Additional disclosures

Section 433(a) of the Higher Education Act of 1965 (20 U.S.C. 1083(a)) is amended—(1)in paragraph (4), by striking the origination fee and and inserting finance charges, the origination fee, and the;(2)by redesignating paragraphs (6) through (19) as paragraphs (7) through (20), respectively; and(3)by inserting after paragraph (5), the following:

(6)the annual percentage rate applicable to the loan, taking into account—(A)the amount of the loan;(B)the stated interest rate of the loan;(C)the standard term for a loan of the same type;(D)any fees or additional costs associated with the loan; and(E)any capitalization of interest on the loan;

Plain language disclosure form

Section 455(p) of the Higher Education Act of 1965 (20 U.S.C. 1087e(p)) is amended—(1)by striking Each institution and inserting the following:

(1)

In general

Each institution

; and

(2)by adding at the end the following:

(2)

Plain language disclosure form

(A)

Development and issuance of form

Not later than 18 months after the date of the enactment of this paragraph, the Secretary shall, based on consumer testing, develop and issue a model form to be known as the Plain Language Disclosure Form that shall be used by institutions and contractors described in paragraph (1) to comply with the disclosure requirements of such paragraph.(B)

Format

The Secretary shall ensure that the Plain Language Disclosure Form—(i)enables borrowers to easily identify the information required to be disclosed under section 433(a) with respect to a loan and loan repayment options (including income-based and income contingent repayment), with emphasis on the loan terms determined by the Secretary to be critical to understanding the total costs of the loan and the estimated monthly repayment;(ii)has a clear format and design, including easily readable font; and(iii)is as succinct as practicable.(C)

Consultation

In developing the Plain Language Disclosure Form, the Secretary shall, as appropriate, consult with—(i)the Federal Reserve Board;(ii)institutions and contractors described in paragraph (1);(iii)borrowers of loans under this part; and(iv)other organizations involved in the provision of financial assistance to students, as identified by the Secretary.(3)

Electronic system for compliance

In carrying out paragraph (2), the Secretary shall develop and implement an electronic system that may be used by institutions and contractors described in paragraph (1) to generate a Plain Language Disclosure Form for each borrower by—(A)enabling institutions and contractors to enter personalized loan request information electronically;(B)integrating appropriate data found in the National Student Loan Data System; and(C)generating and integrating personalized borrower information.(4)

Limit on liability

Nothing in this subsection shall be construed to create a private right of action against an institution or contractor described in paragraph (1) with respect to the form or electronic system developed under this paragraph.(5)

Borrower signature required

Beginning after the issuance of the Plain Language Disclosure Form by the Secretary under paragraph (2), a loan may not be issued to a borrower under this part unless the borrower acknowledges, in writing (which may include an electronic signature), that the borrower has read the Plain Language Disclosure Form for the loan concerned.(6)

Consumer testing defined

In this subsection, the term consumer testing means the solicitation of feedback from individuals, including borrowers and prospective borrowers of loans under this part (as determined by the Secretary), about the usefulness of different methods of disclosing material terms of loans on the Plain Language Disclosure Form to maximize borrowers’ understanding of the terms and conditions of such loans.