Sec. 2. State-based education loan programs
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Section 151 of the Higher Education Act of 1965 ( 20 U.S.C. 1019 ) is amended— in paragraph (8)(B)— in clause (i), by striking or after the semicolon; in clause (ii), by striking the period at the end and inserting a semicolon; and by adding at the end the following: arrangements or agreements with respect to education loans made under a State-based education loan program; or arrangements or agreements with respect to education loans funded, insured, or guaranteed by any other Federal agency that is not the Department of Education. ; and by adding at the end the following:
The term State-based education loan program means an education loan program that— is provided by a State agency, State authority, or nonprofit organization, separately or jointly; makes loans that are not funded, insured, or guaranteed by the Federal Government; is authorized, established, or chartered by State law, or otherwise approved by the State; offers one or more loans for which the interest rate and fees, as calculated in accordance with sections 106 and 107 of the Truth in Lending Act ( 15 U.S.C. 1605 ; 1606), are at least as favorable as the interest rate and fees of the Direct PLUS loans authorized under part D of title IV at the time such loan is originated; and is available only to a borrower who has been advised by an institution of higher education (as defined under section 102)— that the borrower has the opportunity to exhaust eligibility for Federal education loans made under part D of title IV prior to accepting a private education loan; and of the interest rates, fees, and benefits of such Federal education loans, including income-driven repayment options, opportunities for loan forgiveness, forbearance or deferment options, interest subsidies, and tax benefits. .
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