A bill to amend the Higher Education Act of 1965 to improve the information and repayment options to student borrowers, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Information Means a Positive 
Loan Experience Act of 2007''.

SEC. 2. PURPOSE.

    The purpose of this Act is to improve--
            (1) the repayment plans available to borrowers of loans 
        under title IV of the Higher Education Act of 1965 (20 U.S.C. 
        1070 et seq.); and
            (2) borrowers' understanding of--
                    (A) the repayment plans available for such loans;
                    (B) the conditions under which such loans may be 
                cancelled or forgiven; and
                    (C) the availability of deferments, forbearance, 
                and consolidation for such loans, and the impact on the 
                balance of such loans and total interest paid of using 
                those options.

SEC. 3. FLEXIBLE REPAYMENT PLANS.

    (a) Student Loan Requirements.--Section 427(a)(2)(H) of the Higher 
Education Act of 1965 (20 U.S.C. 1077(a)(2)(H)) is amended by inserting 
``, and, if applicable, the option of electing to delay repayment or 
principal for the first 2 years of the repayment period'' before the 
semicolon at the end.
    (b) FFEL Repayment Plans.--Section 428(b)(9) of the Higher 
Education Act of 1965 (20 U.S.C. 1078(b)(9)) is amended--
            (1) in subparagraph (A)--
                    (A) in the first sentence of the matter preceding 
                clause (i), by inserting ``, and the election described 
                in subparagraph (C)'' after ``thereon'';
                    (B) in clause (ii), by inserting ``, which plan 
                shall be established by the lender with the informed 
                agreement of the borrower'' before the semicolon at the 
                end; and
                    (C) by striking clause (iv) and inserting the 
                following:
                            ``(iv) for new borrowers on or after 
                        October 7, 1998, who accumulate outstanding 
                        loans under this part totaling more than 
                        $20,000, an extended repayment plan, with a 
                        fixed annual or graduated repayment amount paid 
                        over an extended period, not to exceed 25 
                        years, except that the borrower shall repay 
                        annually a minimum amount determined in 
                        accordance with paragraph (1)(L)(i).''; and
            (2) by adding at the end the following:
                    ``(C) Option for first 2 years.--A lender shall 
                offer each new borrower of loans on or after October 7, 
                1998, the opportunity to elect, for the first 2 years 
                of repayment of such loans, to delay the repayment of 
                principal, regardless of the repayment plan selected 
                under this paragraph.''.
    (c) Direct Loan Repayment Plans.--Section 455(d) of the Higher 
Education Act of 1965 (20 U.S.C. 1087e(d)) is amended--
            (1) in paragraph (1)--
                    (A) in the matter preceding subparagraph (A)--
                            (i) in the first sentence, by inserting ``, 
                        and the election described in paragraph (6)'' 
                        after ``the loan''; and
                            (ii) in the third sentence, by striking 
                        ``may choose'' and inserting ``shall choose 
                        from''; and
                    (B) in subparagraph (C), by striking 
                ``428(b)(9)(A)(v)'' and inserting ``428(b)(9)(A)(iv)''; 
                and
            (2) by adding at the end the following:
            ``(6) Option for first 2 years.--The Secretary shall offer 
        each new borrower of loans on or after October 7, 1998, the 
        opportunity to elect, for the first 2 years of repayment of 
        such loans, to delay the repayment of principal, consistent 
        with section 428(b)(9)(C).''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to loans for which the first disbursement is made on 
or after October 7, 1998.

SEC. 4. REVISED DEFINITION OF ECONOMIC HARDSHIP.

    Section 435(o)(1) of the Higher Education Act of 1965 (20 U.S.C. 
1085(o)(1)) is amended--
            (1) in subparagraph (A)(ii), by striking ``100 percent of 
        the poverty line for a family of 2'' and inserting ``150 
        percent of the poverty line applicable to the borrower's family 
        size''; and
            (2) in subparagraph (B)(ii), by striking ``to a family of 
        2'' and inserting ``to the borrower's family size''.

SEC. 5. USEFUL AND COMPREHENSIVE STUDENT LOAN INFORMATION FOR 
              BORROWERS.

