I 
110TH CONGRESS 
1ST SESSION 
H. R. 890 
To establish requirements for lenders and institutions of higher education 
in order to protect students and other borrowers receiving educational loans. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 7, 2007 
Mr. GEORGE MILLER of California (for himself, Mr. HINOJOSA, Mr. BISHOP 
of New York, Mr. COURTNEY, Mr. YARMUTH, Mr. TIERNEY, Mrs. DAVIS 
of California, Mr. GRIJALVA, Mr. DAVIS of Illinois, Mr. MICHAUD, Mr. 
MCDERMOTT, Ms. MATSUI, and Mr. VAN HOLLEN) introduced the fol-
lowing bill; which was referred to the Committee on Education and 
Labor, and in addition to the Committee on Financial Services, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To establish requirements for lenders and institutions of 
higher education in order to protect students and other 
borrowers receiving educational loans. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Student Loan Sun-
shine Act’’. 
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SEC. 2. INSTITUTION AND LENDER REPORTING AND DIS-
CLOSURE REQUIREMENTS. 
Title I of the Higher Education Act of 1965 (20 
U.S.C. 1001 et seq.) is amended by adding at the end 
the following: 
‘‘PART E—LENDER AND INSTITUTION REQUIRE-
MENTS RELATING TO EDUCATIONAL LOANS 
‘‘SEC. 151. DEFINITIONS. 
‘‘In this part: 
‘‘(1) COVERED INSTITUTION.—The term ‘cov-
ered institution’— 
‘‘(A) means any educational institution 
that offers a postsecondary educational degree, 
certificate, or program of study (including any 
institution of higher education, as such term is 
defined in section 102) and receives any Fed-
eral funding or assistance; and 
‘‘(B) includes an agent of the educational 
institution (including an alumni association, 
booster club, or other organization directly or 
indirectly associated with such institution) or 
employee of such institution. 
‘‘(2) EDUCATIONAL
LOAN.—The term ‘edu-
cational loan’ (except when used as part of the term 
‘private educational loan’) means— 
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‘‘(A) any loan made, insured, or guaran-
teed under title IV; or 
‘‘(B) a private educational loan (as defined 
in paragraph (5)). 
‘‘(3) EDUCATIONAL LOAN ARRANGEMENT.—The 
term ‘educational loan arrangement’ means an ar-
rangement or agreement between a lender and a cov-
ered institution— 
‘‘(A) under which arrangement or agree-
ment a lender provides or otherwise issues edu-
cational loans to the students attending the cov-
ered institution or the parents of such students; 
and 
‘‘(B) which arrangement or agreement— 
‘‘(i) relates to the covered institution 
recommending, promoting, endorsing, or 
using the loan product of the lender; and 
‘‘(ii) involves the payment of any fee 
or provision of other material benefit by 
the lender to the institution or to groups of 
students who attend the institution. 
‘‘(4) LENDER.— 
‘‘(A) IN GENERAL.—The term ‘lender’— 
‘‘(i) means a creditor, except that 
such term shall not include an issuer of 
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credit under a residential mortgage trans-
action; and 
‘‘(ii) includes an agent of a lender. 
‘‘(B) INCORPORATION
OF
TILA
DEFINI-
TIONS.—The terms ‘creditor’ and ‘residential 
mortgage transaction’ have the meanings given 
such terms in section 103 of the Truth in 
Lending Act (15 U.S.C. 1602). 
‘‘(5) PRIVATE EDUCATIONAL LOAN.—The term 
‘private educational loan’ means a private loan pro-
vided by a lender that— 
‘‘(A) is not made, insured, or guaranteed 
under title IV; and 
‘‘(B) is issued by a lender for postsec-
ondary educational expenses to a student, or 
the parent of the student, regardless of whether 
the loan is provided through the educational in-
stitution that the student attends or directly to 
the student or parent from the lender. 
