What This Bill Does
This bill requires lenders to provide clearer information to student loan borrowers before and during the life of their loans. The bill changes what information lenders must disclose so borrowers can better understand loan costs and repayment options.
##
Who It Affects
- Student loan borrowers
- Prospective student loan borrowers
- Eligible lenders (organizations that make, insure or guarantee federal student loans)
- The Secretary of Education (the federal official who oversees education programs)
##
Key Provisions
- Lenders must provide borrowers with a separate written or electronic statement before the first loan payment that shows the loan principal (the original amount borrowed), interest rate, number of required monthly payments, and estimated total amount the borrower will pay over the life of the loan including all fees (Sec. 2)
- Lenders must provide monthly statements to all borrowers for the life of the loan showing current loan balance, interest rate, total interest paid to date, accumulated interest since the last statement, and estimated total cost of the loan (Sec. 4)
- Monthly statements must remind borrowers they can change repayment plans and explain that paying interest while still in school can reduce the total cost of the loan (Sec. 4)
- Lenders must include contact information and a link to the Department of Education's website describing available repayment plans in monthly statements (Sec. 4)
- The Secretary of Education must conduct consumer testing within 24 months to determine how effective the new disclosures are at helping borrowers understand their loans, then report findings to Congress (Sec. 5)
##
What Changes
If this becomes law, student loan borrowers will receive more detailed disclosures about their loans before money is disbursed (given to them) and continue receiving monthly statements for the entire life of their loans. Borrowers will see estimates of total loan costs upfront and ongoing tracking of interest paid. Lenders must explain the option to pay interest while borrowing is ongoing and must remind borrowers about repayment plan choices each month.
##
Important Definitions
None defined in bill text.
##
Effective Date
180 days after the bill becomes law.
I
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 fol-
lowing 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 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 2023’’.
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
(1) by striking ‘‘and’’ at the end of paragraph
9
(18);
10
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
2
•HR 1371 IH
(2) by striking the period and inserting ‘‘; and’’
1
at the end of paragraph (19); and
2
(3) by adding at the end the following new
3
paragraph:
4
‘‘(20) a separate written or electronic state-
5
ment, in simple and understandable terms, show-
6
ing—
7
‘‘(A) for the loan or loans being dis-
8
bursed—
9
‘‘(i) the principal amount of the loan,
10
the stated interest rate on the loan, the
11
number of required monthly payments to
12
be made on the loan (which shall be based
13
on a standard repayment plan or, in the
14
case of a borrower who has selected an-
15
other repayment plan, on the repayment
16
plan selected by the borrower), and the es-
17
timated number of months before the start
18
of the repayment period for the loan
19
(based on the expected date on which the
20
repayment period is to begin or the
21
deferment period under 428B(d)(1) is to
22
end, as applicable);
23
‘‘(ii) the estimated balance to be owed
24
by the borrower on such loan (including, if
25
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
3
•HR 1371 IH
applicable, the estimated amount of inter-
1
est to be capitalized) as of the scheduled
2
date on which the repayment period is to
3
begin or the deferment period under
4
428B(d)(1) is to end, as applicable, and an
5
estimate of the projected monthly payment;
6
and
7
‘‘(iii) an estimate of the aggregate
8
amount the borrower will pay for the loan
9
or loans, including the total amount of
10
monthly payments made over the life of
11
the loan plus the amount of any charges
12
for the loan, such as an origination fee;
13
‘‘(B) for each other loan owed by the bor-
14
rower to the lender, the information described
15
in clauses (i) through (iii) of subparagraph (A);
16
and
17
‘‘(C) an estimate of the total cumulative
18
amount the borrower will pay for all loans owed
19
by the borrower to that lender, including the
20
loan being disbursed, as determined by calcu-
21
lating the sum of the estimated aggregate
22
amounts the borrower will pay for each loan in
23
accordance with subparagraphs (A) and (B).’’.
