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 ; or ; and by adding at the end the following: arrangements or agreements with respect to education loans made under a State-based education loan program. ; 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, such as in a financial aid offer, 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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