‘‘(6) 
POSTSECONDARY
EDUCATIONAL
EX-
PENSES.—The term ‘postsecondary educational ex-
penses’ means any of the expenses that are included 
as part of a student’s cost of attendance, as defined 
under section 472. 
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‘‘SEC. 152. REQUIREMENTS FOR LENDERS AND INSTITU-
TIONS 
PARTICIPATING 
IN 
EDUCATIONAL 
LOAN ARRANGEMENTS. 
‘‘(a) REPORTING FOR LENDERS.—In addition to any 
other disclosure required under Federal law, each lender 
that participates in 1 or more educational loan arrange-
ments shall prepare and submit to the Secretary (at a time 
to be determined by the Secretary) an annual report that 
includes, with respect to each educational loan arrange-
ment, the following: 
‘‘(1) The date on which the arrangement was 
entered into and the period for which the arrange-
ment applies. 
‘‘(2) A summary of the terms of the arrange-
ment related to the marketing, recommending, en-
dorsing, or use of, the loans. 
‘‘(3) The full details of any aspect of the ar-
rangement relating to the covered institution issuing 
loans and the lender (or a financial partner of the 
lender) servicing or purchasing such loans. 
‘‘(4) A summary of any direct or indirect ben-
efit provided or paid to any party in connection with 
the arrangement. 
‘‘(b) PROVISION OF LOAN INFORMATION.—A lender 
may not provide a private educational loan to a student 
attending a covered institution with which the lender has 
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an educational loan arrangement, or the parent of such 
student, until the covered institution has informed the stu-
dent or parent of their remaining options for borrowing 
under title IV, including information on any terms and 
conditions of available loans under such title that are more 
favorable to the borrower. 
‘‘(c) USE OF INSTITUTION NAME.— 
‘‘(1) IN GENERAL.—A covered institution that 
has entered into an educational loan arrangement 
with a lender regarding private educational loans 
shall not allow the lender to use the name, emblem, 
mascot, or logo of the institution, or other words, 
pictures, or symbols readily identified with the insti-
tution, in the marketing of private educational loans 
to the students attending the institution in any way 
that implies that the institution endorses the private 
educational loans offered by the lender. 
‘‘(2) APPLICABILITY.—Paragraph (1) shall 
apply to any educational loan arrangement, or exten-
sion of such arrangement, entered into or renewed 
after the date of enactment of the Student Loan 
Sunshine Act. 
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‘‘SEC. 153. INTEREST RATE REPORT FOR INSTITUTIONS 
AND 
LENDERS 
PARTICIPATING 
IN 
EDU-
CATIONAL LOAN ARRANGEMENTS. 
‘‘(a) SECRETARY DUTIES.— 
‘‘(1) REPORT AND MODEL FORMAT.—Not later 
than 180 days after the date of enactment of the 
Student Loan Sunshine Act, the Secretary shall— 
‘‘(A) prepare a report on the adequacy of 
the information provided to students and the 
parents of such students about educational 
loans (including loans made, insured, or guar-
anteed under title IV and private educational 
loans), after consulting with students, rep-
resentatives of covered institutions (including fi-
nancial aid administrators, registrars, and busi-
ness officers), lenders (including lenders of pri-
vate educational loans), loan servicers, and 
guaranty agencies; 
‘‘(B) include in the report a model format, 
based on the report’s findings, to be used by 
lenders and covered institutions in carrying out 
subsections (b) and (c)— 
‘‘(i) that provides information on the 
applicable interest rates and other terms 
and conditions of the educational loans 
provided by a lender to students attending 
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the institution, or the parents of such stu-
dents, disaggregated by each type of edu-
cational loans provided to such students or 
parents by the lender, including— 
‘‘(I) the interest rate and terms 
and conditions of the loans offered by 
the lender for the upcoming academic 
year; 
‘‘(II) with respect to such loans, 
any benefits that are contingent on 
the repayment behavior of the bor-
rower; 
‘‘(III) the annual percentage rate 
for such loans, based on the actual 
disbursed amount of the loan; 
‘‘(IV) the average amount bor-
rowed from the lender by students en-
rolled in the institution who obtain 
loans of such type from the lender for 
the preceding academic year; and 
‘‘(V) the average interest rate on 
such loans provided to such students 
for the preceding academic year; and 
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‘‘(ii) which format shall be easily usa-
ble by lenders, institutions, guaranty agen-
cies, and loan servicers; and 
‘‘(C)(i) submit the report and model for-
mat to the Committee on Health, Education, 
Labor, and Pensions of the Senate and the 
Committee on Education and Labor of the 
House of Representatives; and 
‘‘(ii) make the report and model format 
available to covered institutions, lenders, and 
the public. 
