[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 1464 Introduced in Senate (IS)]
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117th CONGRESS
1st Session
S. 1464
To amend the Higher Education Act of 1965 to direct the Secretary of
Education to develop a plain language disclosure form for borrowers of
Federal student loans, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 29, 2021
Mr. Scott of South Carolina (for himself and Mr. Manchin) introduced
the following bill; which was read twice and referred to the Committee
on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to direct the Secretary of
Education to develop a plain language disclosure form for borrowers of
Federal student loans, and for other purposes.
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 ``Student Loan Disclosure
Modernization Act''.
SEC. 2. ADDITIONAL DISCLOSURES.
Section 433(a) of the Higher Education Act of 1965 (20 U.S.C.
1083(a)) is amended--
(1) in paragraph (4), by striking ``the origination fee
and'' and inserting ``finance charges, the origination fee, and
the'';
(2) by redesignating paragraphs (6) through (19) as
paragraphs (7) through (20), respectively; and
(3) by inserting after paragraph (5), the following:
``(6) the annual percentage rate applicable to the loan,
taking into account--
``(A) the amount of the loan;
``(B) the stated interest rate of the loan;
``(C) the standard term for a loan of the same
type;
``(D) any fees or additional costs associated with
the loan; and
``(E) any capitalization of interest on the
loan;''.
SEC. 3. PLAIN LANGUAGE DISCLOSURE FORM.
Section 455(p) of the Higher Education Act of 1965 (20 U.S.C.
1087e(p)) is amended--
(1) by striking ``Each institution'' and inserting the
following:
``(1) In general.--Each institution''; and
(2) by adding at the end the following:
``(2) Plain language disclosure form.--
``(A) Development and issuance of form.--Not later
than 18 months after the date of the enactment of this
paragraph, the Secretary shall, based on consumer
testing, develop and issue a model form to be known as
the `Plain Language Disclosure Form' that shall be used
by institutions and contractors described in paragraph
(1) to comply with the disclosure requirements of such
paragraph.
``(B) Format.--The Secretary shall ensure that the
Plain Language Disclosure Form--
``(i) enables borrowers to easily identify
the information required to be disclosed under
section 433(a) with respect to a loan and loan
repayment options (including income-based and
income contingent repayment), with emphasis on
the loan terms determined by the Secretary to
be critical to understanding the total costs of
the loan and the estimated monthly repayment;
``(ii) has a clear format and design,
including easily readable font; and
``(iii) is as succinct as practicable.
``(C) Consultation.--In developing the Plain
Language Disclosure Form, the Secretary shall, as
appropriate, consult with--
``(i) the Federal Reserve Board;
``(ii) institutions and contractors
described in paragraph (1);
``(iii) borrowers of loans under this part;
and
``(iv) other organizations involved in the
provision of financial assistance to students,
as identified by the Secretary.
``(3) Electronic system for compliance.--In carrying out
paragraph (2), the Secretary shall develop and implement an
electronic system that may be used by institutions and
contractors described in paragraph (1) to generate a Plain
Language Disclosure Form for each borrower by--
``(A) enabling institutions and contractors to
enter personalized loan request information
electronically;
``(B) integrating appropriate data found in the
National Student Loan Data System; and
``(C) generating and integrating personalized
borrower information.
``(4) Limit on liability.--Nothing in this subsection shall
be construed to create a private right of action against an
institution or contractor described in paragraph (1) with
respect to the form or electronic system developed under this
paragraph.
``(5) Borrower signature required.--Beginning after the
issuance of the Plain Language Disclosure Form by the Secretary
under paragraph (2), a loan may not be issued to a borrower
under this part unless the borrower acknowledges, in writing
(which may include an electronic signature), that the borrower
has read the Plain Language Disclosure Form for the loan
concerned.
``(6) Consumer testing defined.--In this subsection, the
term `consumer testing' means the solicitation of feedback from
individuals, including borrowers and prospective borrowers of
loans under this part (as determined by the Secretary), about
the usefulness of different methods of disclosing material
terms of loans on the Plain Language Disclosure Form to
maximize borrowers' understanding of the terms and conditions
of such loans.''.
SEC. 4. REPORT TO CONGRESS.
Not later than 2 years after the date of enactment of this Act, the
Secretary of Education shall submit to Congress a report that includes
a description of the methods and procedures used to develop the Plain
Language Disclosure Form required under section 455(p)(2) of the Higher
Education Act of 1965 (as added by section 3 of this Act).
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