Empowering Student Borrowers Act
This bill amends the Higher Education Act of 1965 to direct the Department of Education to establish best practices for institutions of higher education (IHEs) regarding methods to: (1) teach financial literacy skills, and (2) provide information to assist students when making financial decisions related to student borrowing.
In addition, the bill requires an IHE that participates in federal student aid programs to provide an annual estimate of borrowing costs to each enrolled student who receives an education loan. The cost estimate must include the student's cumulative education loan balance, projected monthly payment amount, and interest rate on each loan.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2224 Introduced in Senate (IS)]
<DOC>
115th CONGRESS
1st Session
S. 2224
To establish best practices for teaching financial literacy, and to
establish an annual estimate of student borrowing costs.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 13, 2017
Mr. Donnelly (for himself, Mr. Johnson, and Ms. Klobuchar) introduced
the following bill; which was read twice and referred to the Committee
on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To establish best practices for teaching financial literacy, and to
establish an annual estimate of student borrowing costs.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Empowering Student Borrowers Act''.
SEC. 2. BEST PRACTICES FOR TEACHING FINANCIAL LITERACY.
Part C of title I of the Higher Education Act of 1965 (20 U.S.C.
1015 et seq.) is amended by adding at the end the following:
``SEC. 138. BEST PRACTICES FOR TEACHING FINANCIAL LITERACY.
``(a) Best Practices.--
``(1) In general.--After soliciting public comments and
consulting with and receiving input from relevant parties,
including a diverse set of institutions of higher education and
other parties, the Secretary shall, by not later than 1 year
after the date of enactment of the Empowering Student Borrowers
Act, establish best practices for institutions of higher
education regarding methods to--
``(A) teach financial literacy skills; and
``(B) provide useful and necessary information to
assist students at institutions of higher education
when making financial decisions related to student
borrowing.
``(2) Best practices.--The best practices described in
paragraph (1) shall include the following:
``(A) Methods to ensure that students have a clear
sense of the students' total borrowing obligations,
including monthly payments, and repayment options.
``(B) The most effective ways to engage students in
financial literacy education, including frequency and
timing of communication with students.
``(C) Information on how to target different
student populations, including part-time students,
first-time students, and other nontraditional students.
``(D) Ways to clearly communicate the importance of
graduating on a student's ability to repay student
loans.
``(b) Maintenance of Best Practices.--The Secretary shall maintain
and periodically update the best practices information required under
subsection (a) and make the best practices available to the public.''.
SEC. 3. ANNUAL ESTIMATE OF STUDENT LOAN BORROWING COSTS.
Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is
amended by adding at the end the following:
``(n) Annual Estimate of Student Loan Borrowing Costs.--
``(1) In general.--Beginning on July 1, 2019, each eligible
institution shall provide a cost estimate described in
paragraph (2) to each enrolled student who receives an
education loan to attend the institution, not later than 30
days before the first day of each academic year beginning after
the academic year for which the student first received such a
loan to attend such institution.
``(2) Contents of estimate.--The estimate under paragraph
(1) shall contain the following information:
``(A) Cumulative balances and monthly payments.--A
notice to the student of--
``(i) the cumulative balance of education
loans owed by the student as of the date of the
notice; and
``(ii) projected monthly payment amounts
based on the cumulative balances described in
clause (i), assuming a standard repayment
schedule.
``(B) Interest rates.--The interest rate of each
education loan, except that interest rates for a
private education loan may be based on average private
education loan interest rates if the institution cannot
reasonably determine the actual interest rate of such
loan.
``(C) Disclaimer.--A clear and conspicuous notice
stating that any information provided under paragraph
(1) is an estimate, accurate to the best of the
institution's knowledge, and that an interest rate
provided under subparagraph (B)--
``(i) in the case of a loan described in
paragraph (6)(A)(i), is the applicable rate of
interest of such loan;
``(ii) in the case of a private education
loan, may be based on average private education
loan interest rates; and
``(iii) does not include private education
loans of which the institution is not aware.
``(3) Form of estimate.--The estimate under paragraph (1)
shall be--
``(A) provided to the student in hard copy format
on the letterhead of the institution, by electronic
mail or by another method the Secretary may prescribe;
and
``(B) delivered to the student separately from any
other disclosures required under this Act.
``(4) Limitation of liability.--An institution that
provides the estimate under paragraph (1) in good faith shall
not be liable to any person for inaccuracies contained in such
estimate.
``(5) Student debt letter template.--Not later than July 1,
2018, and as necessary thereafter, the Secretary shall provide
the following to eligible institutions:
``(A) Examples of the information required under
subparagraphs (A), (B), and (C) of paragraph (2).
``(B) Technical assistance on how to comply with
the requirements of this subsection.
``(C) Preliminary approvals in a timely manner of
estimate formats proposed for use by an institution, at
the request of the institution.
``(D) The formula (which shall take into
consideration a student's past borrowing rates and
other criteria the Secretary may determine) to be used
in making the projections under clauses (i) and (ii) of
paragraph (2)(A) with respect to loans described in
paragraph (6)(A)(i).
``(E) Encryption technology software to enable
institutions to provide the estimate under paragraph
(2) to students in a secure format for institutions
that choose to provide the estimate to students in an
electronic format.
``(6) Definitions.--In this subsection:
``(A) Education loan.--The term `education loan'
means--
``(i) a loan made under part D (other than
a Federal Direct Consolidation Loan or a
Federal Direct PLUS loan made on behalf of a
student);
``(ii) a loan made under a State-sponsored
loan program for the purpose of paying a
student's cost of attendance at an institution
of higher education; and
``(iii) a private education loan with
respect to which the institution should
reasonably be aware.
``(B) Private education loan.--The term `private
education loan' has the meaning given the term in
section 140 of the Truth in Lending Act.
``(C) Student.--The term `student', when used with
respect to an eligible institution, does not include
any student who has transferred to the institution less
than 60 days before the first day of the academic year
for which an estimate would be provided.''.
SEC. 4. ANNUAL PROVISION OF INFORMATION BY THE SECRETARY OF EDUCATION.
Not later than April 1, 2019, and annually thereafter, the
Secretary of Education shall provide to each institution (as defined in
section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002)) the
following information:
(1) The amount of any loans made under part D of title IV
of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.)
(other than a Federal Direct Consolidation Loan or a Federal
Direct PLUS loan made on behalf of a student) expected to be
disbursed to any borrower enrolled in that institution for the
next academic year.
(2) The projected cumulative balance of such loans, as
determined in accordance with section 485(n)(5)(D) of such Act
(20 U.S.C. 1092(n)(5)(D)), as added by this Act, that will be
owed by each borrower that is enrolled in the institution after
the completion of the borrower's course of study at the
institution of higher education.
(3) The projected monthly payment amounts of such loans, as
determined in accordance with section 485(n)(5) of the Higher
Education Act of 1965 (20 U.S.C. 1092(n)(5)), assuming a
standard repayment schedule (as described in section
455(d)(1)(A) of such Act (20 U.S.C. 1087e(d)(1)(A))).
<all>
Introduced in Senate
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
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