Student Loan Disclosure Transparency Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2090 To improve Federal student loan disclosures, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 19, 2021 Ms. HERRERA BEUTLER (for herself, Ms. SPANBERGER, Mr. GAETZ, Mr. JOHNSON of Ohio, Ms. BROWNLEY, Mr. WALTZ, Ms. CRAIG, Miss GONZA´LEZ-COLO´N, Mr. STANTON, Ms. SCHRIER, and Mr. RUTHERFORD) introduced the following bill; which was referred to the Committee on Education and Labor A BILL To improve Federal student loan disclosures, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Student Loan Disclo- 4 sure Transparency Act of 2021’’. 5 SEC. 2. REQUIRED DISCLOSURES BEFORE DISBURSEMENT. 6 Section 433(a) of the Higher Education Act of 1965 7 (20 U.S.C. 1083(a)) is amended— 8 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 2090 IH (1) by striking ‘‘and’’ at the end of paragraph 1 (18); 2 (2) by striking the period and inserting ‘‘; and’’ 3 at the end of paragraph (19); and 4 (3) by adding at the end the following new 5 paragraph: 6 ‘‘(20) a separate written or electronic state- 7 ment, in simple and understandable terms, show- 8 ing— 9 ‘‘(A) for the loan or loans being dis- 10 bursed— 11 ‘‘(i) the principal amount of the loan, 12 the stated interest rate on the loan, the 13 number of required monthly payments to 14 be made on the loan (which shall be based 15 on a standard repayment plan or, in the 16 case of a borrower who has selected an- 17 other repayment plan, on the repayment 18 plan selected by the borrower), and the es- 19 timated number of months before the start 20 of the repayment period for the loan 21 (based on the expected date on which the 22 repayment period is to begin or the 23 deferment period under 428B(d)(1) is to 24 end, as applicable); 25 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 2090 IH ‘‘(ii) the estimated balance to be owed 1 by the borrower on such loan (including, if 2 applicable, the estimated amount of inter- 3 est to be capitalized) as of the scheduled 4 date on which the repayment period is to 5 begin or the deferment period under 6 428B(d)(1) is to end, as applicable, and an 7 estimate of the projected monthly payment; 8 and 9 ‘‘(iii) an estimate of the aggregate 10 amount the borrower will pay for the loan 11 or loans, including the total amount of 12 monthly payments made over the life of 13 the loan plus the amount of any charges 14 for the loan, such as an origination fee; 15 ‘‘(B) for each other loan owed by the bor- 16 rower to the lender, the information described 17 in clauses (i) through (iii) of subparagraph (A); 18 and 19 ‘‘(C) an estimate of the total cumulative 20 amount the borrower will pay for all loans owed 21 by the borrower to that lender, including the 22 loan being disbursed, as determined by calcu- 23 lating the sum of the estimated aggregate 24 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 2090 IH amounts the borrower will pay for each loan in 1 accordance with subparagraphs (A) and (B).’’. 2 SEC. 3. DISCLOSURE OF PROJECTED MONTHLY PAYMENT 3 AMOUNTS. 4 Section 433 of the Higher Education Act of 1965 (20 5 U.S.C. 1083) is further amended— 6 (1) in subsection (b), by amending paragraph 7 (9) to read as follows: 8 ‘‘(9) information of interest charges, accrual, 9 and payments, including— 10 ‘‘(A) the projected total of interest charges 11 which the borrower will pay on the loan or 12 loans, assuming that the borrower makes pay- 13 ments exactly in accordance with the repayment 14 schedule; 15 ‘‘(B) projections of the borrower’s monthly 16 repayment amount, assuming interest accrual 17 resulting from capitalization of interest while 18 the borrower, or the student on whose behalf 19 the loan is made, is in school (as applicable), 20 which shall disclose the cost to the borrower 21 of— 22 ‘‘(i) capitalizing the interest; and 23 ‘‘(ii) paying the interest as the inter- 24 est accrues; and 25 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 2090 IH ‘‘(C) if the borrower has already paid in- 1 terest on the loan or loans, the amount of inter- 2 est paid;’’; and 3 (2) by striking subsection (d), and redesig- 4 nating subsections (e) and (f) as subsections (d) and 5 (e), respectively. 6 SEC. 4. REQUIRED MONTHLY DISCLOSURES. 7 Section 433(d) of the Higher Education Act of 1965, 8 as so redesignated by section 3 of this Act, is amended— 9 (1) in the subsection header, by striking ‘‘DUR- 10 ING REPAYMENT’’ and inserting ‘‘FOR THE LIFE OF 11 THE LOAN’’; and 12 (2) by amending paragraph (1) to read as fol- 13 lows: 14 ‘‘(1) PERTINENT INFORMATION ABOUT LOANS 15 PROVIDED ON A MONTHLY BASIS.—Each eligible 16 lender shall provide the borrower of one or more 17 loans made, insured, or guaranteed under this part 18 or part D with a written monthly bill or statement 19 (including through electronic means), in simple and 20 understandable terms, of pertinent loan information 21 described in this paragraph that— 22 ‘‘(A) with respect to a borrower who is in 23 repayment status, shall include a bill that cor- 24 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 2090 IH responds to each payment installment time pe- 1 riod in which a payment is due; 2 ‘‘(B) with respect to a borrower who is not 3 in repayment status, shall be a statement for 4 each month of the period during which the bor- 5 rower is not required to make a payment to the 6 eligible lender, including while the borrower is 7 in school and