H.R.5287 – Fair Student Loan Debt Collection Practices Act

  • Source: congress.gov

Treliant Takeaway:

Treliant knows student lending and the Fair Debt Collection Practices Act (FDCPA). If you need assistance with assessing and managing your fair servicing risk, or determining the impact of the proposed legislation on your firm’s activities, Treliant can help.

Article Highlights:

On December 3, 2019, Representative Al Lawson, Jr. introduced House Bill H.R. 5287 – Fair Student Loan Debt Collection Practices Act in order to prohibit debt collectors from collecting on certain Federal student loan debts.

If it becomes a law, the bill would provide additional protection for borrowers. First, a debt collector would have to certify the borrower is not eligible for any administrative discharge of the federal student loan debt before collecting on the debt. This would effectively shift the burden of seeking administrative discharge of federal student loan debt from the borrower to the servicer or debt collector.

Second, all persons or companies under contract with the Secretary of Education to collect federal student loan debts would be subject to the Fair Debt Collection Practices Act.  The bill also proposes to limit wage garnishment authority for federal student loan debts to reflect the availability of debt cancellation, discharge, or forgiveness and income-based repayment plans.

Finally, the bill would prohibit collection efforts if a similarly situated borrower under an income-driven repayment plan would not have to make payments on their federal student debt.  Under an income-driven repayment plan, borrowers experiencing financial hardship can have their aggregate monthly payment for all federal student loans reduced. The eligibility is based on their annual income and annual loan amount due.

The bill was referred to the Committee on Financial Services and the Committees on the Judiciary, and Education and Labor on 12/3/2019.   The Committee on Financial Services held a Mark-up Session on 12/10/2019 for two days.  At the conclusion, the committee voted to have the Act amended by a vote of 32 Yeas and 24 Nays.  The last action taken by the House was on 12/19/2019 where the bill was referred to the Subcommittee on Antitrust, Commercial, and Administrative Law by the Committee on the Judiciary.