‘‘(2) FORMAT UPDATE.—Not later than 1 year 
after the submission of the report and model format 
described in paragraph (1), the Secretary shall— 
‘‘(A) assess the adequacy of the model for-
mat included in the report; 
‘‘(B) after consulting with students, rep-
resentatives of covered institutions (including fi-
nancial aid administrators, registrars, and busi-
ness officers), lenders (including lenders of pri-
vate educational loans), loan servicers, and 
guaranty agencies— 
‘‘(i) prepare a list of any improve-
ments to the model format that have been 
identified as beneficial to borrowers; and 
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‘‘(ii) update the model format after 
taking such improvements into consider-
ation; and 
‘‘(C)(i) submit the list of improvements 
and updated model format to the Committee on 
Health, Education, Labor, and Pensions of the 
Senate and the Committee on Education and 
Labor of the House of Representatives; and 
‘‘(ii) make the list of improvements and 
updated model format available to covered insti-
tutions, lenders, and the public. 
‘‘(3) USE OF FORM.—The Secretary shall take 
such steps as necessary to make the model format, 
and any updated model format, available to covered 
institutions and to encourage— 
‘‘(A) lenders subject to subsection (b) to 
use the model format or updated model format 
(if available) in providing the information re-
quired under subsection (b); and 
‘‘(B) covered institutions to use such for-
mat in preparing the information report under 
subsection (c). 
‘‘(b) LENDER DUTIES.—Each lender that has an 
educational loan arrangement with a covered institution 
shall annually, by a date determined by the Secretary, pro-
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vide to the covered institution and to the Secretary the 
information included on the model format or an updated 
model format (if available) for each type of educational 
loan provided by the lender to students attending the cov-
ered institution, or the parents of such students, for the 
preceding academic year. 
‘‘(c) COVERED INSTITUTION DUTIES.—Each covered 
institution shall— 
‘‘(1) prepare and submit to the Secretary an 
annual report, by a date determined by the Sec-
retary, that includes, for each lender that has an 
educational loan arrangement with the covered insti-
tution and that has submitted to the institution the 
information required under subsection (b)— 
‘‘(A) the information included on the 
model format or updated model format (if avail-
able) for each type of educational loan provided 
by the lender to students attending the covered 
institution, or the parents of such students; and 
‘‘(B) a detailed explanation of why the cov-
ered institution believes the terms and condi-
tions of each type of educational loan provided 
pursuant to the agreement are beneficial for 
students attending the covered institution, or 
the parents of such students; and 
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‘‘(2) ensure that the report required under 
paragraph (1) is made available to the public and 
provided to students attending or planning to attend 
the covered institution, and the parents of such stu-
dents, in time for the student or parent to take such 
information into account before applying for or se-
lecting an educational loan. 
‘‘SEC. 154. PRIVATE EDUCATIONAL LOAN DISCLOSURE RE-
QUIREMENTS FOR COVERED INSTITUTIONS. 