24
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
4
•HR 1371 IH
SEC. 3. DISCLOSURE OF PROJECTED MONTHLY PAYMENT
1
AMOUNTS.
2
Section 433 of the Higher Education Act of 1965 (20
3
U.S.C. 1083) is further amended—
4
(1) in subsection (b), by amending paragraph
5
(9) to read as follows:
6
‘‘(9) information of interest charges, accrual,
7
and payments, including—
8
‘‘(A) the projected total of interest charges
9
which the borrower will pay on the loan or
10
loans, assuming that the borrower makes pay-
11
ments exactly in accordance with the repayment
12
schedule;
13
‘‘(B) projections of the borrower’s monthly
14
repayment amount, assuming interest accrual
15
resulting from capitalization of interest while
16
the borrower, or the student on whose behalf
17
the loan is made, is in school (as applicable),
18
which shall disclose the cost to the borrower
19
of—
20
‘‘(i) capitalizing the interest; and
21
‘‘(ii) paying the interest as the inter-
22
est accrues; and
23
‘‘(C) if the borrower has already paid in-
24
terest on the loan or loans, the amount of inter-
25
est paid;’’; and
26
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
5
•HR 1371 IH
(2) by striking subsection (d), and redesig-
1
nating subsections (e) and (f) as subsections (d) and
2
(e), respectively.
3
SEC. 4. REQUIRED MONTHLY DISCLOSURES.
4
Section 433(d) of the Higher Education Act of 1965,
5
as so redesignated by section 3 of this Act, is amended—
6
(1) in the subsection header, by striking ‘‘DUR-
7
ING REPAYMENT’’ and inserting ‘‘FOR THE LIFE OF
8
THE LOAN’’; and
9
(2) by amending paragraph (1) to read as fol-
10
lows:
11
‘‘(1) PERTINENT INFORMATION ABOUT LOANS
12
PROVIDED
ON
A
MONTHLY
BASIS.—Each eligible
13
lender shall provide the borrower of one or more
14
loans made, insured, or guaranteed under this part
15
or part D with a written monthly bill or statement
16
(including through electronic means), in simple and
17
understandable terms, of pertinent loan information
18
described in this paragraph that—
19
‘‘(A) with respect to a borrower who is in
20
repayment status, shall include a bill that cor-
21
responds to each payment installment time pe-
22
riod in which a payment is due;
23
‘‘(B) with respect to a borrower who is not
24
in repayment status, shall be a statement for
25
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
6
•HR 1371 IH
each month of the period during which the bor-
1
rower is not required to make a payment to the
2
eligible lender, including while the borrower is
3
in school and during periods of deferment or
4
forbearance;
5
‘‘(C) shall be provided to the borrower of
6
a loan not more than 30 days after the first
7
disbursement of the loan, and monthly there-
8
after for the life of the loan; and
9
‘‘(D) shall include, for all outstanding
10
loans made, insured, or guaranteed under this
11
part or part D by the eligible lender to the bor-
12
rower—
13
‘‘(i) the original principal amount of
14
each of the borrower’s loans owed to that
15
lender, and the original principal amount
16
of those loans in the aggregate;
17
‘‘(ii) the borrower’s current balance
18
on each loan and on all loans in the aggre-
19
gate, as of the time of the bill or state-
20
ment, as applicable;
21
‘‘(iii) the interest rate on each loan;
22
‘‘(iv) the total amount the borrower
23
has paid in interest on each loan and on
24
all loans in the aggregate;
25
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
7
•HR 1371 IH
‘‘(v) the amount of interest that has
1
accumulated on each loan and on all loans
2
in the aggregate since the last statement,
3
and the total interest accrued to date on
4
each loan and on all loans in the aggregate
5
during the life of the loans;
6
‘‘(vi) the aggregate amount the bor-
7
rower has paid for each loan and all loans
8
in the aggregate, including the amount the
9
borrower has paid in interest, the amount
10
the borrower has paid in fees, and the
11
amount the borrower has paid against the
12
principal;
13
‘‘(vii) an estimate of the aggregate
14
