Sec. 401. Student loan contract; simplifying loan disclosures
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Section 455 ( 20 U.S.C. 1087e ), as amended by section 202, is further amended by inserting after subsection
(b)the following: Any master promissory note form described in section 432(m)(1)(D) that is developed or used for covered loans shall be referred to as a student loan contract . Notwithstanding section 432(m)(1)(D)(i), each student loan contract for a covered loan shall— not be entered into by a student unless the student has completed all required counseling related to such loan, including counseling required under section 485(l); be signed by the student entering such student loan contract after completion of such counseling; be used only for the academic year for which the initial loans are made under the contract and shall be valid for additional loans within an academic year; and include options for the student to enter both the student's current contact information and permanent contact information that is likely to remain valid upon the student's exit from the institution. In this subsection, the term covered loan means a loan made under this part on or after the effective date of the Affordable Loans for Any Student Act , except with respect to a borrower described in clause (ii). A borrower is described in this clause if the loan made under this part on or after the effective date of the Affordable Loans for Any Student Act with respect to such borrower is for the 2020–2021 academic year and the borrower has already taken out a loan under this part (other than a Federal Direct Consolidation Loan) for such academic year (including any such loan for attendance at another institution from which the student transferred or in which the student had previously enrolled). For loans made under this part for periods of enrollment beginning on or after the effective date of the Affordable Loans for Any Student Act , the Secretary shall take such steps as are necessary to streamline the student loan disclosure requirements under this Act. The Secretary shall ensure that information required to be disclosed to a student who is applying for, receiving, or preparing to repay a loan under this part shall be consumer-tested and delivered in a manner that— reduces and simplifies the paperwork students are required to complete; limits the number of times a student is presented with disclosures by incorporating the streamlined disclosures into required student loan counseling under section 485(l), the student loan contract under this subsection, or both; and is effective in helping the student understand the student's rights and obligations as a Federal student loan borrower. Prior to making the first disbursement of a covered loan (other than a Federal Direct Consolidation Loan) to a borrower for an academic year, the eligible institution shall ensure that the borrower— has completed the applicable counseling under paragraph
(2)or
(3)of section 485(l); and after completing such counseling, accepts the loan for such academic year by— signing and returning to the institution the student loan contract described in section 455(c)(1) that affirmatively states that the borrower accepts the loan; or electronically signing an electronic version of such student loan contract, which may be done through the online counseling tool in accordance with section 485(n)(1)(B). . Section 487(a)(7) ( 20 U.S.C. 1094(a)(7) ) is amended by striking section 485 and inserting sections 455(c)(3) and 485 .
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