‘‘A covered institution that provides information to 
any student, or the parent of such student, regarding a 
private educational loan from a lender shall, prior to or 
concurrent with such information— 
‘‘(1) inform the student or parent of— 
‘‘(A) the student or parent’s eligibility for 
assistance and loans under title IV; and 
‘‘(B) the terms and conditions of such pri-
vate educational loan that are less favorable 
than the terms and conditions of educational 
loans for which the student or parent is eligible, 
including interest rates, repayment options, and 
loan forgiveness; and 
‘‘(2) ensure that information regarding such 
private educational loans is presented in such a 
manner as to be distinct from information regarding 
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loans that are made, insured, or guaranteed under 
title IV. 
‘‘SEC. 155. GIFT BAN FOR EMPLOYEES OF INSTITUTIONS. 
‘‘(a) GIFT BAN.—A lender or guarantor of edu-
cational loans shall not offer any gift to an employee or 
agent of a covered institution. 
‘‘(b) REPORTS OF GIFT BAN VIOLATIONS.— 
‘‘(1) EMPLOYEE REPORT.—Each employee or 
agent of a covered institution shall report to the In-
spector General of the Department of Education any 
instance of a lender or guarantor of educational 
loans (including an agent of the lender or guarantor) 
that attempts to give a gift to the employee or agent 
in violation of subsection (a). 
‘‘(2) INSPECTOR GENERAL REPORT.—The In-
spector General of the Department of Education 
shall investigate any reported violation of this sub-
section and shall annually submit a report to the 
Committee on Health, Education, Labor, and Pen-
sions of the Senate and the Committee on Education 
and Labor of the House of Representatives identi-
fying all reported violations of the gift ban under 
subsection (a), including the lenders involved in each 
such violation, for the preceding year. 
‘‘(c) DEFINITION OF GIFT.— 
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‘‘(1) IN GENERAL.—In this section, the term 
‘gift’ means any gratuity, favor, discount, entertain-
ment, hospitality, loan, or other item having a mone-
tary value of more than $10. The term includes a 
gift of services, transportation, lodging, or meals, 
whether provided in kind, by purchase of a ticket, 
payment in advance, or reimbursement after the ex-
pense has been incurred. 
‘‘(2) EXCEPTIONS.—The term ‘gift’ shall not 
include any of the following: 
‘‘(A) Standard informational material re-
lated to a loan, such as a brochure. 
‘‘(B) Food, refreshments, training, or in-
formational material furnished to an employee 
or agent of an institution as an integral part of 
a training session or through participation in 
an advisory council that is designed to improve 
the lender’s service to the covered institution, if 
such training or participation contributes to the 
professional development of the employee or 
agent of the institution. 
‘‘(C) Favorable terms, conditions, and bor-
rower benefits on an educational loan provided 
to a student employed by the covered institu-
tion. 
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‘‘(3) RULE FOR GIFTS TO FAMILY MEMBERS.— 
For purposes of this section, a gift to a family mem-
ber of an employee or an agent of a covered institu-
tion, or a gift to any other individual based on that 
individual’s relationship with the employee or agent, 
shall be considered a gift to the employee or agent 
if— 
‘‘(A) the gift is given with the knowledge 
and acquiescence of the employee or agent; and 
‘‘(B) the employee or agent has reason to 
believe the gift was given because of the official 
position of the employee or agent. 
‘‘SEC. 156. COMPLIANCE AND ENFORCEMENT. 
‘‘(a) CONDITION OF ANY FEDERAL ASSISTANCE.— 
Notwithstanding any other provision of law, a covered in-
stitution or lender shall comply with this part as a condi-
tion of receiving Federal funds or assistance provided after 
the date of enactment of the Student Loan Sunshine Act. 
