[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8660 Introduced in House (IH)]
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118th CONGRESS
2d Session
H. R. 8660
To strengthen requirements for contracts between the Department of
Education and Federal student loan servicers, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 7, 2024
Ms. Jacobs (for herself, Ms. Bonamici, Ms. Norton, Mr. Goldman of New
York, Mr. Krishnamoorthi, Mr. Davis of Illinois, Mr. Thanedar, Mr.
Jackson of Illinois, Ms. Salinas, Mrs. Dingell, Mrs. Ramirez, Mr.
Thompson of Mississippi, Ms. Moore of Wisconsin, Mr. Robert Garcia of
California, Ms. McClellan, Ms. Garcia of Texas, Mr. Frost, Mr.
Blumenauer, and Mr. Clyburn) introduced the following bill; which was
referred to the Committee on Education and the Workforce
_______________________________________________________________________
A BILL
To strengthen requirements for contracts between the Department of
Education and Federal student loan servicers, 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 Loan Servicers
Accountability Act of 2024''.
SEC. 2. CONTRACT REQUIREMENTS FOR FEDERAL STUDENT LOAN SERVICERS.
(a) In General.--Part G of title IV of the Higher Education Act of
1965 (20 U.S.C. 1088 et seq.) is amended by adding at the end the
following:
``SEC. 494A. CONTRACT REQUIREMENTS FOR FEDERAL STUDENT LOAN SERVICERS.
``(a) Enhanced Vetting.--Before entering into a contract or other
agreement with a Federal student loan servicer for the servicing of
Federal student loans, the Secretary shall evaluate the following
factors:
``(1) In the case of a servicer that has previously
serviced Federal student loans, the past performance of the
servicer compared to all Federal student loan servicers,
including--
``(A) the levels of consumer satisfaction reported
with respect to such servicer; and
``(B) the quality of customer service practices and
the demonstrated ability of the servicer to prevent
errors and disruptions in services in the event a
Federal student loan is transferred to or from the
servicer, as measured by--
``(i) the service level methodology
performance metrics and servicer allocation
metrics issued by the Office of Federal Student
Aid of the Department (or any successor
metrics); and
``(ii) any other quantitative or
qualitative factors the Secretary determines
appropriate for analysis.
``(2) In the case of a servicer that has not previously
serviced Federal student loans, the past performance of the
servicer compared to other similarly situated servicers,
including--
``(A) the levels of consumer satisfaction reported
with respect to such servicer; and
``(B) the quality of customer service practices and
the demonstrated ability of the servicer to prevent
errors and disruptions in services in the event a
student loan is transferred to or from the servicer, as
measured by any quantitative or qualitative factors the
Secretary determines appropriate for analysis.
``(3) Any penalties or other punitive measures previously
imposed on the servicer by the Department as a result of the
servicer's misconduct, failure to adequately support borrowers,
or inability to meet the terms and conditions of a servicing
agreement with the Department.
``(4) Any legal action previously taken against the
servicer, including any legal action taken by a State.
``(5) The ability of the servicer to capture necessary data
regarding borrowers and the eligible Federal student loans held
by borrowers in the event such loans are transferred to the
servicer, including the ability of the servicer to gather all
information related to the repayment history of a borrower and
relevant consumer demographic data prior to servicing such
loans.
``(6) The ability of the servicer to provide targeted
services, including personalized counseling and other high-
quality services, for borrowers most at risk of default and
delinquency, including borrowers who have previously defaulted.
``(7) The demonstrated ability of the servicer--
``(A) to support borrowers from traditionally
underrepresented communities by providing information
through the forms described in subsection (f) and
through automatic website translation, and services in
multiple languages (including, Spanish, Mandarin,
Haitian Creole, Arabic, and other languages); and
``(B) to provide appropriate access and support for
borrowers with disabilities.
