II 110th CONGRESS 1st Session S. 1720 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.
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: I
Federal Supplemental Loan Program
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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