‘‘(b) PENALTIES.—Notwithstanding any other provi-
sion of law, if the Secretary determines, after providing 
notice and an opportunity for a hearing for a covered insti-
tution or lender, that the covered institution or lender has 
violated subsection (a)— 
‘‘(1) in the case of a covered institution, or a 
lender that does not participate in a loan program 
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under title IV, the Secretary may impose a civil pen-
alty in an amount of not more than $25,000; and 
‘‘(2) in the case of a lender that does partici-
pate in a program under title IV, the Secretary may 
limit, terminate or suspend the lender’s participation 
in such program. 
‘‘(c) CONSIDERATIONS.—In taking any action against 
a covered institution or lender under subsection (b), the 
Secretary shall take into consideration the nature and se-
verity of the violation of subsection (a). 
‘‘SEC. 157. GAO STUDY AND REPORTS. 
‘‘(a) STUDY.—The Comptroller General of the United 
States shall conduct a study on— 
‘‘(1) the gifts or financial or other material ben-
efits that are provided by lenders to covered institu-
tions to secure, or as part of an effort to secure, the 
covered institutions’ educational loan business; 
‘‘(2) the extent to which lenders issuing private 
educational loans may be inappropriately using in-
ducements to secure, or as part of an effort to se-
cure, educational loan arrangements with covered in-
stitutions; and 
‘‘(3) whether educational loans made to stu-
dents attending a covered institution in connection 
with an educational loan arrangement, and private 
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educational loans made directly to students, provide 
competitive interest rates, terms, and conditions to 
students who obtain such loans. 
‘‘(b) REPORTS.—The Comptroller General of the 
United States shall— 
‘‘(1) not later than 1 year after the date of en-
actment of the Student Loan Sunshine Act, submit 
to Congress a preliminary report regarding the find-
ings of the study described in subsection (a); and 
‘‘(2) not later than 2 years after such date of 
enactment, submit to Congress a final report regard-
ing such findings.’’. 
SEC. 3. PROGRAM PARTICIPATION AGREEMENTS. 
Section 487(a) of the Higher Education Act of 1965 
(20 U.S.C. 1094(a)) is amended by adding at the end the 
following: 
‘‘(24)(A) In the case of an institution (including 
an employee or agent of an institution) that main-
tains a preferred lender list, in print or any other 
medium, through which the institution recommends 
1 or more specific lenders for loans made under part 
B to the students attending the institution (or the 
parents of such students), the institution will— 
‘‘(i) clearly and fully disclose on the pre-
ferred lender list— 
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‘‘(I) why the institution has included 
each lender as a preferred lender, espe-
cially with respect to terms and conditions 
favorable to the borrower; and 
‘‘(II) that the students attending the 
institution (or the parents of such stu-
dents) do not have to borrow from a lender 
on the preferred lender list; 
‘‘(ii) ensure, through the use of the list 
provided by the Secretary under subparagraph 
(C), that— 
‘‘(I) there are not less than 3 lenders 
named on the preferred lending list that 
are not affiliates of each other; and 
‘‘(II) the preferred lender list— 
‘‘(aa) specifically indicates, for 
each lender on the list, whether the 
lender is or is not an affiliate of each 
other lender on the list; and 
‘‘(bb) if the lender is an affiliate 
of another lender on the list, describes 
the specifics of such affiliation; and 
‘‘(iii) establish a process to ensure that 
lenders are placed upon the preferred lender list 
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on the basis of the benefits provided to bor-
rowers, including — 
‘‘(I) highly competitive interest rates, 
terms, or conditions for loans made under 
part B; 
‘‘(II) high-quality servicing for such 
loans; or 
‘‘(III) additional benefits beyond the 
standard terms and conditions for such 
loans. 
‘‘(B) For the purposes of subparagraph 
(A)(ii)— 
‘‘(i) the term ‘affiliate’ means a person 
that controls, is controlled by, or is under com-
mon control with another person; and 
‘‘(ii) a person has control over another per-
son if— 
‘‘(I) the person directly or indirectly, 
or acting through 1 or more others, owns, 
controls, or has the power to vote 5 per-
cent or more of any class of voting securi-
ties of such other person; 
‘‘(II) the person controls, in any man-
ner, the election of a majority of the direc-
tors or trustees of such other person; or 
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‘‘(III) the Secretary determines (after 
notice and opportunity for a hearing) that 
the person directly or indirectly exercises a 
controlling interest over the management 
or policies of such other person. 