``(b) Required Contract Terms.--As part of any contract or other
agreement between the Department and a Federal student loan servicer,
the servicer shall agree to the following terms:
``(1) The servicer shall place a borrower's loans into an
administrative forbearance, during which interest shall not
accrue, during any period in which the servicer has identified
a servicer error but has not yet corrected the error.
``(2) For a borrower who has submitted a certification of
the borrower's employment status or income for purposes of the
public service loan forgiveness program under section 455(m) or
an income-driven repayment plan, respectively, the servicer
shall provide credit toward loan forgiveness under that program
or plan for--
``(A) any period during which the borrower--
``(i) was in administrative forbearance due
to a servicer error as described in paragraph
(1); and
``(ii) would have otherwise qualified for
credit toward forgiveness if not for such
forbearance; or
``(B) any other period during which the borrower
would have qualified for credit toward forgiveness if
not for a servicer error.
``(3) The servicer shall provide appropriate remedies to a
borrower in the event a servicer error results in financial
harm to the borrower (as determined by the Secretary),
including--
``(A) refunding overpayments on a loan made due to
a servicer error;
``(B) reimbursing a borrower for fees and other
expenses, such as insufficient funds fees, incurred by
the borrower as a result of a servicer error; and
``(C) such other remedies as the Secretary
determines appropriate.
``(4) The servicer shall ensure that credit reporting
agencies remove delinquencies or other negative information
from the credit reports of a borrower if the negative credit
information was a result of an error by the servicer.
``(5) The servicer shall maintain all records concerning
the account of a borrower--
``(A) for the period during which the servicer
services any loan of the borrower; and
``(B) for a period of not less than 3 years after--
``(i) the loans of a borrower have been
paid in full, discharged, or assigned to
collection;
``(ii) the account has been transferred to
another servicer; or
``(iii) the servicer otherwise ceases the
servicing of such loans.
``(6) The servicer shall abide by any decision of the
Secretary to revoke the contract in accordance with subsection
(e).
``(c) Applicability.--
``(1) Contracts covered.--Subsections (a) and (b) shall
apply with respect to contracts and other agreements entered
into on or after the date that is 90 days after the date of
enactment of the Student Loan Servicers Accountability Act of
2024.
``(2) Special rule.--The requirements of paragraphs (1)
through (5) of subsection (b) shall apply to the actions of the
Department in directly administering the public service loan
forgiveness program under section 455(m), income-driven
repayment plans, and other forgiveness and repayment programs
authorized under this Act in the same manner as such
requirements apply to Federal student loan servicers.
``(d) Review of Legacy Contracts.--Not later than 180 days after
the date of enactment of the Student Loan Servicers Accountability Act
of 2024, the Secretary shall conduct a review of all legacy student
loan servicing contracts to determine whether such contracts, and the
Federal student loan servicers providing services under such contracts,
align with the requirements set forth in subsections (a) and (b). The
Secretary shall use the results of such review to inform any decision
of the Secretary to continue or renew such a contract.
``(e) Revocation.--
``(1) In general.--Subject to paragraph (2), the Secretary
may revoke a contract or other agreement between the Department
and a Federal student loan servicer in the Unified Servicing
and Data Solution system or a business process operation vendor
if the Secretary determines that the servicer or vendor
knowingly withheld information or made misrepresentations to
the Department in connection with the vetting process described
in subsection (a) or any element of a contract entered into
under subsection (b).
``(2) Notice.--In the event the Secretary determines that a
Federal student loan servicer or vendor described in paragraph
(1) withheld information or made misrepresentations as
described in such paragraph, the Secretary shall provide the
servicer or vendor (as the case may be) with reasonable notice
of such determination and an opportunity for a hearing before
making taking final action to revoke the contract or other
agreement concerned.
``(f) Information in Multiple Languages.--The Secretary and the
Director of the Office of Management and Budget shall ensure that forms
and other information relating the rights of borrowers under this
section are made available in multiple languages (including Spanish,
Mandarin, Haitian Creole, Arabic, and other languages) and are
accessible to borrowers with disabilities.
