; amend- ed Pub. L. 104–208, div. A, title II, § 2107(a), Sept. 30, 1996, 110 Stat. 3009–402; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.) Editorial Notes AMENDMENTS 2010—Subsec. (a)(2). Pub. L. 111–203 substituted ‘‘Bu- reau’’ for ‘‘Board’’. 1996—Subsec. (a). Pub. L. 104–208 substituted ‘‘For any closed end consumer credit transaction that is secured by real property or a dwelling, that is subject to this subchapter, and’’ for ‘‘For any consumer credit trans- action subject to this subchapter’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–208, div. A, title II, § 2107(b), Sept. 30, 1996, 110 Stat. 3009–402, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall be effective as of September 30, 1995.’’ § 1650. Preventing unfair and deceptive private educational lending practices and elimi- nating conflicts of interest (a) Definitions As used in this section— (1) the term ‘‘cosigner’’— (A) means any individual who is liable for the obligation of another without compensa- tion, regardless of how designated in the contract or instrument with respect to that obligation, other than an obligation under a private education loan extended to consoli- date a consumer’s pre-existing private edu- cation loans; (B) includes any person the signature of which is requested as condition to grant credit or to forbear on collection; and (C) does not include a spouse of an indi- vidual described in subparagraph (A), the signature of whom is needed to perfect the security interest in a loan. (2) the term ‘‘covered educational institu- tion’’— (A) means any educational institution that offers a postsecondary educational degree, certificate, or program of study (including any institution of higher education); and (B) includes an agent, officer, or employee of the educational institution; (3) the term ‘‘gift’’— (A)(i) means any gratuity, favor, discount, entertainment, hospitality, loan, or other item having more than a de minimis mone- tary value, including services, transpor- tation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred; and (ii) includes an item described in clause (i) provided to a family member of an officer, employee, or agent of a covered educational institution, or to any other individual based on that individual’s relationship with the of- ficer, employee, or agent, if— (I) the item is provided with the knowl- edge and acquiescence of the officer, em- ployee, or agent; and (II) the officer, employee, or agent has reason to believe the item was provided be- cause of the official position of the officer, employee, or agent; and (B) does not include— (i) standard informational material re- lated to a loan, default aversion, default prevention, or financial literacy; (ii) food, refreshments, training, or infor- mational material furnished to an officer, employee, or agent of a covered edu- cational institution, as an integral part of a training session or through participation in an advisory council that is designed to improve the service of the private edu- cational lender to the covered educational institution, if such training or participa- tion contributes to the professional devel- opment of the officer, employee, or agent of the covered educational institution; (iii) favorable terms, conditions, and bor- rower benefits on a private education loan Page 1533 TITLE 15—COMMERCE AND TRADE § 1650 1 So in original. The word ‘‘of’’ probably should not appear. provided to a student employed by the cov- ered educational institution, if such terms, conditions, or benefits are not provided be- cause of the student’s employment with the covered educational institution; (iv) the provision of financial literacy counseling or services, including coun- seling or services provided in coordination with a covered educational institution, to the extent that such counseling or services are not undertaken to secure— (I) applications for private education loans or private education loan volume; (II) applications or loan volume for any loan made, insured, or guaranteed under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); or (III) the purchase of a product or serv- ice of a specific private educational lend- er; (v) philanthropic contributions to a cov- ered educational institution from a private educational lender that are unrelated to private education loans and are not made in exchange for any advantage related to private education loans; or (vi) State education grants, scholarships, or financial aid funds administered by or on behalf of a State; (4) the term ‘‘institution of higher edu- cation’’ has the same meaning as in section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002); (5) the term ‘‘postsecondary educational ex- penses’’ means any of the expenses that are in- cluded as part of the cost of attendance of a student, as defined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll); (6) the term ‘‘preferred lender arrangement’’ has the same meaning as in section 151 of the Higher Education Act of 1965 [20 U.S.C. 1019]; (7) the term ‘‘private educational lender’’ means— (A) a financial institution, as defined in section 1813 of title 12 that solicits, makes, or extends private education loans; (B) a Federal credit union, as defined in section 1752 of title 12 that solicits, makes, or extends private education loans; and (C) any other person engaged in the busi- ness of soliciting, making, or extending pri- vate education loans; (8) the term ‘‘private education loan’’— (A) means a loan provided by a private educational lender that— (i) is not made, insured, or guaranteed under of 1 title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); and (ii) is issued expressly for postsecondary educational expenses to a borrower, re- gardless of whether the loan is provided through the educational institution that the subject student attends or directly to the borrower from the private educational lender; and (B) does not include an extension of credit under an open end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwell- ing; and (9) the term ‘‘revenue sharing’’ means an ar- rangement between a covered educational in- stitution and a private educational lender under which— (A) a private educational lender provides or issues private education loans with re- spect to students attending the covered edu- cational institution; (B) the covered educational institution recommends to students or others the pri- vate educational lender or the private edu- cation loans of the private educational lend- er; and (C) the private educational lender pays a fee or provides other material benefits, in- cluding profit sharing, to the covered edu- cational institution in connection with the private education loans provided to students attending the covered educational institu- tion or a borrower acting on behalf of a stu- dent. (b) Prohibition on certain gifts and arrange- ments