Title: Transparency in Student Loan Consultation Act of 2018
Policy area: Education

Summary:
Transparency in Student Loan Consultation Act of 2018
This bill amends the Higher Education Act of 1965 to require institutions of higher education to provide accurate and complete information about student loan payments to certain borrowers.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6473 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 6473

  To increase transparency with respect to loan repayment options for 
                    Federal student loan borrowers.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 23, 2018

 Ms. DeLauro introduced the following bill; which was referred to the 
                Committee on Education and the Workforce

_______________________________________________________________________

                                 A BILL


 
  To increase transparency with respect to loan repayment options for 
                    Federal student loan borrowers.

    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 ``Transparency in Student Loan 
Consultation Act of 2018''.

SEC. 2. FINDINGS.

    Congress finds as follows:
            (1) Loopholes in Federal law allow institutions of higher 
        education and third party consultants that contract with such 
        institutions to provide borrowers with inaccurate or incomplete 
        information, including with respect to borrower repayment 
        options.
            (2) The Higher Education Act of 1965 (20 U.S.C. 1001 et 
        seq.) does not contain borrower-centered provisions that would 
        allow the Secretary of Education to establish minimum standards 
        governing communications that institutions of higher education 
        and third party consultants may have with borrowers who are no 
        longer enrolled at such an institution.
            (3) The Higher Education Act of 1965 requires that 
        institutions of higher education provide certain information to 
        borrowers about the borrower's student loans when the borrower 
        enters and exits the student loan program, but such Act does 
        not require or permit the Department of Education to oversee 
        communications between the institutions or third party 
        consultants and the borrowers after the borrowers are no longer 
        enrolled at an institution.
            (4) In a report released April, 26, 2018, the Government 
        Accountability Office (hereinafter referred to as ``GAO'') 
        found that some institutions of higher education hired third 
        party consultants that encouraged student loan borrowers with 
        past-due payments to put loans in forbearance, an option that 
        allows borrowers to temporarily postpone payments.
            (5) Loan forbearance can help borrowers avoid default in 
        the short-term, but ultimately increases loan costs over time.
            (6) The GAO found that 5 of the 9 third party consultants 
        hired by institutions of higher education, that served about 
        800 out of 1,300 institutions, encouraged forbearance over 
        potentially more beneficial options.
            (7) The GAO also found that 4 of the 5 third party 
        consultants provided inaccurate or incomplete information to 
        borrowers about their repayment options. Inaccurate information 
        about the consequences of default could cause a borrower to 
        feel undue pressure to choose forbearance, even when the 
        borrower is eligible for more favorable repayment and 
        postponement options.
            (8) Borrowers who only receive a forbearance application 
        may inaccurately assume that forbearance is the only or 
        preferred option to avoid default.
            (9) Moreover, borrowers may miss the opportunity to learn 
        about other, potentially more favorable repayment and 
        postponement options from the Department of Education's loan 
        servicers, who are responsible for counseling borrowers and 
        approving forbearance requests.
            (10) Student loan borrowers deserve accurate and complete 
        information about loan repayment options to make informed 
        decisions about loan repayment that are in their best interest, 
        not the interest of institutions of higher education or third 
        party consultants.

SEC. 3. LOAN REPAYMENT TRANSPARENCY.

    Section 487(a) of the Higher Education Act of 1965 (20 U.S.C. 1094) 
is amended by adding at the end the following:
            ``(30) The institution will ensure that any information 
        related to student loan repayment that is provided to a 
        borrower who is in repayment status or who will enter repayment 
        status within 6 months, whether provided directly by the 
        institution or by a third party servicer who has a contract 
        with the institution--
                    ``(A) is accurate and complete;
                    ``(B) if such information is related to the 
                provision, explanation, selection, or revision of any 
                loan repayment or consolidation option, includes a list 
                and explanation of each of the loan repayment options 
                and Federal loan consolidation options available to the 
                borrower, including an explanation of any special 
                options that may be available due to the particular 
                circumstances of the borrower; and
                    ``(C) with respect to a borrower who has failed to 
                make an installment payment when due, or who is 
                otherwise requesting default prevention, aversion, or 
                debt management counseling, includes an explanation of 
                the borrower's repayment status and repayment schedule, 
                and a description of each option for which the borrower 
                is eligible to make, schedule, postpone, or reduce loan 
                payments, including loan forgiveness, cancellation, 
                deferment, and forbearance opportunities.''.
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