Student Loan Disclosure Transparency Act of 2023
This bill requires lenders disbursing federal student loans to disclose additional information to borrowers and increase the frequency of such disclosures.
Specifically, prior to disbursement, the lender making a loan must disclose (1) the principal amount, interest rate, and number of required monthly payments to be made on the loan; (2) the estimated balance owed by the borrower; and (3) the estimated aggregate amount the borrower will pay.
Prior to repayment, the lender must disclose the projected total of interest charges that the borrower will pay on the loan, as well as projections of the borrower's monthly repayment amount.
The bill also requires certain disclosures for the life of the loan. In particular, lenders must disclose information about loans on a monthly, rather than periodic, basis. Lenders must also provide borrowers who are not in a repayment status (e.g., a borrower who is in school or in a deferment period) with a monthly statement.
The Department of Education must obtain feedback from borrowers and report on the usefulness and effectiveness of such disclosures.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1371 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 1371
To improve Federal student loan disclosures, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 3, 2023
Ms. Spanberger (for herself, Mr. Waltz, Mrs. Chavez-DeRemer, Mr.
Johnson of Ohio, Ms. Schrier, and Mr. Stanton) introduced the following
bill; which was referred to the Committee on Education and the
Workforce
_______________________________________________________________________
A BILL
To improve Federal student loan disclosures, 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 Loan Disclosure Transparency
Act of 2023''.
SEC. 2. REQUIRED DISCLOSURES BEFORE DISBURSEMENT.
Section 433(a) of the Higher Education Act of 1965 (20 U.S.C.
1083(a)) is amended--
(1) by striking ``and'' at the end of paragraph (18);
(2) by striking the period and inserting ``; and'' at the
end of paragraph (19); and
(3) by adding at the end the following new paragraph:
``(20) a separate written or electronic statement, in
simple and understandable terms, showing--
``(A) for the loan or loans being disbursed--
``(i) the principal amount of the loan, the
stated interest rate on the loan, the number of
required monthly payments to be made on the
loan (which shall be based on a standard
repayment plan or, in the case of a borrower
who has selected another repayment plan, on the
repayment plan selected by the borrower), and
the estimated number of months before the start
of the repayment period for the loan (based on
the expected date on which the repayment period
is to begin or the deferment period under
428B(d)(1) is to end, as applicable);
``(ii) the estimated balance to be owed by
the borrower on such loan (including, if
applicable, the estimated amount of interest to
be capitalized) as of the scheduled date on
which the repayment period is to begin or the
deferment period under 428B(d)(1) is to end, as
applicable, and an estimate of the projected
monthly payment; and
``(iii) an estimate of the aggregate amount
the borrower will pay for the loan or loans,
including the total amount of monthly payments
made over the life of the loan plus the amount
of any charges for the loan, such as an
origination fee;
``(B) for each other loan owed by the borrower to
the lender, the information described in clauses (i)
through (iii) of subparagraph (A); and
``(C) an estimate of the total cumulative amount
the borrower will pay for all loans owed by the
borrower to that lender, including the loan being
disbursed, as determined by calculating the sum of the
estimated aggregate amounts the borrower will pay for
each loan in accordance with subparagraphs (A) and
(B).''.
SEC. 3. DISCLOSURE OF PROJECTED MONTHLY PAYMENT AMOUNTS.
Section 433 of the Higher Education Act of 1965 (20 U.S.C. 1083) is
further amended--
(1) in subsection (b), by amending paragraph (9) to read as
follows:
``(9) information of interest charges, accrual, and
payments, including--
``(A) the projected total of interest charges which
the borrower will pay on the loan or loans, assuming
that the borrower makes payments exactly in accordance
with the repayment schedule;
``(B) projections of the borrower's monthly
repayment amount, assuming interest accrual resulting
from capitalization of interest while the borrower, or
the student on whose behalf the loan is made, is in
school (as applicable), which shall disclose the cost
to the borrower of--
``(i) capitalizing the interest; and
``(ii) paying the interest as the interest
accrues; and
``(C) if the borrower has already paid interest on
the loan or loans, the amount of interest paid;''; and
(2) by striking subsection (d), and redesignating
subsections (e) and (f) as subsections (d) and (e),
respectively.
SEC. 4. REQUIRED MONTHLY DISCLOSURES.
