II 

110TH CONGRESS 

1ST SESSION S. 1720 

To amend title IV of the Higher Education Act of 1965 to establish a 

Federal Supplemental Loan Program. 

IN THE SENATE OF THE UNITED STATES 

JUNE 27, 2007 

Mr. BROWN (for himself and Mr. SANDERS) introduced the following bill; 

which was read twice and referred to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To amend title IV of the Higher Education Act of 1965 

to establish a Federal Supplemental Loan Program. 

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

3 SECTION 1. FEDERAL SUPPLEMENTAL LOAN PROGRAM. 

4 Title IV of the Higher Education Act of 1965 (20 

5 U.S.C. 1070 et seq.) is amended by adding at the end 

6 the following: 


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1 ‘‘PART I—FEDERAL SUPPLEMENTAL LOAN 

2 PROGRAM 

3 ‘‘SEC. 499. FEDERAL SUPPLEMENTAL LOAN PROGRAM. 

4 ‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall 

5 carry out a Federal Supplemental Loan Program in ac6 cordance with this section. 

7 ‘‘(b) ELIGIBLE INDIVIDUALS.—An individual shall be 

8 eligible to receive a loan under this section if such indi9 vidual attends an institution of higher education on a full10 time basis as an undergraduate or graduate student. 

11 ‘‘(c) FIXED INTEREST RATE LOANS AND VARIABLE

12 INTEREST RATE LOANS.— 

13 ‘‘(1) IN GENERAL.—Beginning with academic 

14 year 2008–2009, the Secretary shall make fixed in15 terest rate loans and variable interest rate loans to 

16 eligible individuals under this section to enable such 

17 individuals to pursue their courses of study at insti18 tutions of higher education on a full-time basis. 

19 ‘‘(2) FIXED INTEREST RATE LOANS.—With re20 spect to a fixed interest rate loan made under this 

21 section, the applicable rate of interest on the prin22 cipal balance of the loan shall be set by the Sec23 retary at the lowest rate for the borrower that will 

24 result in no net cost to the Federal Government over 

25 the life of the loan. 


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1 ‘‘(3) VARIABLE INTEREST RATE LOANS.—With 

2 respect to a variable interest rate loan made under 

3 this section, the applicable rate of interest shall, dur4 ing any 12-month period beginning on July 1 and 

5 ending on June 30, be determined on the preceding 

6 June 1 and be equal to— 

7 ‘‘(A) the bond equivalent rate of 91-day 

8 Treasury bills auctioned at the final auction 

9 held prior to such June 1; plus 

10 ‘‘(B) a margin determined on an annual 

11 basis by the Secretary to result in the lowest 

12 rate for the borrower that will result in no net 

13 cost to the Federal Government over the life of 

14 the loan. 

15 ‘‘(d) MAXIMUM LOAN AMOUNT.— 

16 ‘‘(1) IN GENERAL.—The Secretary shall make a 

17 loan under this section in any amount up to the 

18 maximum amount described in paragraph (2). 

19 ‘‘(2) MAXIMUM AMOUNT.—For an eligible indi20 vidual, the maximum amount shall be calculated by 

21 subtracting from the estimated cost of attendance 

22 for such individual to attend the institution of higher 

23 education, any amount of financial aid awarded to 

24 the eligible individual and any loan amount for 

25 which the individual is eligible, but does not receive 


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1 such amount, pursuant to the subsidized loan pro2 gram established under section 428 and the unsub3 sidized loan program established under section 

4 428H. 

5 ‘‘(e) COSIGNERS.—The Secretary shall offer to eligi6 ble individuals both fixed interest rate loans and variable 

7 interest rate loans under this section with the option of 

8 having a cosigner or not having a cosigner. 

9 ‘‘(f) REPAYMENT.—The Secretary shall offer a bor10 rower of a loan made under this section the same repay11 ment plans the Secretary offers under section 455(d) for 

12 Federal Direct Loans. 

13 ‘‘(g) CONSOLIDATION.—A borrower of a loan made 

14 under this section may consolidate such loan with Federal 

15 Direct Loans made under part D. 

16 ‘‘(h) DISCLOSURES AND COOLING OFF PERIOD.— 

17 ‘‘(1) DISCLOSURES.—The Secretary shall pro18 vide disclosures to each borrower of a loan made 

19 under this section that are not less than as protec20 tive as the disclosures required under the Truth in 

21 Lending Act (15 U.S.C. 1601 et seq.), including 

22 providing a description of the terms, fees, and an23 nual percentage rate with respect to the loan before 

24 signing the promissory note. 


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1 ‘‘(2) COOLING OFF PERIOD.—With respect to 

2 loans made under this section, the Secretary shall 

3 provide a cooling off period for the borrower of not 

4 less than 10 business days during which an indi5 vidual may rescind consent to borrow funds pursu6 ant to this section. 

7 ‘‘(i) DISCRETION TO ALTER.—The Secretary may de8 sign or alter the loan program under this section with fea9 tures similar to those offered by private lenders as part 

10 of loans financing postsecondary education.’’. 

Æ 


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