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(1) AMENDMENT.—Section 428C(a)(3)(B) (20 
U.S.C. 1078–3(a)(3)(B)) is amended by adding at 
the end the following new clause: 
‘‘(ii) Loans made under this section shall, to 
the extent used to pay off the outstanding principal 
balance on loans made under this title, excluding 
capitalized interest, be counted against the applica-
ble limitations on aggregate indebtedness contained 
in sections 425(a)(2), 428(b)(1)(B), 428H(d), 455, 
and 464(a)(2)(B).’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply with respect to any 
loan made, insured, or guaranteed under part B or 
part D of title IV of the Higher Education Act of 
1965 for which the first disbursement of principal is 
made on or after the date of enactment of this Act. 
(c) ADDITIONAL CONSOLIDATION LOAN CHANGES.—
(1) 
ADDITIONAL
AMENDMENTS.—Section 
428C(b)(1) (20 U.S.C. 1078–3(b)(1)) is amended—
(A) by striking everything after ‘‘under 
this section’’ the first place it appears in sub-
paragraph (A); 
(B) by striking ‘‘(i) which’’ and all that 
follows through ‘‘and (ii)’’ in subparagraph (C);
216
(C) by striking ‘‘and’’ at the end of sub-
paragraph (E); 
(D) by redesignating subparagraph (F) as 
subparagraph (G); and 
(E) by inserting after subparagraph (E) 
the following new subparagraph: 
‘‘(F) that the lender of the consolidation 
loan shall, upon application for such loan, pro-
vide the borrower with a clear and conspicuous 
notice of at least the following information: 
‘‘(i) the effects of consolidation on 
total interest to be paid, fees to be paid, 
and length of repayment; 
‘‘(ii) the effects of consolidation on a 
borrower’s underlying loan benefits, includ-
ing 
loan 
forgiveness, 
cancellation, 
deferment, and reduced interest rates on 
those underlying loans; 
‘‘(iii) the ability of the borrower to 
prepay the loan, pay on a shorter schedule, 
and to change repayment plans; 
‘‘(iv) that borrower benefit programs 
may vary among different loan holders, 
and a description of how the borrower ben-
217
efits may vary among different loan hold-
ers; 
‘‘(v) the tax benefits for which bor-
rowers may be eligible; 
‘‘(vi) the consequences of default; and 
‘‘(vii) that by making the application 
the applicant is not obligated to agree to 
take the consolidation loan; and’’. 
(2) EFFECTIVE
DATE
FOR
SINGLE
HOLDER 
AMENDMENT.—The amendment made by paragraph 
(1)(A) shall apply with respect to any loan made 
under section 428C of the Higher Education Act of 
1965 (20 U.S.C. 1078–3) for which the application 
is received by an eligible lender on or after July 1, 
2006. 
(d) VOLUNTARY FLEXIBLE AGREEMENTS.—Section 
428A(c) (20 U.S.C. 1078–1(c)) is amended by striking 
paragraph (3) and inserting the following: 
‘‘(3) NOTICE TO INTERESTED PARTIES.—Once 
the Secretary reaches a tentative agreement in prin-
ciple under this section, the Secretary shall publish 
in the Federal Register a notice that invites inter-
ested parties to comment on the proposed agree-
ment. The notice shall state how to obtain a copy of 
the tentative agreement in principle and shall give
218
interested parties no less than 30 days to provide 
comments. The Secretary may consider such com-
ments prior to providing the notices pursuant to 
paragraph (2).’’. 
(e) FINANCIAL AND ECONOMIC LITERACY.—
(1) DEFAULT REDUCTION PROGRAM.—Section 
428F is amended by adding at the end the following: 
‘‘(c) FINANCIAL AND ECONOMIC LITERACY.—Where 
appropriate, each program described under subsection (b) 
shall include making available financial and economic edu-
cation materials for the borrower.’’. 
(2) PROGRAM ASSISTANCE FOR BORROWERS.—
Section 432(k)(1) (20 U.S.C. 1082(k)(1)) is amend-
ed by striking ‘‘and offering’’ and all that follows 
through the period and inserting ‘‘, offering loan re-
payment matching provisions as part of employee 
benefit packages, and providing employees with fi-
nancial and economic education and counseling.’’. 
(f) 
CREDIT
BUREAU
ORGANIZATION
AGREE-
MENTS.—Section 430A(a) (20 U.S.C. 1080a(a)) is 
amended by striking ‘‘agreements with credit bureau orga-
nizations’’ and inserting ‘‘an agreement with each national 
credit bureau organization (as described in section 603(p) 
of the Fair Credit Reporting Act)’’.