    (a) Insurance Program Agreements.--Section 428(b)(1) of the Higher 
Education Act of 1965 (20 U.S.C. 1078(b)(1)) is amended--
            (1) in subparagraph (X), by striking ``and'' after the 
        semicolon;
            (2) in subparagraph (Y)(ii), by striking the period at the 
        end and inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(Z) provides that the lender shall, at the time 
                the lender grants a deferment to a borrower who 
                received a loan under section 428H and is eligible for 
                a deferment under section 427(a)(2)(C), provide 
                information to the borrower to enable the borrower to 
                understand the impact of capitalization of interest on 
                the borrower's loan principal and total amount of 
                interest to be paid during the life of the loan.''.
    (b) Guaranty Agreements.--Section 428(c)(3)(C) of the Higher 
Education Act of 1965 (20 U.S.C. 1078(c)(3)(C)) is amended--
            (1) in clause (i), by striking ``and'' after the semicolon;
            (2) in clause (ii), by striking ``and'' after the 
        semicolon;
            (3) by inserting after clause (ii) the following:
                            ``(iii) the lender shall, at the time of 
                        granting a borrower forbearance, provide 
                        information to the borrower to enable the 
                        borrower to understand the impact of 
                        capitalization of interest on the borrower's 
                        loan principal and total amount of interest to 
                        be paid during the life of the loan; and
                            ``(iv) the lender shall contact the 
                        borrower not less often than once every 180 
                        days during the period of forbearance to inform 
                        the borrower of--
                                    ``(I) the amount of unpaid 
                                principal and the amount of interest 
                                that has accrued since the last 
                                statement of such amounts provided to 
                                the borrower by the lender;
                                    ``(II) the fact that interest will 
                                accrue on the loan for the period of 
                                forbearance;
                                    ``(III) the amount of interest that 
                                will be capitalized, and the date on 
                                which capitalization will occur;
                                    ``(IV) the ability of the borrower 
                                to pay the interest that has accrued 
                                before the interest is capitalized; and
                                    ``(V) the borrower's option to 
                                discontinue the forbearance at any 
                                time; and''.
    (c) Lender Agreements.--Section 428C(b)(1) of the Higher Education 
Act of 1965 (20 U.S.C. 1078-3(b)(1)) is amended--
            (1) in subparagraph (E), by striking ``and'' after the 
        semicolon;
            (2) by redesignating subparagraph (F) as subparagraph (G); 
        and
            (3) by inserting after subparagraph (E) the following:
                    ``(F) that the lender shall, upon application for a 
                consolidation loan, provide the borrower with 
                information about the possible impact of loan 
                consolidation, including--
                            ``(i) the total interest to be paid and 
                        fees to be paid on the consolidation loan, and 
                        the length of repayment for the loan;
                            ``(ii) whether consolidation would result 
                        in a loss of loan benefits under this part or 
                        part D, including loan forgiveness, 
                        cancellation, and deferment;
                            ``(iii) in the case of a borrower that 
                        plans to include a Federal Perkins Loan under 
                        part E in the consolidation loan, that once the 
                        borrower adds the borrower's Federal Perkins 
                        Loan to a consolidation loan--
                                    ``(I) the borrower will lose all 
                                interest-free periods that would have 
                                been available for such loan under part 
                                E, such as the periods during which no 
                                interest accrues on the Federal Perkins 
                                Loan while the borrower is enrolled in 
                                school at least half-time, the grace 
                                period, and the periods during which 
                                the borrower's student loan repayments 
                                are deferred under section 464(c)(2); 
                                and
                                    ``(II) the borrower will no longer 
                                be eligible for cancellation of part or 
                                all of a Federal Perkins loan under 
                                section 465(a);
                            ``(iv) the ability of the borrower to 
                        prepay the consolidation loan, pay such loan on 
                        a shorter schedule, and to change repayment 
                        plans;
                            ``(v) that borrower benefit programs for a 
                        consolidation loan may vary among different 
                        lenders;
                            ``(vi) the consequences of default on the 
                        consolidation loan; and
                            ``(vii) that by applying for a 
                        consolidation loan, the borrower is not 
                        obligated to agree to take the consolidation 
                        loan; and''.
    (d) Information Dissemination.--Subparagraph (M) of section 
485(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1092(a)(1)(M)) 
is amended to read as follows:
            ``(M) the terms and conditions of the loans that students 
        receive under parts B, D, and E;''.
    (e) Exit Counseling.--Subparagraph (A) of section 485(b)(1) of the 
Higher Education Act of 1965 (20 U.S.C. 1092(b)(1)(A)) is amended by 
striking the subparagraph designation and all that follows through 
``465.'' and inserting the following: ``(A) Each eligible institution 
shall, through financial aid offices or otherwise, provide counseling 
to borrowers of loans that are made, insured, or guaranteed under part 
B (other than loans made pursuant to section 428C or loans made to 
parents pursuant to section 428B), or made under part D (other than 
Federal Direct Consolidation Loans or Federal Direct PLUS Loans made to 
parents) or E, prior to the completion of the course of study for which 
the borrower enrolled at the institution or at the time of departure 
from such institution. The counseling required by this subsection shall 
include--
            ``(i) information on the repayment plans available, 
        including a discussion of the different features of each plan 
        and sample information showing the difference in interest paid 
        and total payments under each plan;
            ``(ii) the average anticipated monthly repayments under the 
        standard repayment plan and, at the borrower's request, the 
        other repayment plans for which the borrower is eligible;
            ``(iii) such debt and management strategies as the 
        institution determines are designed to facilitate the repayment 
        of such indebtedness;
            ``(iv) an explanation that the borrower has the ability to 
        prepay each such loan, pay the loan on a shorter schedule, and 
        change repayment plans;
            ``(v) the terms and conditions under which the student may 
        obtain full or partial forgiveness or cancellation of principal 
        or interest under sections 428J, 460, and 465 (to the extent 
        that such sections are applicable to the student's loans);
            ``(vi) the terms and conditions under which the student may 
        defer repayment of principal or interest or be granted 
        forbearance under subsections (b)(1)(M) and (o) of section 428, 
        428H(e)(7), subsections (f) and (l) of section 455, and section 
        464(c)(2), and the potential impact of such deferment or 
        forbearance;
            ``(vii) the consequences of default on such loans;
            ``(viii) information on the effects of using a 
        consolidation loan to discharge the borrower's loans under 
        parts B, D, and E, including, at a minimum--
                    ``(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, including all grace periods, 
                loan forgiveness, cancellation, and deferment 
                opportunities;
                    ``(III) the ability of the borrower to prepay the 
                loan or change repayment plans; and
                    ``(IV) that borrower benefit programs may vary 
                among different loan holders; and
            ``(ix) a notice to borrowers about the availability of the 
        National Student Loan Data System and how the system can be 
        used by a borrower to obtain information on the status of the 
        borrower's loans.''.
    (f) Conforming Amendment.--Section 455(g) of the Higher Education 
Act of 1965 (20 U.S.C. 1087e(g)) is amended by striking 
``428C(b)(1)(F)'' and inserting ``428C(b)(1)(G)''.

