Date: August 19, 2015Author: Denbeaux & Denbeaux
WASHINGTON, DC – U.S. Senator Bob Menendez (D-NJ), senior member of the Senate Banking Committee, today introduced the Christopher Bryski Student Loan Protection Act, legislation designed to increase transparency in the student loan process and provide better financial protections for borrowers and their co-signers in the event of severe injury or death. According to the CFPB, more than 90 percent of private student loans have a co-signer such as a parent or grandparent. The bill is cosponsored by Senators Cory Booker (D-NJ), Kirsten Gillibrand (D-NY), Al Franken (D-Minn) and Elizabeth Warren (D-Mass).
Many private student loans allow a lender to automatically put a borrower into default—and require immediate repayment of the loan—if a student borrower or co-signer dies, becomes disabled, or files for bankruptcy, even if the loan is in good standing and payments continue to be made. Further, while many lenders allow a co-signer to be released from a loan after the borrower meets a minimum number of payments and a credit check, they often make the process so burdensome and inconvenient that, according to the CFPB, less than 1 percent of borrowers are able to actually secure a co-signer release.
“Middle class families like Christopher’s should not have to endure the devastating loss of a child only to learn they must also face the financial hardship of a huge student loan debt,” said Sen. Menendez. “And if a student hasn’t missed a payment and their loan is in good standing, there is absolutely no reason for a lender to put the loan into default because tragedy strikes. Lenders also shouldn’t be able to use hidden tricks and confusing paperwork to stop the fair release of co-signers from a loan. This law is designed to stop these practices and ensure fairness for students and their families.”
The legislation is named in honor of Christopher Bryski, a New Jersey college student who passed away in 2006 after falling into a two-year coma from a severe traumatic brain injury. While mourning the loss of their son, Christopher’s family was blindsided with tens of thousands of dollars in student loan debt they were obligated to repay his private lender, because Christopher’s father had co-signed his loan and they were unaware of their obligations if such a tragic event were to occur.
“We are extremely grateful for the willingness of Senator Menendez to introduce Christopher’s Law,” said the Bryski family. “We know Christopher Bryski, who we lost nine years ago this month, and who the bill is named after, would be grateful and honored as well. This bill, originally proposed by our family in 2009, was brought to US Congress by the late Representative John Adler, and the late Senator Frank Lautenberg. We are hoping this bill passes during this Congressional Session, with the help of Senator Menendez, to help alleviate undue hardship for families already struggling to cope with the death or serious injury of their loved one. Our original intent remains the same, to mandate transparency in the private and federal student loan industry, with six years of hard work to prove it.”
The bill is supported by: National Education Association (NEA), American Federation of Teachers (AFT), Center for Responsible Lending (CRL), U.S. Public Interest Research Group (U.S. PIRG), Consumer Federation of America (CFA), National Association of Student Financial Aid Administrators (NAFSAA), and the American Council on Education (ACE).
Menendez first introduced Christopher’s Law in 2014.
(1) Protects students and their families during a time of loss. The CFPB continues to receive reports from borrowers who discover their loans, which are otherwise in good standing, are now in default because a co-signer, such as a parent or grandparent, has died. CFPB’s recent survey of private student loan contracts found most contracts contain automatic default clauses. Christopher’s Law will prohibit a lender from automatically declaring a default or accelerating the obligations on an otherwise performing loan upon the death, disability, or bankruptcy of a co-signer. Similarly, the lender would be prohibited from declaring a default or acceleration upon the death, disability, or bankruptcy of the student if the co-signer continues to meet all payment obligations under the loan.
(2) Provides for automatic co-signer release when required criteria are met. Many creditors advertise options to release a co-signer from a loan once the borrower meets certain payment and credit conditions, but most creditors are not transparent about their requirements and make the process unduly burdensome in a way that inhibits borrowers’ ability to exercise it. The CFPB reports that less than 1 percent of borrowers with loans that include a co-signer release actually obtained one. Christopher’s Law will require lenders to automatically release the co-signer when the applicable conditions are met, and directs the CFPB to set boundaries to prevent lenders from setting unfairly restrictive requirements for a co-signer release.
(3) Increases transparency and improves disclosures regarding the obligations of co-signers. Christopher’s Law will require lenders to clearly and conspicuously describe, in writing, any co-signers’ obligations on a loan, including the effect a borrower’s or co-signer’s death, disability, or inability to engage in any substantial gainful activity would have on such obligations. To help alleviate confusion surrounding the loan obligation in the event of the death or disability of a borrower, the bill will also require lenders to provide student loan borrowers the option to designate an individual to have the legal authority to act on their behalf in such a circumstance.