II 

110TH CONGRESS 

1ST SESSION S. 1400 

To amend the Higher Education Act of 1965 to improve the information 

and repayment options provided to student borrowers, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 15, 2007 

Mr. ENZI (for himself, Mr. ALEXANDER, Mr. ALLARD, Mr. BURR, Mr. 

ISAKSON, and Ms. MURKOWSKI) 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 improve 

the information and repayment options provided to student borrowers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Student Information 

5 Means a Positive Loan Experience Act of 2007’’. 

6 SEC. 2. PURPOSE. 

7 The purpose of this Act is to improve— 


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1 (1) the repayment plans available to borrowers 

2 of loans under title IV of the Higher Education Act 

3 of 1965 (20 U.S.C. 1070 et seq.); and 

4 (2) borrowers’ understanding of— 

5 (A) the repayment plans available for such 

6 loans; 

7 (B) the conditions under which such loans 

8 may be cancelled or forgiven; and 

9 (C) the availability of deferments, forbear10 ance, and consolidation for such loans, and the 

11 impact on the balance of such loans and total 

12 interest paid of using those options. 

13 SEC. 3. FLEXIBLE REPAYMENT PLANS. 

14 (a) STUDENT LOAN REQUIREMENTS.—Section 

15 427(a)(2)(H) of the Higher Education Act of 1965 (20 

16 U.S.C. 1077(a)(2)(H)) is amended by inserting ‘‘, and, if 

17 applicable, the option of electing to delay repayment or 

18 principal for the first 2 years of the repayment period’’ 

19 before the semicolon at the end. 

20 (b) FFEL REPAYMENT PLANS.—Section 428(b)(9) 

21 of the Higher Education Act of 1965 (20 U.S.C. 

22 1078(b)(9)) is amended— 

23 (1) in subparagraph (A)— 

24 (A) in the first sentence of the matter pre25 ceding clause (i), by inserting ‘‘, and the elecVerDate Aug 31 2005 04:24 May 17, 2007 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1400.IS S1400

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1 tion described in subparagraph (C)’’ after 

2 ‘‘thereon’’; 

3 (B) in clause (ii), by inserting ‘‘, which 

4 plan shall be established by the lender with the 

5 informed agreement of the borrower’’ before the 

6 semicolon at the end; and 

7 (C) by striking clause (iv) and inserting 

8 the following: 

9 ‘‘(iv) for new borrowers on or after 

10 October 7, 1998, who accumulate out11 standing loans under this part totaling 

12 more than $20,000, an extended repay13 ment plan, with a fixed annual or grad14 uated repayment amount paid over an ex15 tended period, not to exceed 25 years, ex16 cept that the borrower shall repay annually 

17 a minimum amount determined in accord18 ance with paragraph (1)(L)(i).’’; and 

19 (2) by adding at the end the following: 

20 ‘‘(C) OPTION FOR FIRST 2 YEARS.—A 

21 lender shall offer each new borrower of loans on 

22 or after October 7, 1998, the opportunity to 

23 elect, for the first 2 years of repayment of such 

24 loans, to delay the repayment of principal, reVerDate Aug 31 2005 04:24 May 17, 2007 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1400.IS S1400

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1 gardless of the repayment plan selected under 

2 this paragraph.’’. 

3 (c) DIRECT LOAN REPAYMENT PLANS.—Section 

4 455(d) of the Higher Education Act of 1965 (20 U.S.C. 

5 1087e(d)) is amended— 

6 (1) in paragraph (1)— 

7 (A) in the matter preceding subparagraph 

8 (A)— 

9 (i) in the first sentence, by inserting 

10 ‘‘, and the election described in paragraph 

11 (6)’’ after ‘‘the loan’’; and 

12 (ii) in the third sentence, by striking 

13 ‘‘may choose’’ and inserting ‘‘shall choose 

14 from’’; and 

15 (B) in subparagraph (C), by striking 

16 ‘‘428(b)(9)(A)(v)’’ and inserting 

17 ‘‘428(b)(9)(A)(iv)’’; and 

18 (2) by adding at the end the following: 

19 ‘‘(6) OPTION FOR FIRST 2 YEARS.—The Sec20 retary shall offer each new borrower of loans on or 

21 after October 7, 1998, the opportunity to elect, for 

22 the first 2 years of repayment of such loans, to delay 

23 the repayment of principal, consistent with section 

24 428(b)(9)(C).’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply with respect to loans for which the 

3 first disbursement is made on or after October 7, 1998. 

4 SEC. 4. REVISED DEFINITION OF ECONOMIC HARDSHIP. 

5 Section 435(o)(1) of the Higher Education Act of 

6 1965 (20 U.S.C. 1085(o)(1)) is amended— 

7 (1) in subparagraph (A)(ii), by striking ‘‘100 

8 percent of the poverty line for a family of 2’’ and 

9 inserting ‘‘150 percent of the poverty line applicable 

10 to the borrower’s family size’’; and 

11 (2) in subparagraph (B)(ii), by striking ‘‘to a 

12 family of 2’’ and inserting ‘‘to the borrower’s family 

13 size’’. 