Section 433(d) of the Higher Education Act of 1965, as so
redesignated by section 3 of this Act, is amended--
(1) in the subsection header, by striking ``During
Repayment'' and inserting ``for the Life of the Loan''; and
(2) by amending paragraph (1) to read as follows:
``(1) Pertinent information about loans provided on a
monthly basis.--Each eligible lender shall provide the borrower
of one or more loans made, insured, or guaranteed under this
part or part D with a written monthly bill or statement
(including through electronic means), in simple and
understandable terms, of pertinent loan information described
in this paragraph that--
``(A) with respect to a borrower who is in
repayment status, shall include a bill that corresponds
to each payment installment time period in which a
payment is due;
``(B) with respect to a borrower who is not in
repayment status, shall be a statement for each month
of the period during which the borrower is not required
to make a payment to the eligible lender, including
while the borrower is in school and during periods of
deferment or forbearance;
``(C) shall be provided to the borrower of a loan
not more than 30 days after the first disbursement of
the loan, and monthly thereafter for the life of the
loan; and
``(D) shall include, for all outstanding loans
made, insured, or guaranteed under this part or part D
by the eligible lender to the borrower--
``(i) the original principal amount of each
of the borrower's loans owed to that lender,
and the original principal amount of those
loans in the aggregate;
``(ii) the borrower's current balance on
each loan and on all loans in the aggregate, as
of the time of the bill or statement, as
applicable;
``(iii) the interest rate on each loan;
``(iv) the total amount the borrower has
paid in interest on each loan and on all loans
in the aggregate;
``(v) the amount of interest that has
accumulated on each loan and on all loans in
the aggregate since the last statement, and the
total interest accrued to date on each loan and
on all loans in the aggregate during the life
of the loans;
``(vi) the aggregate amount the borrower
has paid for each loan and all loans in the
aggregate, including the amount the borrower
has paid in interest, the amount the borrower
has paid in fees, and the amount the borrower
has paid against the principal;
``(vii) an estimate of the aggregate amount
the borrower will pay during the life of the
loan for each loan and on all loans in the
aggregate, including the total amount of
monthly payments made over the life of the
loans plus the amount of any charges for the
loans, such as origination fees;
``(viii) a description of each fee the
borrower has been charged for the most recently
preceding installment time period;
``(ix) the date by which the borrower needs
to make a payment in order to avoid additional
fees and the amount of such payment and the
amount of such fees;
``(x) with respect to a borrower who is not
in repayment, the estimated balance to be owed
by the borrower on each loan and on all loans
in the aggregate, and an estimate of the
projected monthly payment on each loan and on
all loans in the aggregate, on the estimated
date the borrower will enter (or re-enter)
repayment status;
``(xi) a reminder that the borrower has the
option to change repayment plans, a list of the
names of the repayment plans available to the
borrower, a link to the appropriate page of the
Department's website to obtain a more detailed
description of the repayment plans, and
directions for the borrower to request a change
in repayment plan;
``(xii) an explanation--
``(I) that the borrower has the
option to pay the interest that accrues
on each loan while the borrower is a
student at an institution of higher
education or during a period of
deferment or forbearance, if
applicable; and
``(II) if the borrower does not pay
such interest while attending an
institution or during a period of
deferment or forbearance, any
accumulated interest on the loan will
be capitalized when the loan goes into
repayment, resulting in more interest
being paid over the life of the loan;
``(xiii) an explanation that making even
small payments of any amount while the borrower
is a student at an institution of higher
education, or during a period of deferment or
forbearance, if applicable, can help to offset
interest accrual over the life of the loan;
``(xiv) the lender's or loan servicer's
address, toll-free phone number, and website
for payment and billing error purposes,
including information about how a borrower can
make voluntary payments when a loan is not in
repayment status; and
``(xv) an explanation to borrowers that
loans made under this part of part D have
significant protections for borrowers that
aren't offered by the private market, including
a number of income-driven repayment options,
which offer flexible repayments terms and loan
forgiveness for struggling borrowers.''.
SEC. 5. REPORT TO CONGRESS ON CONSUMER TESTING.
Not later than 24 months after the date of enactment of this Act,
the Secretary shall--
(1) conduct consumer testing by obtaining feedback from
individuals, including borrowers and prospective borrowers of
loans under the Higher Education Act of 1965, on the usefulness
and effectiveness of disclosing monthly terms of loans under
section 433 of the Higher Education Act of 1965, as amended by
this Act, to maximize borrowers' understanding of the terms and
conditions of such loans; and
(2) submit to Congress a report on the results of such
consumer testing.
SEC. 6. EFFECTIVE DATE.
The amendments made by this Act to the Higher Education Act of 1965
shall take effect 180 days after the date of enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Education and the Workforce.
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