A private educational lender may not, directly or indirectly— (1) offer or provide any gift to a covered edu- cational institution in exchange for any ad- vantage or consideration provided to such pri- vate educational lender related to its private education loan activities; or (2) engage in revenue sharing with a covered educational institution. (c) Prohibition on co-branding A private educational lender may not use the name, emblem, mascot, or logo of the covered educational institution, or other words, pic- tures, or symbols readily identified with the covered educational institution, in the mar- keting of private education loans in any way that implies that the covered educational insti- tution endorses the private education loans of- fered by the private educational lender. (d) Advisory Board compensation Any person who is employed in the financial aid office of a covered educational institution, or who otherwise has responsibilities with re- spect to private education loans or other finan- cial aid of the institution, and who serves on an advisory board, commission, or group estab- lished by a private educational lender or group of such lenders shall be prohibited from receiv- ing anything of value from the private edu- cational lender or group of lenders. Nothing in this subsection prohibits the reimbursement of reasonable expenses incurred by an employee of a covered educational institution as part of their service on an advisory board, commission, or group described in this subsection. (e) Prohibition on prepayment or repayment fees or penalty It shall be unlawful for any private edu- cational lender to impose a fee or penalty on a borrower for early repayment or prepayment of any private education loan. Page 1534 TITLE 15—COMMERCE AND TRADE § 1651 1 So in original. (f) Credit card protections for college students (1) Disclosure required An institution of higher education shall pub- licly disclose any contract or other agreement made with a card issuer or creditor for the purpose of marketing a credit card. (2) Inducements prohibited No card issuer or creditor may offer to a stu- dent at an institution of higher education any tangible item to induce such student to apply for or participate in an open end consumer credit plan offered by such card issuer or cred- itor, if such offer is made— (A) on the campus of an institution of higher education; (B) near the campus of an institution of higher education, as determined by rule of the Bureau; or (C) at an event sponsored by or related to an institution of higher education. (3) Sense of the Congress It is the sense of the Congress that each in- stitution of higher education should consider adopting the following policies relating to credit cards: (A) That any card issuer that markets a credit card on the campus of such institu- tion notify the institution of the location at which such marketing will take place. (B) That the number of locations on the campus of such institution at which the marketing of credit cards takes place be lim- ited. (C) That credit card and debt education and counseling sessions be offered as a reg- ular part of any orientation program for new students of such institution. (g) Additional protections relating to borrower or cosigner of a private education loan (1) Prohibition on automatic default in case of death or bankruptcy of non-student obligor With respect to a private education loan in- volving a student obligor and 1 or more co- signers, the creditor shall not declare a de- fault or accelerate the debt against the stu- dent obligor on the sole basis of a bankruptcy or death of a cosigner. (2) Cosigner release in case of death of bor- rower (A) Release of cosigner The holder of a private education loan, when notified of the death of a student obli- gor, shall release within a reasonable time- frame any cosigner from the obligations of the cosigner under the private education loan. (B) Notification of release A holder or servicer of a private education loan, as applicable, shall within a reasonable time-frame notify any cosigners for the pri- vate education loan if a cosigner is released from the obligations of the cosigner for the private education loan under this paragraph. (C) Designation of individual to act on behalf of the borrower Any lender that extends a private edu- cation loan shall provide the student obligor an option to designate an individual to have the legal authority to act on behalf of the student obligor with respect to the private education loan in the event of the death of the student obligor. (Pub. L. 90–321, title I, § 140, as added Pub. L. 110–315, title X, § 1011(a), Aug. 14, 2008, 122 Stat. 3479; amended Pub. L. 111–24, title III, § 304, May 22, 2009, 123 Stat. 1749; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107; Pub. L. 115–174, title VI, § 601(a), May 24, 2018, 132 Stat. 1365.) Editorial Notes REFERENCES IN TEXT The Higher Education Act of 1965, referred to in sub- sec. (a)(3)(B)(iv)(II), (8)(A)(i), is Pub. L. 89–329, Nov. 8, 1965, 79 Stat. 1219. Title IV of the Act is classified gen- erally to subchapter IV (§ 1070 et seq.) of chapter 28 of Title 20, Education. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 1001 of Title 20 and Tables. AMENDMENTS 2018—Subsec. (a). Pub. L. 115–174, § 601(a)(1), added par. (1) and redesignated former pars. (1) to (8) as (2) to (9), respectively. Subsec. (g). Pub. L. 115–174, § 601(a)(2), added subsec. (g). 2010—Subsec. (f)(2)(B). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’. 2009—Subsec. (f). Pub. L. 111–24 added subsec. (f). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2018 AMENDMENT Pub. L. 115–174, title VI, § 601(b), May 24, 2018, 132 Stat. 1365, provided that: ‘‘The amendments made by sub- section (a) [amending this section] shall only apply to private education loan agreements entered into on or after the date that is 180 days after the date of enact- ment of this Act [May 24, 2018].’’ EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111–24 effective 9 months after May 22, 2009, except as otherwise specifically provided, see section 3 of Pub. L. 111–24, set out as a note under section 1602 of this title. EFFECTIVE DATE Subsec. (c) of this section effective on the earlier of the date on which regulations issued under section 1002 of Pub. L. 110–315 (set out as a Regulations note under section 1638 of this title) become effective or 18 months after Aug. 14, 2008, see section 1003(b) of Pub. L. 110–315, set out as an Effective Date of 2008 Amendment note under section 1638 of this title. Such regulations were issued effective Sept. 14, 2009, with compliance optional until Feb. 14, 2010. § 1651. Procedure for timely settlement of estates of decedent obligors The Bureau, in consultation with the Bureau 1 and each other agency referred to in section 1607(a) of this title, shall prescribe regulations