14 SEC. 5. USEFUL AND COMPREHENSIVE STUDENT LOAN IN15 FORMATION FOR BORROWERS. 

16 (a) INSURANCE PROGRAM AGREEMENTS.—Section 

17 428(b)(1) of the Higher Education Act of 1965 (20 

18 U.S.C. 1078(b)(1)) is amended— 

19 (1) in subparagraph (X), by striking ‘‘and’’ 

20 after the semicolon; 

21 (2) in subparagraph (Y)(ii), by striking the pe22 riod at the end and inserting ‘‘; and’’; and 

23 (3) by adding at the end the following: 

24 ‘‘(Z) provides that the lender shall, at the 

25 time the lender grants a deferment to a borVerDate Aug 31 2005 04:24 May 17, 2007 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1400.IS S1400

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1 rower who received a loan under section 428H 

2 and is eligible for a deferment under section 

3 427(a)(2)(C), provide information to the bor4 rower to enable the borrower to understand the 

5 impact of capitalization of interest on the bor6 rower’s loan principal and total amount of in7 terest to be paid during the life of the loan.’’. 

8 (b) GUARANTY AGREEMENTS.—Section 428(c)(3)(C) 

9 of the Higher Education Act of 1965 (20 U.S.C. 

10 1078(c)(3)(C)) is amended— 

11 (1) in clause (i), by striking ‘‘and’’ after the 

12 semicolon; 

13 (2) in clause (ii), by striking ‘‘and’’ after the 

14 semicolon; 

15 (3) by inserting after clause (ii) the following: 

16 ‘‘(iii) the lender shall, at the time of 

17 granting a borrower forbearance, provide 

18 information to the borrower to enable the 

19 borrower to understand the impact of cap20 italization of interest on the borrower’s 

21 loan principal and total amount of interest 

22 to be paid during the life of the loan; and 

23 ‘‘(iv) the lender shall contact the bor24 rower not less often than once every 180 


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1 days during the period of forbearance to 

2 inform the borrower of— 

3 ‘‘(I) the amount of unpaid prin4 cipal and the amount of interest that 

5 has accrued since the last statement 

6 of such amounts provided to the bor7 rower by the lender; 

8 ‘‘(II) the fact that interest will 

9 accrue on the loan for the period of 

10 forbearance; 

11 ‘‘(III) the amount of interest that 

12 will be capitalized, and the date on 

13 which capitalization will occur; 

14 ‘‘(IV) the ability of the borrower 

15 to pay the interest that has accrued 

16 before the interest is capitalized; and 

17 ‘‘(V) the borrower’s option to dis18 continue the forbearance at any time; 

19 and’’. 

20 (c) LENDER AGREEMENTS.—Section 428C(b)(1) of 

21 the Higher Education Act of 1965 (20 U.S.C. 1078– 

22 3(b)(1)) is amended— 

23 (1) in subparagraph (E), by striking ‘‘and’’ 

24 after the semicolon; 


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1 (2) by redesignating subparagraph (F) as sub2 paragraph (G); and 

3 (3) by inserting after subparagraph (E) the fol4 lowing: 

5 ‘‘(F) that the lender shall, upon applica6 tion for a consolidation loan, provide the bor7 rower with information about the possible im8 pact of loan consolidation, including— 

9 ‘‘(i) the total interest to be paid and 

10 fees to be paid on the consolidation loan, 

11 and the length of repayment for the loan; 

12 ‘‘(ii) whether consolidation would re13 sult in a loss of loan benefits under this 

14 part or part D, including loan forgiveness, 

15 cancellation, and deferment; 

16 ‘‘(iii) in the case of a borrower that 

17 plans to include a Federal Perkins Loan 

18 under part E in the consolidation loan, 

19 that once the borrower adds the borrower’s 

20 Federal Perkins Loan to a consolidation 

21 loan— 

22 ‘‘(I) the borrower will lose all in23 terest-free periods that would have 

24 been available for such loan under 

25 part E, such as the periods during 


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1 which no interest accrues on the Fed2 eral Perkins Loan while the borrower 

3 is enrolled in school at least half-time, 

4 the grace period, and the periods dur5 ing which the borrower’s student loan 

6 repayments are deferred under section 

7 464(c)(2); and 

8 ‘‘(II) the borrower will no longer 

9 be eligible for cancellation of part or 

10 all of a Federal Perkins loan under 

11 section 465(a); 

12 ‘‘(iv) the ability of the borrower to 

13 prepay the consolidation loan, pay such 

14 loan on a shorter schedule, and to change 

15 repayment plans; 

16 ‘‘(v) that borrower benefit programs 

17 for a consolidation loan may vary among 

18 different lenders; 

19 ‘‘(vi) the consequences of default on 

20 the consolidation loan; and 

21 ‘‘(vii) that by applying for a consolida22 tion loan, the borrower is not obligated to 

23 agree to take the consolidation loan; and’’. 

