Student Loan Disclosure Transparency Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 4193 To improve Federal student loan disclosures, and for other purposes. IN THE HOUSE OF REPRESENTATIVES AUGUST 16, 2019 Ms. SHALALA (for herself, Mr. GAETZ, Mr. STEWART, Mr. MCADAMS, Ms. HERRERA BEUTLER, and Ms. SPANBERGER) 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 2019’’. 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 2 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 3 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 4 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 5 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 6 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 7 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 8 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 9 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 10 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS 11 •HR 4193 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 21:46 Aug 26, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H4193.IH H4193 jbell on DSK3GLQ082PROD with BILLS