Student Loan Disclosure Transparency Act of 2021
Bill: H.R.2090 | Sponsor: Rep. Herrera Beutler, Jaime (R-WA)
Policy area: Education

Summary:
Student Loan Disclosure Transparency Act of 2021
This bill requires lenders disbursing federal student loans to disclose additional information to borrowers and increase the frequency of such disclosures.
Specifically, prior to disbursement, the lender making a loan must disclose (1) the principal amount, interest rate, and number of required monthly payments to be made on the loan; (2) the estimated balance owed by the borrower; and (3) the estimated aggregate amount the borrower will pay.
Prior to repayment, the lender must disclose the projected total of interest charges that the borrower will pay on the loan, as well as projections of the borrower's monthly repayment amount.
The bill also requires certain disclosures for the life of the loan. In particular, lenders must disclose information about loans on a monthly, rather than periodic, basis. Lenders must also provide borrowers who are not in a repayment status (e.g., a borrower who is in school or in a deferment period) with a monthly statement.
The Department of Education must obtain feedback from borrowers and report on the usefulness and effectiveness of such disclosures.

To improve Federal student loan disclosures, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Loan Disclosure Transparency 
Act of 2021''.

SEC. 2. REQUIRED DISCLOSURES BEFORE DISBURSEMENT.

    Section 433(a) of the Higher Education Act of 1965 (20 U.S.C. 
1083(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (18);
            (2) by striking the period and inserting ``; and'' at the 
        end of paragraph (19); and
            (3) by adding at the end the following new paragraph:
            ``(20) a separate written or electronic statement, in 
        simple and understandable terms, showing--
                    ``(A) for the loan or loans being disbursed--
                            ``(i) the principal amount of the loan, the 
                        stated interest rate on the loan, the number of 
                        required monthly payments to be made on the 
                        loan (which shall be based on a standard 
                        repayment plan or, in the case of a borrower 
                        who has selected another repayment plan, on the 
                        repayment plan selected by the borrower), and 
                        the estimated number of months before the start 
                        of the repayment period for the loan (based on 
                        the expected date on which the repayment period 
                        is to begin or the deferment period under 
                        428B(d)(1) is to end, as applicable);
                            ``(ii) the estimated balance to be owed by 
                        the borrower on such loan (including, if 
                        applicable, the estimated amount of interest to 
                        be capitalized) as of the scheduled date on 
                        which the repayment period is to begin or the 
                        deferment period under 428B(d)(1) is to end, as 
                        applicable, and an estimate of the projected 
                        monthly payment; and
                            ``(iii) an estimate of the aggregate amount 
                        the borrower will pay for the loan or loans, 
                        including the total amount of monthly payments 
                        made over the life of the loan plus the amount 
                        of any charges for the loan, such as an 
                        origination fee;
                    ``(B) for each other loan owed by the borrower to 
                the lender, the information described in clauses (i) 
                through (iii) of subparagraph (A); and
                    ``(C) an estimate of the total cumulative amount 
                the borrower will pay for all loans owed by the 
                borrower to that lender, including the loan being 
                disbursed, as determined by calculating the sum of the 
                estimated aggregate amounts the borrower will pay for 
                each loan in accordance with subparagraphs (A) and 
                (B).''.

SEC. 3. DISCLOSURE OF PROJECTED MONTHLY PAYMENT AMOUNTS.

    Section 433 of the Higher Education Act of 1965 (20 U.S.C. 1083) is 
further amended--
            (1) in subsection (b), by amending paragraph (9) to read as 
        follows:
            ``(9) information of interest charges, accrual, and 
        payments, including--
                    ``(A) the projected total of interest charges which 
                the borrower will pay on the loan or loans, assuming 
                that the borrower makes payments exactly in accordance 
                with the repayment schedule;
                    ``(B) projections of the borrower's monthly 
                repayment amount, assuming interest accrual resulting 
                from capitalization of interest while the borrower, or 
                the student on whose behalf the loan is made, is in 
                school (as applicable), which shall disclose the cost 
                to the borrower of--
                            ``(i) capitalizing the interest; and
                            ``(ii) paying the interest as the interest 
                        accrues; and
                    ``(C) if the borrower has already paid interest on 
                the loan or loans, the amount of interest paid;''; and
            (2) by striking subsection (d), and redesignating 
        subsections (e) and (f) as subsections (d) and (e), 
        respectively.

SEC. 4. REQUIRED MONTHLY DISCLOSURES.

