Sec. 402. Annual and pre-loan information and counseling requirements
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Section 485(l) ( 20 U.S.C. 1092(l) ) is amended to read as follows: Each eligible institution shall ensure that each individual for whom the institution has knowledge that the student has accepted, or will accept, 1 or more student loans under part D (including any such loans for attendance at another institution from which the student transferred or in which the student had previously enrolled, other than a Federal Direct Consolidation Loan) for an academic year, receives comprehensive information on the terms and conditions of such loans and the responsibilities the individual has with respect to such loans.
Such information shall be provided, for each academic year for which the individual receives such loans, in a simple, understandable, and consumer-friendly manner— during a counseling session conducted in person; online, with the individual acknowledging receipt of the information; or through the use of the online counseling tool described in subsection (n)(1)(B). In the case of institutions not using the online counseling tool described in subsection (n)(1)(B), the Secretary shall require such institutions to carry out the requirements of subparagraph
(A)through the use of interactive programs, during an annual counseling session that is in-person or online, that test the individual’s understanding of the terms and conditions of the loan awarded to the individual, using simple and understandable language and clear formatting. The information to be provided under paragraph (1)(A) to a borrower of a loan made under part D (other than a Federal Direct PLUS Loan made on behalf of a dependent student) shall include the following: A notification that some students may qualify for other financial aid that does not need to be repaid, and an explanation that the borrower should consider accepting any such grant, scholarship, military tuition assistance, veterans benefits, Federal or State work-study jobs, or other programs for which the borrower is eligible, prior to accepting student loans. Information on the total outstanding student loan debt that the institution is aware that the student has borrowed, disaggregated by type of loan, including loans issued under this title, private education loans (as defined in section 140 of the Truth in Lending Act ( 15 U.S.C. 1650 )) that the institution has certified in accordance with section 487(a)(28), and education loans from the institution, as applicable. The student’s estimated monthly payment amounts for loans made, insured, or guaranteed under this title based on— the fixed repayment plan described under section 493E for loans issued under part B or D; and the income-based repayment plan under section 493C(c), utilizing individualized data applicable to the borrower as described in paragraph (4). A statement that the monthly amount described in subparagraph
(C)does not include any amounts that the student may be required to repay for non-Federal education loans, including private education loans or institutional education loans. An explanation of the use of the student loan contract referred to in section 455(c). A recommendation to the borrower to exhaust the borrower’s Federal student loan options prior to taking out private education loans, an explanation that Federal student loans typically offer better terms and conditions than private education loans, an explanation that Federal student loans offer consumer protections typically not available in the private education loan market, an explanation of treatment of loans made under part D and private education loans in bankruptcy, and an explanation that if a borrower decides to take out a private education loan— the borrower has the ability to select a private educational lender of the borrower’s choice; the proposed private education loan may impact the borrower’s potential eligibility for other financial assistance, including Federal financial assistance under this title; and the borrower has a right— to accept the terms of the private education loan within 30 calendar days following the date on which the application for such loan is approved and the borrower receives the required disclosure documents, pursuant to section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ); and to cancel such loan within 3 business days of the date on which the loan is consummated, pursuant to section 128(e)(7) of such Act ( 15 U.S.C. 1638(e)(7) ). An explanation of the importance of contacting the appropriate offices at the institution of higher education if the borrower withdraws prior to completing the borrower’s program of study so that the institution can provide exit counseling, including information regarding the borrower’s repayment options and loan consolidation. An explanation of the obligation of the borrower to repay the full amount of the loan, regardless of whether the borrower completes or does not complete the program in which the borrower is enrolled within the regular time for program completion. A general description of the terms and conditions under which the student may obtain forgiveness or cancellation of any principal and interest of a loan issued under this title. Information as to how the student can access the loan records of the student and the contact information for inquiries regarding repaying the loan. The contact information for the financial aid office, or other appropriate office, at the institution that the borrower may contact if the borrower has any questions about the borrower’s rights and responsibilities or the terms and conditions of the loan. An explanation that the student has the right to annually request a copy of the credit report of the student from a consumer reporting agency pursuant to section 612(a) of the Fair Credit Reporting Act ( 15 U.S.C. 1681j(a) ). For a first-time borrower, in addition to all the information described in subparagraphs
(A)through (L)— the anticipated balance on the loan for which the borrower is receiving counseling under this subsection; and information on the annual and aggregate loan limits for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans as it pertains to the loan for which the borrower is receiving counseling, and a statement that such aggregate borrowing limit may change based on the borrower’s student status (whether undergraduate or graduate) or if there is a change in the borrower’s dependency status. For a borrower with an outstanding balance of principal or interest due on a loan made under this title, including loans made under part B, in addition to all the information described in subparagraphs
(A)through (L), the percentage of the total aggregate borrowing limit that the student has reached, as of the date of the counseling, and a statement that such aggregate borrowing limit may change based on the borrower’s student status (whether undergraduate or graduate) or if there is a change in the borrower’s dependency status. The information to be provided under paragraph (1)(A) to a borrower of a Federal Direct PLUS Loan made on behalf of a dependent student shall include the following: A notification that some students may qualify for other financial aid and an explanation that the student for whom the borrower is taking out the loan should consider accepting any such grant, scholarship, military tuition assistance, veterans benefits, Federal or State work-study jobs, or other programs for which the student for whom the borrower is taking out the loan is eligible, prior to borrowing any Federal Direct PLUS Loan on behalf of a dependent student. The information described in subparagraphs
(B)through
(L)of paragraph (2), as applicable. The option of the borrower to pay the interest on the loan while the loan is under pause payment. An explanation that the borrower has the options to prepay each loan, pay each loan on a shorter schedule, and change repayment plans. For each Federal Direct PLUS Loan made on behalf of a dependent student for which the borrower is receiving counseling under this subsection, the contact information for the loan servicer of the loan and a link to such servicer’s website. For a first-time borrower of such loan— the anticipated balance on the loan for which the borrower is receiving counseling under this paragraph; and the estimated monthly payment amounts for such loan based on— the fixed repayment plan described in section 493E for the loan; and the income-based repayment plan under section 493C(c), utilizing individualized data applicable to the borrower as described in paragraph (4). For a borrower undergoing counseling that already has an outstanding balance of principal or interest due on a Federal Direct PLUS Loan made on behalf of a dependent student— the anticipated balance of all Federal Direct PLUS Loans held by the borrower (including the one for which counseling is provided); and the estimated monthly payment amounts for all such loans based on— the fixed repayment plan described in section 493E for loans issued under part B or D; and the income-based repayment plan under section 493C(c), utilizing individualized data applicable to the borrower as described in paragraph (4). In providing estimated payments for income-based repayment plans under section 493C(c) for purposes of this section, the Secretary shall develop and implement a database to generate repayment estimate for borrowers by— enabling each institution to enter relevant loan, program cost, and average indebtedness at graduation information electronically; integrating applicable data on Federal loans made, insured, or guaranteed under this title from the National Student Loan Data System or a successor system; integrating available data on occupational earnings reasonably related to the student’s program of study; using a hypothetical family size of 1; and providing a borrower the option to adjust these data elements and observe the corresponding change in estimated monthly payment amounts. .
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Sec. 402
Annual and pre-loan information and counseling requirements
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