[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1720 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1720

 To amend title IV of the Higher Education Act of 1965 to establish a 
                   Federal Supplemental Loan Program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 27, 2007

Mr. Brown (for himself and Mr. Sanders) introduced the following bill; 
     which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
 To amend title IV of the Higher Education Act of 1965 to establish a 
                   Federal Supplemental Loan Program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. FEDERAL SUPPLEMENTAL LOAN PROGRAM.

    Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et 
seq.) is amended by adding at the end the following:

              ``PART I--FEDERAL SUPPLEMENTAL LOAN PROGRAM

``SEC. 499. FEDERAL SUPPLEMENTAL LOAN PROGRAM.

    ``(a) Program Authorized.--The Secretary shall carry out a Federal 
Supplemental Loan Program in accordance with this section.
    ``(b) Eligible Individuals.--An individual shall be eligible to 
receive a loan under this section if such individual attends an 
institution of higher education on a full-time basis as an 
undergraduate or graduate student.
    ``(c) Fixed Interest Rate Loans and Variable Interest Rate Loans.--
            ``(1) In general.--Beginning with academic year 2008-2009, 
        the Secretary shall make fixed interest rate loans and variable 
        interest rate loans to eligible individuals under this section 
        to enable such individuals to pursue their courses of study at 
        institutions of higher education on a full-time basis.
            ``(2) Fixed interest rate loans.--With respect to a fixed 
        interest rate loan made under this section, the applicable rate 
        of interest on the principal balance of the loan shall be set 
        by the Secretary at the lowest rate for the borrower that will 
        result in no net cost to the Federal Government over the life 
        of the loan.
            ``(3) Variable interest rate loans.--With respect to a 
        variable interest rate loan made under this section, the 
        applicable rate of interest shall, during any 12-month period 
        beginning on July 1 and ending on June 30, be determined on the 
        preceding June 1 and be equal to--
                    ``(A) the bond equivalent rate of 91-day Treasury 
                bills auctioned at the final auction held prior to such 
                June 1; plus
                    ``(B) a margin determined on an annual basis by the 
                Secretary to result in the lowest rate for the borrower 
                that will result in no net cost to the Federal 
                Government over the life of the loan.
    ``(d) Maximum Loan Amount.--
            ``(1) In general.--The Secretary shall make a loan under 
        this section in any amount up to the maximum amount described 
        in paragraph (2).
            ``(2) Maximum amount.--For an eligible individual, the 
        maximum amount shall be calculated by subtracting from the 
        estimated cost of attendance for such individual to attend the 
        institution of higher education, any amount of financial aid 
        awarded to the eligible individual and any loan amount for 
        which the individual is eligible, but does not receive such 
        amount, pursuant to the subsidized loan program established 
        under section 428 and the unsubsidized loan program established 
        under section 428H.
    ``(e) Cosigners.--The Secretary shall offer to eligible individuals 
both fixed interest rate loans and variable interest rate loans under 
this section with the option of having a cosigner or not having a 
cosigner.
    ``(f) Repayment.--The Secretary shall offer a borrower of a loan 
made under this section the same repayment plans the Secretary offers 
under section 455(d) for Federal Direct Loans.
    ``(g) Consolidation.--A borrower of a loan made under this section 
may consolidate such loan with Federal Direct Loans made under part D.
    ``(h) Disclosures and Cooling Off Period.--
            ``(1) Disclosures.--The Secretary shall provide disclosures 
        to each borrower of a loan made under this section that are not 
        less than as protective as the disclosures required under the 
        Truth in Lending Act (15 U.S.C. 1601 et seq.), including 
        providing a description of the terms, fees, and annual 
        percentage rate with respect to the loan before signing the 
        promissory note.
            ``(2) Cooling off period.--With respect to loans made under 
        this section, the Secretary shall provide a cooling off period 
        for the borrower of not less than 10 business days during which 
        an individual may rescind consent to borrow funds pursuant to 
        this section.
    ``(i) Discretion to Alter.--The Secretary may design or alter the 
loan program under this section with features similar to those offered 
by private lenders as part of loans financing postsecondary 
education.''.
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