‘‘(C) The Secretary shall maintain and update 
a list of lender affiliates of all eligible lenders, and 
shall provide such list to the eligible institutions for 
use in carrying out subparagraph (A).’’. 
SEC. 4. NOTICE OF AVAILABILITY OF FUNDS FROM FED-
ERAL SOURCES. 
Section 128 of the Truth in Lending Act (15 U.S.C. 
1638) is amended by adding at the end the following: 
‘‘(e) DISCLOSURES RELATING
TO PRIVATE EDU-
CATIONAL LOANS.— 
‘‘(1) IN GENERAL.—In the case of an extension 
of credit that is a private educational loan, other 
than a residential mortgage transaction, the creditor 
shall provide in every application for such extensions 
of credit and together with any solicitation, mar-
keting, or advertisement of such extensions of credit, 
written, electronic, or otherwise, the disclosures de-
scribed in paragraph (2). 
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‘‘(2) DISCLOSURES.—Disclosures required by 
this subsection shall include a clear and prominent 
statement— 
‘‘(A) that the borrower may qualify for 
Federal financial assistance through a program 
under title IV of the Higher Education Act of 
1965, in lieu of or in addition to a loan from 
a non-Federal source; 
‘‘(B) of the interest rates available with re-
spect to such Federal financial assistance; 
‘‘(C) describing how the applicable interest 
rate is determined, including whether it is based 
on the credit score of the borrower; 
‘‘(D) 
showing 
sample 
loan 
costs, 
disaggregated by type; 
‘‘(E) of the types of repayment plans that 
are available; 
‘‘(F) of whether, and under what condi-
tions, early repayment may be made without 
penalty; 
‘‘(G) of when and how often the loan 
would be recapitalized; 
‘‘(H) describing all fees, deferments, or 
forbearance; 
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‘‘(I) describing all available repayment 
benefits, and the percentage of all borrowers 
who qualify for such benefits; 
‘‘(J) describing collection practices in the 
case of default; 
‘‘(K) describing late payment penalties and 
associated fees; 
‘‘(L) of any complaints (and their resolu-
tion) filed with any State or private consumer 
protection agency (including the Better Busi-
ness Bureau); and 
‘‘(M) such other information as the Board 
may require. 
‘‘(3) PROVISION OF INFORMATION.—Before a 
creditor may issue any funds with respect to an ex-
tension of credit described in paragraph (1) for an 
amount equal to more than $1,000— 
‘‘(A) the creditor shall notify the relevant 
postsecondary educational institution, in writ-
ing, of the proposed extension of credit and the 
amount thereof; and 
‘‘(B) if such relevant institution is a cov-
ered institution, the institution shall, in an ex-
pedient manner, notify the prospective bor-
rower, in accordance with procedures estab-
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lished by rule of the Board, whether and to 
what extent the proposed extension of credit ex-
ceeds the cost of attendance (as defined in sec-
tion 472 of the Higher Education Act of 1965) 
for the student at that institution, after consid-
eration of the Federal and State grant and loan 
aid and institutional aid that the student has or 
is eligible to receive. 
‘‘(4) REGULATORY AUTHORITY.—The Board— 
‘‘(A) shall issue such rules and regulations 
as may be necessary to implement this sub-
section; and 
‘‘(B) may, by rule, establish appropriate 
exceptions to the disclosures required by this 
subsection. 
‘‘(5) DEFINITIONS.—As used in this subsection, 
the terms ‘private educational loan’ and ‘covered in-
stitution’ have the same meanings as in section 151 
of the Higher Education Act of 1965.’’. 
Æ 
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