[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1400 Introduced in Senate (IS)]
110th CONGRESS
1st Session
S. 1400
To amend the Higher Education Act of 1965 to improve the information
and repayment options provided to student borrowers, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 15, 2007
Mr. Enzi (for himself, Mr. Alexander, Mr. Allard, Mr. Burr, Mr.
Isakson, and Ms. Murkowski) introduced the following bill; which was
read twice and referred to the Committee on Health, Education, Labor,
and Pensions
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to improve the information
and repayment options provided to student borrowers, 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 Information Means a Positive
Loan Experience Act of 2007''.
SEC. 2. PURPOSE.
The purpose of this Act is to improve--
(1) the repayment plans available to borrowers of loans
under title IV of the Higher Education Act of 1965 (20 U.S.C.
1070 et seq.); and
(2) borrowers' understanding of--
(A) the repayment plans available for such loans;
(B) the conditions under which such loans may be
cancelled or forgiven; and
(C) the availability of deferments, forbearance,
and consolidation for such loans, and the impact on the
balance of such loans and total interest paid of using
those options.
SEC. 3. FLEXIBLE REPAYMENT PLANS.
(a) Student Loan Requirements.--Section 427(a)(2)(H) of the Higher
Education Act of 1965 (20 U.S.C. 1077(a)(2)(H)) is amended by inserting
``, and, if applicable, the option of electing to delay repayment or
principal for the first 2 years of the repayment period'' before the
semicolon at the end.
(b) FFEL Repayment Plans.--Section 428(b)(9) of the Higher
Education Act of 1965 (20 U.S.C. 1078(b)(9)) is amended--
(1) in subparagraph (A)--
(A) in the first sentence of the matter preceding
clause (i), by inserting ``, and the election described
in subparagraph (C)'' after ``thereon'';
(B) in clause (ii), by inserting ``, which plan
shall be established by the lender with the informed
agreement of the borrower'' before the semicolon at the
end; and
(C) by striking clause (iv) and inserting the
following:
``(iv) for new borrowers on or after
October 7, 1998, who accumulate outstanding
loans under this part totaling more than
$20,000, an extended repayment plan, with a
fixed annual or graduated repayment amount paid
over an extended period, not to exceed 25
years, except that the borrower shall repay
annually a minimum amount determined in
accordance with paragraph (1)(L)(i).''; and
(2) by adding at the end the following:
``(C) Option for first 2 years.--A lender shall
offer each new borrower of loans on or after October 7,
1998, the opportunity to elect, for the first 2 years
of repayment of such loans, to delay the repayment of
principal, regardless of the repayment plan selected
under this paragraph.''.
(c) Direct Loan Repayment Plans.--Section 455(d) of the Higher
Education Act of 1965 (20 U.S.C. 1087e(d)) is amended--
(1) in paragraph (1)--
(A) in the matter preceding subparagraph (A)--
(i) in the first sentence, by inserting ``,
and the election described in paragraph (6)''
after ``the loan''; and
(ii) in the third sentence, by striking
``may choose'' and inserting ``shall choose
from''; and
(B) in subparagraph (C), by striking
``428(b)(9)(A)(v)'' and inserting ``428(b)(9)(A)(iv)'';
and
(2) by adding at the end the following:
``(6) Option for first 2 years.--The Secretary shall offer
each new borrower of loans on or after October 7, 1998, the
opportunity to elect, for the first 2 years of repayment of
such loans, to delay the repayment of principal, consistent
with section 428(b)(9)(C).''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to loans for which the first disbursement is made on
or after October 7, 1998.
SEC. 4. REVISED DEFINITION OF ECONOMIC HARDSHIP.
Section 435(o)(1) of the Higher Education Act of 1965 (20 U.S.C.
1085(o)(1)) is amended--
(1) in subparagraph (A)(ii), by striking ``100 percent of
the poverty line for a family of 2'' and inserting ``150
percent of the poverty line applicable to the borrower's family
size''; and
(2) in subparagraph (B)(ii), by striking ``to a family of
2'' and inserting ``to the borrower's family size''.
SEC. 5. USEFUL AND COMPREHENSIVE STUDENT LOAN INFORMATION FOR
BORROWERS.
(a) Insurance Program Agreements.--Section 428(b)(1) of the Higher
Education Act of 1965 (20 U.S.C. 1078(b)(1)) is amended--
(1) in subparagraph (X), by striking ``and'' after the
semicolon;
(2) in subparagraph (Y)(ii), by striking the period at the
end and inserting ``; and''; and
(3) by adding at the end the following:
``(Z) provides that the lender shall, at the time
the lender grants a deferment to a borrower who
received a loan under section 428H and is eligible for
a deferment under section 427(a)(2)(C), provide
information to the borrower to enable the borrower to
understand the impact of capitalization of interest on
the borrower's loan principal and total amount of
interest to be paid during the life of the loan.''.
(b) Guaranty Agreements.--Section 428(c)(3)(C) of the Higher
Education Act of 1965 (20 U.S.C. 1078(c)(3)(C)) is amended--
(1) in clause (i), by striking ``and'' after the semicolon;
(2) in clause (ii), by striking ``and'' after the
semicolon;
(3) by inserting after clause (ii) the following:
``(iii) the lender shall, at the time of
granting a borrower forbearance, provide
information to the borrower to enable the
borrower to understand the impact of
capitalization of interest on the borrower's
loan principal and total amount of interest to
be paid during the life of the loan; and
``(iv) the lender shall contact the
borrower not less often than once every 180
days during the period of forbearance to inform
the borrower of--
``(I) the amount of unpaid
principal and the amount of interest
that has accrued since the last
statement of such amounts provided to
the borrower by the lender;
``(II) the fact that interest will
accrue on the loan for the period of
forbearance;
``(III) the amount of interest that
will be capitalized, and the date on
which capitalization will occur;
``(IV) the ability of the borrower
to pay the interest that has accrued
before the interest is capitalized; and
``(V) the borrower's option to
discontinue the forbearance at any
time; and''.