``(g) Report to Congress.--Not later than 1 year after the date of
enactment of the Student Loan Servicers Accountability Act of 2024, and
on an annual basis thereafter, the Secretary shall submit to Congress a
report that evaluates the status of compliance with this section,
including the compliance of--
``(1) the Department;
``(2) Federal student loan servicers;
``(3) vendors in the Unified Servicing and Data Solution
system; and
``(4) business process operation vendors.
``(h) Definitions.--In this section:
``(1) Federal student loan.--The term `Federal student
loan' means a loan made under part B, D, or E that is held by
the Department.
``(2) Federal student loan servicer.--The term `Federal
student loan servicer' means any individual, State, or private,
for-profit or nonprofit organization, which enters into, or
seeks to enter into, a contract with the Secretary to
administer, through either manual or automated processing, any
aspect of a Federal student loan program, including monitoring,
processing, servicing, or collecting loans.
``(3) Legacy student loan servicing contract.--The term
`legacy student loan servicing contract' means a contract
between the Department and a Federal student loan servicer
that--
``(A) was entered into before the date that is 90
days after the date of enactment of the Student Loan
Servicers Accountability Act of 2024; and
``(B) was in effect as of such date.''.
(b) Conforming Amendment to PSLF.--Section 455(m) of the Higher
Education Act of 1965 (20 U.S.C. 1087e(m)) is amended by adding at the
end the following:
``(5) Treatment of certain periods of forbearance.--Each
month during which an eligible Federal Direct Loan is in an
administrative forbearance described in section 494A(b)(1)
shall be treated as a qualifying payment counted for purposes
of paragraph (1)(A), regardless of whether the borrower made a
payment on such loan during such period.''.
SEC. 3. COMPTROLLER GENERAL STUDY AND REPORT.
(a) Study.--The Comptroller General of the United States shall
conduct a study--
(1) to determine how and to what extent the transfer of
Federal student loans to Federal student loan servicers leads
to disruptions in repayment or servicer errors that affect the
credit ratings of borrowers of such loans, which shall include
evaluation of--
(A) negative effects resulting from a servicer's
failure to maintain accurate, up-to-date information on
the status of a borrower's account;
(B) the root causes of such failures, such as
errors caused by a lack of compatibility between the
information technology systems of different Federal
student loans servicers; and
(C) how such failures impact borrowers, such as by
presenting borrowers with inaccurate account balances,
inaccurate or incomplete payment histories, and
miscalculated monthly payment amounts;
(2) to develop, in consultation with the Director of the
Bureau of Consumer Financial Protection, recommendations to
assist the Department of Education in mitigating any negative
effects of such transfers on the credit ratings of borrowers;
(3) to determine how and to what extent servicing errors,
servicer noncompliance with State or Federal requirements, or
servicer failure to provide timely and accurate information to
borrowers negatively impacts the credit scores of borrowers or
otherwise results in harm to borrowers;
(4) to assess the effectiveness of the processes used by
servicers to receive and respond to consumer complaints,
including--
(A) servicer requirements regarding how complaints
can be filed; and
(B) servicer processes for tracking, investigating,
resolving, and addressing the root causes of consumer
complaints, including complaints submitted through the
websites and feedback systems of the Department of
Education; and
(5) to determine how the Unified Servicing and Data
Solution will effectively address errors and other issues
arising from the transfer of Federal student loans to and from
different servicers.
(b) Comptroller General Report.--Not later than two years after the
date of the enactment of this Act, the Comptroller General shall submit
to the appropriate congressional committees a report on the results of
the study conducted under subsection (a).
(c) Definitions.--In this section:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Health, Education, Labor, and
Pensions of the Senate; and
(B) the Committee on Education and the Workforce of
the House of Representatives.
(2) Federal student loan; federal student loan servicer.--
The terms ``Federal student loan'' and ``Federal student loan
servicer'' have the meanings given those terms in section 494A
of the Higher Education Act of 1965 (as added by section 2 of
this Act).
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