24 (d) INFORMATION DISSEMINATION.—Subparagraph 

25 (M) of section 485(a)(1) of the Higher Education Act of 


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1 1965 (20 U.S.C. 1092(a)(1)(M)) is amended to read as 

2 follows: 

3 ‘‘(M) the terms and conditions of the loans that 

4 students receive under parts B, D, and E;’’. 

5 (e) EXIT COUNSELING.—Subparagraph (A) of sec6 tion 485(b)(1) of the Higher Education Act of 1965 (20 

7 U.S.C. 1092(b)(1)(A)) is amended by striking the sub8 paragraph designation and all that follows through ‘‘465.’’ 

9 and inserting the following: ‘‘(A) Each eligible institution 

10 shall, through financial aid offices or otherwise, provide 

11 counseling to borrowers of loans that are made, insured, 

12 or guaranteed under part B (other than loans made pursu13 ant to section 428C or loans made to parents pursuant 

14 to section 428B), or made under part D (other than Fed15 eral Direct Consolidation Loans or Federal Direct PLUS 

16 Loans made to parents) or E, prior to the completion of 

17 the course of study for which the borrower enrolled at the 

18 institution or at the time of departure from such institu19 tion. The counseling required by this subsection shall in20 clude— 

21 ‘‘(i) information on the repayment plans avail22 able, including a discussion of the different features 

23 of each plan and sample information showing the 

24 difference in interest paid and total payments under 

25 each plan; 


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1 ‘‘(ii) the average anticipated monthly repay2 ments under the standard repayment plan and, at 

3 the borrower’s request, the other repayment plans 

4 for which the borrower is eligible; 

5 ‘‘(iii) such debt and management strategies as 

6 the institution determines are designed to facilitate 

7 the repayment of such indebtedness; 

8 ‘‘(iv) an explanation that the borrower has the 

9 ability to prepay each such loan, pay the loan on a 

10 shorter schedule, and change repayment plans; 

11 ‘‘(v) the terms and conditions under which the 

12 student may obtain full or partial forgiveness or can13 cellation of principal or interest under sections 428J, 

14 460, and 465 (to the extent that such sections are 

15 applicable to the student’s loans); 

16 ‘‘(vi) the terms and conditions under which the 

17 student may defer repayment of principal or interest 

18 or be granted forbearance under subsections 

19 (b)(1)(M) and (o) of section 428, 428H(e)(7), sub20 sections (f) and (l) of section 455, and section 

21 464(c)(2), and the potential impact of such 

22 deferment or forbearance; 

23 ‘‘(vii) the consequences of default on such 

24 loans; 


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1 ‘‘(viii) information on the effects of using a con2 solidation loan to discharge the borrower’s loans 

3 under parts B, D, and E, including, at a min4 imum— 

5 ‘‘(I) the effects of consolidation on total in6 terest to be paid, fees to be paid, and length of 

7 repayment; 

8 ‘‘(II) the effects of consolidation on a bor9 rower’s underlying loan benefits, including all 

10 grace periods, loan forgiveness, cancellation, 

11 and deferment opportunities; 

12 ‘‘(III) the ability of the borrower to prepay 

13 the loan or change repayment plans; and 

14 ‘‘(IV) that borrower benefit programs may 

15 vary among different loan holders; and 

16 ‘‘(ix) a notice to borrowers about the avail17 ability of the National Student Loan Data System 

18 and how the system can be used by a borrower to 

19 obtain information on the status of the borrower’s 

20 loans.’’. 

21 (f) CONFORMING AMENDMENT.—Section 455(g) of 

22 the Higher Education Act of 1965 (20 U.S.C. 1087e(g)) 

23 is amended by striking ‘‘428C(b)(1)(F)’’ and inserting 

24 ‘‘428C(b)(1)(G)’’. 


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1 SEC. 6. REPORT REQUIRED. 

2 Section 141(c) of the Higher Education Act of 1965 

3 (20 U.S.C. 1018(c)) is amended— 

4 (1) in the subsection heading, by striking 

5 ‘‘PLAN AND REPORT’’ and inserting ‘‘PLAN, RE6 PORT, AND BRIEFING’’; and 

7 (2) by adding at the end the following: 

8 ‘‘(4) BRIEFING ON ENFORCEMENT OF STUDENT

9 LOAN PROVISIONS.—The Chief Operating Officer 

10 shall provide an annual briefing to the members of 

11 the authorizing committees on the steps the PBO 

12 has taken and is taking to ensure that lenders are 

13 providing the information required under clauses 

14 (iii) and (iv) of section 428(c)(3)(C) and sections 

15 428(b)(1)(Z) and 428C(b)(1)(F).’’. 

Æ 


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