during periods of deferment or 8 forbearance; 9 ‘‘(C) shall be provided to the borrower of 10 a loan not more than 30 days after the first 11 disbursement of the loan, and monthly there- 12 after for the life of the loan; and 13 ‘‘(D) shall include, for all outstanding 14 loans made, insured, or guaranteed under this 15 part or part D by the eligible lender to the bor- 16 rower— 17 ‘‘(i) the original principal amount of 18 each of the borrower’s loans owed to that 19 lender, and the original principal amount 20 of those loans in the aggregate; 21 ‘‘(ii) the borrower’s current balance 22 on each loan and on all loans in the aggre- 23 gate, as of the time of the bill or state- 24 ment, as applicable; 25 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 2090 IH ‘‘(iii) the interest rate on each loan; 1 ‘‘(iv) the total amount the borrower 2 has paid in interest on each loan and on 3 all loans in the aggregate; 4 ‘‘(v) the amount of interest that has 5 accumulated on each loan and on all loans 6 in the aggregate since the last statement, 7 and the total interest accrued to date on 8 each loan and on all loans in the aggregate 9 during the life of the loans; 10 ‘‘(vi) the aggregate amount the bor- 11 rower has paid for each loan and all loans 12 in the aggregate, including the amount the 13 borrower has paid in interest, the amount 14 the borrower has paid in fees, and the 15 amount the borrower has paid against the 16 principal; 17 ‘‘(vii) an estimate of the aggregate 18 amount the borrower will pay during the 19 life of the loan for each loan and on all 20 loans in the aggregate, including the total 21 amount of monthly payments made over 22 the life of the loans plus the amount of any 23 charges for the loans, such as origination 24 fees; 25 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 2090 IH ‘‘(viii) a description of each fee the 1 borrower has been charged for the most re- 2 cently preceding installment time period; 3 ‘‘(ix) the date by which the borrower 4 needs to make a payment in order to avoid 5 additional fees and the amount of such 6 payment and the amount of such fees; 7 ‘‘(x) with respect to a borrower who is 8 not in repayment, the estimated balance to 9 be owed by the borrower on each loan and 10 on all loans in the aggregate, and an esti- 11 mate of the projected monthly payment on 12 each loan and on all loans in the aggre- 13 gate, on the estimated date the borrower 14 will enter (or re-enter) repayment status; 15 ‘‘(xi) a reminder that the borrower 16 has the option to change repayment plans, 17 a list of the names of the repayment plans 18 available to the borrower, a link to the ap- 19 propriate page of the Department’s website 20 to obtain a more detailed description of the 21 repayment plans, and directions for the 22 borrower to request a change in repayment 23 plan; 24 ‘‘(xii) an explanation— 25 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 2090 IH ‘‘(I) that the borrower has the 1 option to pay the interest that accrues 2 on each loan while the borrower is a 3 student at an institution of higher 4 education or during a period of 5 deferment or forbearance, if applica- 6 ble; and 7 ‘‘(II) if the borrower does not 8 pay such interest while attending an 9 institution or during a period of 10 deferment or forbearance, any accu- 11 mulated interest on the loan will be 12 capitalized when the loan goes into re- 13 payment, resulting in more interest 14 being paid over the life of the loan; 15 ‘‘(xiii) an explanation that making 16 even small payments of any amount while 17 the borrower is a student at an institution 18 of higher education, or during a period of 19 deferment or forbearance, if applicable, can 20 help to offset interest accrual over the life 21 of the loan; 22 ‘‘(xiv) the lender’s or loan servicer’s 23 address, toll-free phone number, and 24 website for payment and billing error pur- 25 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 2090 IH poses, including information about how a 1 borrower can make voluntary payments 2 when a loan is not in repayment status; 3 and 4 ‘‘(xv) an explanation to borrowers 5 that loans made under this part of part D 6 have significant protections for borrowers 7 that aren’t offered by the private market, 8 including a number of income-driven re- 9 payment options, which offer flexible re- 10 payments terms and loan forgiveness for 11 struggling borrowers.’’. 12 SEC. 5. REPORT TO CONGRESS ON CONSUMER TESTING. 13 Not later than 24 months after the date of enactment 14 of this Act, the Secretary shall— 15 (1) conduct consumer testing by obtaining feed- 16 back from individuals, including borrowers and pro- 17 spective borrowers of loans under the Higher Edu- 18 cation Act of 1965, on the usefulness and effective- 19 ness of disclosing monthly terms of loans under sec- 20 tion 433 of the Higher Education Act of 1965, as 21 amended by this Act, to maximize borrowers’ under- 22 standing of the terms and conditions of such loans; 23 and 24 VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 2090 IH (2) submit to Congress a report on the results 1 of such consumer testing. 2 SEC. 6. EFFECTIVE DATE. 3 The amendments made by this Act to the Higher 4 Education Act of 1965 shall take effect 180 days after 5 the date of enactment of this Act. 6 Æ VerDate Sep 11 2014 21:58 May 19, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H2090.IH H2090 kjohnson on DSK79L0C42PROD with BILLS