    Section 433(d) of the Higher Education Act of 1965, as so 
redesignated by section 3 of this Act, is amended--
            (1) in the subsection header, by striking ``During 
        Repayment'' and inserting ``for the Life of the Loan''; and
            (2) by amending paragraph (1) to read as follows:
            ``(1) Pertinent information about loans provided on a 
        monthly basis.--Each eligible lender shall provide the borrower 
        of one or more loans made, insured, or guaranteed under this 
        part or part D with a written monthly bill or statement 
        (including through electronic means), in simple and 
        understandable terms, of pertinent loan information described 
        in this paragraph that--
                    ``(A) with respect to a borrower who is in 
                repayment status, shall include a bill that corresponds 
                to each payment installment time period in which a 
                payment is due;
                    ``(B) with respect to a borrower who is not in 
                repayment status, shall be a statement for each month 
                of the period during which the borrower is not required 
                to make a payment to the eligible lender, including 
                while the borrower is in school and during periods of 
                deferment or forbearance;
                    ``(C) shall be provided to the borrower of a loan 
                not more than 30 days after the first disbursement of 
                the loan, and monthly thereafter for the life of the 
                loan; and
                    ``(D) shall include, for all outstanding loans 
                made, insured, or guaranteed under this part or part D 
                by the eligible lender to the borrower--
                            ``(i) the original principal amount of each 
                        of the borrower's loans owed to that lender, 
                        and the original principal amount of those 
                        loans in the aggregate;
                            ``(ii) the borrower's current balance on 
                        each loan and on all loans in the aggregate, as 
                        of the time of the bill or statement, as 
                        applicable;
                            ``(iii) the interest rate on each loan;
                            ``(iv) the total amount the borrower has 
                        paid in interest on each loan and on all loans 
                        in the aggregate;
                            ``(v) the amount of interest that has 
                        accumulated on each loan and on all loans in 
                        the aggregate since the last statement, and the 
                        total interest accrued to date on each loan and 
                        on all loans in the aggregate during the life 
                        of the loans;
                            ``(vi) the aggregate amount the borrower 
                        has paid for each loan and all loans in the 
                        aggregate, including the amount the borrower 
                        has paid in interest, the amount the borrower 
                        has paid in fees, and the amount the borrower 
                        has paid against the principal;
                            ``(vii) an estimate of the aggregate amount 
                        the borrower will pay during the life of the 
                        loan for each loan and on all loans in the 
                        aggregate, including the total amount of 
                        monthly payments made over the life of the 
                        loans plus the amount of any charges for the 
                        loans, such as origination fees;
                            ``(viii) a description of each fee the 
                        borrower has been charged for the most recently 
                        preceding installment time period;
                            ``(ix) the date by which the borrower needs 
                        to make a payment in order to avoid additional 
                        fees and the amount of such payment and the 
                        amount of such fees;
                            ``(x) with respect to a borrower who is not 
                        in repayment, the estimated balance to be owed 
                        by the borrower on each loan and on all loans 
                        in the aggregate, and an estimate of the 
                        projected monthly payment on each loan and on 
                        all loans in the aggregate, on the estimated 
                        date the borrower will enter (or re-enter) 
                        repayment status;
                            ``(xi) a reminder that the borrower has the 
                        option to change repayment plans, a list of the 
                        names of the repayment plans available to the 
                        borrower, a link to the appropriate page of the 
                        Department's website to obtain a more detailed 
                        description of the repayment plans, and 
                        directions for the borrower to request a change 
                        in repayment plan;
                            ``(xii) an explanation--
                                    ``(I) that the borrower has the 
                                option to pay the interest that accrues 
                                on each loan while the borrower is a 
                                student at an institution of higher 
                                education or during a period of 
                                deferment or forbearance, if 
                                applicable; and
                                    ``(II) if the borrower does not pay 
                                such interest while attending an 
                                institution or during a period of 
                                deferment or forbearance, any 
                                accumulated interest on the loan will 
                                be capitalized when the loan goes into 
                                repayment, resulting in more interest 
                                being paid over the life of the loan;
                            ``(xiii) an explanation that making even 
                        small payments of any amount while the borrower 
                        is a student at an institution of higher 
                        education, or during a period of deferment or 
                        forbearance, if applicable, can help to offset 
                        interest accrual over the life of the loan;
                            ``(xiv) the lender's or loan servicer's 
                        address, toll-free phone number, and website 
                        for payment and billing error purposes, 
                        including information about how a borrower can 
                        make voluntary payments when a loan is not in 
                        repayment status; and
                            ``(xv) an explanation to borrowers that 
                        loans made under this part of part D have 
                        significant protections for borrowers that 
                        aren't offered by the private market, including 
                        a number of income-driven repayment options, 
                        which offer flexible repayments terms and loan 
                        forgiveness for struggling borrowers.''.

SEC. 5. REPORT TO CONGRESS ON CONSUMER TESTING.

    Not later than 24 months after the date of enactment of this Act, 
the Secretary shall--
            (1) conduct consumer testing by obtaining feedback from 
        individuals, including borrowers and prospective borrowers of 
        loans under the Higher Education Act of 1965, on the usefulness 
        and effectiveness of disclosing monthly terms of loans under 
        section 433 of the Higher Education Act of 1965, as amended by 
        this Act, to maximize borrowers' understanding of the terms and 
        conditions of such loans; and
            (2) submit to Congress a report on the results of such 
        consumer testing.

SEC. 6. EFFECTIVE DATE.

    The amendments made by this Act to the Higher Education Act of 1965 
shall take effect 180 days after the date of enactment of this Act.
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