“To revise counseling requirements for certain borrowers of student loans, and for other purposes.”
No CRS summary available for this bill.
This section revises pre-loan counseling requirements for Federal Direct Loans (other than consolidation loans or parent PLUS loans) at eligible institutions participating in Title IV programs by (1) renaming the subsection heading from "Entrance Counseling" to "Pre-Loan Counseling" and expanding the requirement from first-time borrowers to the first disbursement of each new loan (or each award year if multiple new loans); (2) replacing the prior total indebtedness disclosure in paragraph (2)(G) with an estimate of the borrower's monthly payment amount relative to estimated monthly income after taxes, living expenses (using Consumer Expenditure Survey data from the Bureau of Labor Statistics), health insurance costs, and other relevant expenses—based on available starting wages for the borrower's program and total estimated debt (federal, known private, and projected to complete the program); (3) adding required disclosures in paragraph (2) that borrowers should take the minimum necessary loan amount; warn of repayment difficulties from high debt-to-income ratios; describe borrowing reduction options (e.g., scholarships, work-study); and explain on-time graduation benefits, required course loads, and added debt from extra years; and (4) requiring students to manually enter (in writing or electronically) the exact dollar amount of desired Federal Direct Loan funding during the loan acceptance process, prior to institutional certification for disbursement and after completing counseling. (As background, these requirements ensure borrowers of federal student loans—which exceed $1.6 trillion outstanding—understand loan obligations and affordability before certifying amounts.)
This section establishes a requirement for eligible lenders to provide quarterly statements, in simple and understandable terms, to borrowers of loans made, insured, or guaranteed under part B (Federal Family Education Loan Program) or part D (William D. Ford Federal Direct Loan Program) during any period when payments are not required (e.g., while in school, deferment, or forbearance). The statements must include (1) original principal amount for each loan and in aggregate, and current balance; (2) interest rate for each loan; (3) total interest paid on each loan and aggregate payments (including interest, fees, and principal); (4) lender or servicer contact information for payments, billing errors, and voluntary payments; (5) an explanation of the option to pay accruing interest and consequences of capitalization; (6) interest accrued since the last statement (based on typical installment period) and aggregate to date; and (7) a note that small voluntary payments can offset interest accrual over the loan's life.
This section revises terminology in program participation agreement requirements by replacing "entrance and exit counseling" with "pre-loan and exit counseling" (20 U.S.C. 1094(e)(2)(B)(ii)(IV)) and in regulatory relief and improvement provisions by replacing "entrance and exit interviews" with "pre-loan and exit interviews" each place it appears (20 U.S.C. 1094a).