SEC. 6. REPORT REQUIRED.

    Section 141(c) of the Higher Education Act of 1965 (20 U.S.C. 
1018(c)) is amended--
            (1) in the subsection heading, by striking ``Plan and 
        Report'' and inserting ``Plan, Report, and Briefing''; and
            (2) by adding at the end the following:
            ``(4) Briefing on enforcement of student loan provisions.--
        The Chief Operating Officer shall provide an annual briefing to 
        the members of the authorizing committees on the steps the PBO 
        has taken and is taking to ensure that lenders are providing 
        the information required under clauses (iii) and (iv) of 
        section 428(c)(3)(C) and sections 428(b)(1)(Z) and 
        428C(b)(1)(F).''.

Summary: Student Information Means a Positive Loan Experience Act of 2007 - Amends the Higher Education Act of 1965 to give borrowers under the Federal Family Education Loan (FFEL) and Direct Loan (DL) programs the option to delay the repayment of principal on such loans for the first two years that they are in repayment, regardless of their repayment plan.

Requires FFEL lenders to offer extended repayment plans to borrowers with $20,000 (currently, $30,000) of FFEL debt.

Revises the definition of economic hardship to include individuals whose earnings do not exceed 150% of the poverty line applicable to their family size.

Requires lenders that grant FFEL loan deferment or forbearance to inform borrowers of the impact such deferment or forbearance has on the ultimate cost of the loan.

Directs lenders to inform borrowers seeking to consolidate loans: (1) of loan costs and repayment terms, including the ability to prepay or change repayment plans; (2) whether FFEL or DL repayment-related benefits will be lost; (3) that certain Federal Perkins Loan (PL) interest-free periods and deferment and cancellation options will be lost; (4) that other lenders may offer different terms; and (5) that applying for such loans does not oblige borrowers to take them.

Requires schools to inform prospective and enrolled students of the terms and conditions of FFEL, DL, and PL loans. Adds to the exit counseling information schools must provide to student borrowers. Requires certain information regarding: (1) costs and repayment terms, including the ability to prepay or change repayment plans; (2) loan forgiveness and forbearance options; (3) the effects of consolidating such loans; and (4) the availability of the National Student Loan Data System for use in obtaining information on their loan status.