amount the borrower will pay during the
15
life of the loan for each loan and on all
16
loans in the aggregate, including the total
17
amount of monthly payments made over
18
the life of the loans plus the amount of any
19
charges for the loans, such as origination
20
fees;
21
‘‘(viii) a description of each fee the
22
borrower has been charged for the most re-
23
cently preceding installment time period;
24
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
8
•HR 1371 IH
‘‘(ix) the date by which the borrower
1
needs to make a payment in order to avoid
2
additional fees and the amount of such
3
payment and the amount of such fees;
4
‘‘(x) with respect to a borrower who is
5
not in repayment, the estimated balance to
6
be owed by the borrower on each loan and
7
on all loans in the aggregate, and an esti-
8
mate of the projected monthly payment on
9
each loan and on all loans in the aggre-
10
gate, on the estimated date the borrower
11
will enter (or re-enter) repayment status;
12
‘‘(xi) a reminder that the borrower
13
has the option to change repayment plans,
14
a list of the names of the repayment plans
15
available to the borrower, a link to the ap-
16
propriate page of the Department’s website
17
to obtain a more detailed description of the
18
repayment plans, and directions for the
19
borrower to request a change in repayment
20
plan;
21
‘‘(xii) an explanation—
22
‘‘(I) that the borrower has the
23
option to pay the interest that accrues
24
on each loan while the borrower is a
25
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
9
•HR 1371 IH
student at an institution of higher
1
education or during a period of
2
deferment or forbearance, if applica-
3
ble; and
4
‘‘(II) if the borrower does not
5
pay such interest while attending an
6
institution or during a period of
7
deferment or forbearance, any accu-
8
mulated interest on the loan will be
9
capitalized when the loan goes into re-
10
payment, resulting in more interest
11
being paid over the life of the loan;
12
‘‘(xiii) an explanation that making
13
even small payments of any amount while
14
the borrower is a student at an institution
15
of higher education, or during a period of
16
deferment or forbearance, if applicable, can
17
help to offset interest accrual over the life
18
of the loan;
19
‘‘(xiv) the lender’s or loan servicer’s
20
address, toll-free phone number, and
21
website for payment and billing error pur-
22
poses, including information about how a
23
borrower can make voluntary payments
24
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
10
•HR 1371 IH
when a loan is not in repayment status;
1
and
2
‘‘(xv) an explanation to borrowers
3
that loans made under this part of part D
4
have significant protections for borrowers
5
that aren’t offered by the private market,
6
including a number of income-driven re-
7
payment options, which offer flexible re-
8
payments terms and loan forgiveness for
9
struggling borrowers.’’.
10
SEC. 5. REPORT TO CONGRESS ON CONSUMER TESTING.
11
Not later than 24 months after the date of enactment
12
of this Act, the Secretary shall—
13
(1) conduct consumer testing by obtaining feed-
14
back from individuals, including borrowers and pro-
15
spective borrowers of loans under the Higher Edu-
16
cation Act of 1965, on the usefulness and effective-
17
ness of disclosing monthly terms of loans under sec-
18
tion 433 of the Higher Education Act of 1965, as
19
amended by this Act, to maximize borrowers’ under-
20
standing of the terms and conditions of such loans;
21
and
22
(2) submit to Congress a report on the results
23
of such consumer testing.
24
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS
11
•HR 1371 IH
SEC. 6. EFFECTIVE DATE.
1
The amendments made by this Act to the Higher
2
Education Act of 1965 shall take effect 180 days after
3
the date of enactment of this Act.
4
Æ
VerDate Sep 11 2014
05:32 Mar 17, 2023
Jkt 039200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6301
E:\BILLS\H1371.IH
H1371
kjohnson on DSK79L0C42PROD with BILLS