(c) Lender Agreements.--Section 428C(b)(1) of the Higher Education
Act of 1965 (20 U.S.C. 1078-3(b)(1)) is amended--
(1) in subparagraph (E), by striking ``and'' after the
semicolon;
(2) by redesignating subparagraph (F) as subparagraph (G);
and
(3) by inserting after subparagraph (E) the following:
``(F) that the lender shall, upon application for a
consolidation loan, provide the borrower with
information about the possible impact of loan
consolidation, including--
``(i) the total interest to be paid and
fees to be paid on the consolidation loan, and
the length of repayment for the loan;
``(ii) whether consolidation would result
in a loss of loan benefits under this part or
part D, including loan forgiveness,
cancellation, and deferment;
``(iii) in the case of a borrower that
plans to include a Federal Perkins Loan under
part E in the consolidation loan, that once the
borrower adds the borrower's Federal Perkins
Loan to a consolidation loan--
``(I) the borrower will lose all
interest-free periods that would have
been available for such loan under part
E, such as the periods during which no
interest accrues on the Federal Perkins
Loan while the borrower is enrolled in
school at least half-time, the grace
period, and the periods during which
the borrower's student loan repayments
are deferred under section 464(c)(2);
and
``(II) the borrower will no longer
be eligible for cancellation of part or
all of a Federal Perkins loan under
section 465(a);
``(iv) the ability of the borrower to
prepay the consolidation loan, pay such loan on
a shorter schedule, and to change repayment
plans;
``(v) that borrower benefit programs for a
consolidation loan may vary among different
lenders;
``(vi) the consequences of default on the
consolidation loan; and
``(vii) that by applying for a
consolidation loan, the borrower is not
obligated to agree to take the consolidation
loan; and''.
(d) Information Dissemination.--Subparagraph (M) of section
485(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1092(a)(1)(M))
is amended to read as follows:
``(M) the terms and conditions of the loans that students
receive under parts B, D, and E;''.
(e) Exit Counseling.--Subparagraph (A) of section 485(b)(1) of the
Higher Education Act of 1965 (20 U.S.C. 1092(b)(1)(A)) is amended by
striking the subparagraph designation and all that follows through
``465.'' and inserting the following: ``(A) Each eligible institution
shall, through financial aid offices or otherwise, provide counseling
to borrowers of loans that are made, insured, or guaranteed under part
B (other than loans made pursuant to section 428C or loans made to
parents pursuant to section 428B), or made under part D (other than
Federal Direct Consolidation Loans or Federal Direct PLUS Loans made to
parents) or E, prior to the completion of the course of study for which
the borrower enrolled at the institution or at the time of departure
from such institution. The counseling required by this subsection shall
include--
``(i) information on the repayment plans available,
including a discussion of the different features of each plan
and sample information showing the difference in interest paid
and total payments under each plan;
``(ii) the average anticipated monthly repayments under the
standard repayment plan and, at the borrower's request, the
other repayment plans for which the borrower is eligible;
``(iii) such debt and management strategies as the
institution determines are designed to facilitate the repayment
of such indebtedness;
``(iv) an explanation that the borrower has the ability to
prepay each such loan, pay the loan on a shorter schedule, and
change repayment plans;
``(v) the terms and conditions under which the student may
obtain full or partial forgiveness or cancellation of principal
or interest under sections 428J, 460, and 465 (to the extent
that such sections are applicable to the student's loans);
``(vi) the terms and conditions under which the student may
defer repayment of principal or interest or be granted
forbearance under subsections (b)(1)(M) and (o) of section 428,
428H(e)(7), subsections (f) and (l) of section 455, and section
464(c)(2), and the potential impact of such deferment or
forbearance;
``(vii) the consequences of default on such loans;
``(viii) information on the effects of using a
consolidation loan to discharge the borrower's loans under
parts B, D, and E, including, at a minimum--
``(I) the effects of consolidation on total
interest to be paid, fees to be paid, and length of
repayment;
``(II) the effects of consolidation on a borrower's
underlying loan benefits, including all grace periods,
loan forgiveness, cancellation, and deferment
opportunities;
``(III) the ability of the borrower to prepay the
loan or change repayment plans; and
``(IV) that borrower benefit programs may vary
among different loan holders; and
``(ix) a notice to borrowers about the availability of the
National Student Loan Data System and how the system can be
used by a borrower to obtain information on the status of the
borrower's loans.''.
(f) Conforming Amendment.--Section 455(g) of the Higher Education
Act of 1965 (20 U.S.C. 1087e(g)) is amended by striking
``428C(b)(1)(F)'' and inserting ``428C(b)(1)(G)''.
SEC. 6. REPORT REQUIRED.
Section 141(c) of the Higher Education Act of 1965 (20 U.S.C.
1018(c)) is amended--
(1) in the subsection heading, by striking ``Plan and
Report'' and inserting ``Plan, Report, and Briefing''; and
(2) by adding at the end the following:
``(4) Briefing on enforcement of student loan provisions.--
The Chief Operating Officer shall provide an annual briefing to
the members of the authorizing committees on the steps the PBO
has taken and is taking to ensure that lenders are providing
the information required under clauses (iii) and (iv) of
section 428(c)(3)(C) and sections 428(b)(1)(Z) and
428C(b)(1)(F).''.
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