LEADS Act of 2016

Summary: Letter of Estimated Annual Debt for Students Act of 2016 or the LEADS Act of 2016 This bill amends the Higher Education Act of 1965 by requiring institutions of higher education to provide to each student with education loans for attending the institution an estimate of student loan borrowing costs, including: (1) the cumulative balance of education loans owed by the student, (2) the amount of new education loans expected to be disbursed during the year, (3) the projected cumulative balance of education loans that will be owed by the student after the student graduates, and (4) projected monthly payments to repay the loans. The estimates must be given to students before each academic year succeeding the one for which a loan was first received. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Letter of Estimated Annual Debt for 
Students Act of 2016'' or the ``LEADS Act of 2016''.

SEC. 2. 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, 2018, 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;
                            ``(ii) the amount of any new education 
                        loans expected to be disbursed during such 
                        academic year;
                            ``(iii) the projected cumulative balance of 
                        education loans that will be owed by the 
                        student after the completion of the student's 
                        course of study at the institution; and
                            ``(iv) projected monthly payment amounts 
                        based on the cumulative balances described in 
                        clauses (i), (ii), and (iii), respectively, 
                        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, 
        2017, and as necessary thereafter, the Secretary shall provide 
        the following to eligible institutions:
                    ``(A) Examples of estimates required under 
                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 (iii) and (iv) 
                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 more 
                than 60 days before the first day of the academic year 
                involved.''.

SEC. 3. ANNUAL PROVISION OF INFORMATION BY THE SECRETARY OF EDUCATION.

    Not later than April 1, 2018, and annually thereafter, the 
Secretary of Education shall provide to institutions of higher 
education (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 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 any borrower after the completion of the borrower's 
        course of study at an 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))).