Title: Empowering Student Borrowers Act
Policy area: Education

Summary:
Empowering Student Borrowers Act
This bill amends the Higher Education Act of 1965 to direct the Department of Education to establish best practices for institutions of higher education (IHEs) regarding methods to: (1) teach financial literacy skills, and (2) provide information to assist students when making financial decisions related to student borrowing.
In addition, the bill requires an IHE that participates in federal student aid programs to provide an annual estimate of borrowing costs to each enrolled student who receives an education loan. The cost estimate must include the student's cumulative education loan balance, projected monthly payment amount, and interest rate on each loan.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2224 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                S. 2224

  To establish best practices for teaching financial literacy, and to 
        establish an annual estimate of student borrowing costs.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 13, 2017

 Mr. Donnelly (for himself, Mr. Johnson, and Ms. Klobuchar) introduced 
the following bill; which was read twice and referred to the Committee 
               on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
  To establish best practices for teaching financial literacy, and to 
        establish an annual estimate of student borrowing costs.

    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 ``Empowering Student Borrowers Act''.

SEC. 2. BEST PRACTICES FOR TEACHING FINANCIAL LITERACY.

    Part C of title I of the Higher Education Act of 1965 (20 U.S.C. 
1015 et seq.) is amended by adding at the end the following:

``SEC. 138. BEST PRACTICES FOR TEACHING FINANCIAL LITERACY.

    ``(a) Best Practices.--
            ``(1) In general.--After soliciting public comments and 
        consulting with and receiving input from relevant parties, 
        including a diverse set of institutions of higher education and 
        other parties, the Secretary shall, by not later than 1 year 
        after the date of enactment of the Empowering Student Borrowers 
        Act, establish best practices for institutions of higher 
        education regarding methods to--
                    ``(A) teach financial literacy skills; and
                    ``(B) provide useful and necessary information to 
                assist students at institutions of higher education 
                when making financial decisions related to student 
                borrowing.
            ``(2) Best practices.--The best practices described in 
        paragraph (1) shall include the following:
                    ``(A) Methods to ensure that students have a clear 
                sense of the students' total borrowing obligations, 
                including monthly payments, and repayment options.
                    ``(B) The most effective ways to engage students in 
                financial literacy education, including frequency and 
                timing of communication with students.
                    ``(C) Information on how to target different 
                student populations, including part-time students, 
                first-time students, and other nontraditional students.
                    ``(D) Ways to clearly communicate the importance of 
                graduating on a student's ability to repay student 
                loans.
    ``(b) Maintenance of Best Practices.--The Secretary shall maintain 
and periodically update the best practices information required under 
subsection (a) and make the best practices available to the public.''.

SEC. 3. ANNUAL ESTIMATE OF STUDENT LOAN BORROWING COSTS.

    Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is 
amended by adding at the end the following:
    ``(n) Annual Estimate of Student Loan Borrowing Costs.--
            ``(1) In general.--Beginning on July 1, 2019, each eligible 
        institution shall provide a cost estimate described in 
        paragraph (2) to each enrolled student who receives an 
        education loan to attend the institution, not later than 30 
        days before the first day of each academic year beginning after 
        the academic year for which the student first received such a 
        loan to attend such institution.
            ``(2) Contents of estimate.--The estimate under paragraph 
        (1) shall contain the following information:
                    ``(A) Cumulative balances and monthly payments.--A 
                notice to the student of--
                            ``(i) the cumulative balance of education 
                        loans owed by the student as of the date of the 
                        notice; and
                            ``(ii) projected monthly payment amounts 
                        based on the cumulative balances described in 
                        clause (i), assuming a standard repayment 
                        schedule.
                    ``(B) Interest rates.--The interest rate of each 
                education loan, except that interest rates for a 
                private education loan may be based on average private 
                education loan interest rates if the institution cannot 
                reasonably determine the actual interest rate of such 
                loan.
                    ``(C) Disclaimer.--A clear and conspicuous notice 
                stating that any information provided under paragraph 
                (1) is an estimate, accurate to the best of the 
                institution's knowledge, and that an interest rate 
                provided under subparagraph (B)--
                            ``(i) in the case of a loan described in 
                        paragraph (6)(A)(i), is the applicable rate of 
                        interest of such loan;
                            ``(ii) in the case of a private education 
                        loan, may be based on average private education 
                        loan interest rates; and
                            ``(iii) does not include private education 
                        loans of which the institution is not aware.
            ``(3) Form of estimate.--The estimate under paragraph (1) 
        shall be--
                    ``(A) provided to the student in hard copy format 
                on the letterhead of the institution, by electronic 
                mail or by another method the Secretary may prescribe; 
                and
                    ``(B) delivered to the student separately from any 
                other disclosures required under this Act.
            ``(4) Limitation of liability.--An institution that 
        provides the estimate under paragraph (1) in good faith shall 
        not be liable to any person for inaccuracies contained in such 
        estimate.
            ``(5) Student debt letter template.--Not later than July 1, 
        2018, and as necessary thereafter, the Secretary shall provide 
        the following to eligible institutions:
                    ``(A) Examples of the information required under 
                subparagraphs (A), (B), and (C) of paragraph (2).
                    ``(B) Technical assistance on how to comply with 
                the requirements of this subsection.
                    ``(C) Preliminary approvals in a timely manner of 
                estimate formats proposed for use by an institution, at 
                the request of the institution.
                    ``(D) The formula (which shall take into 
                consideration a student's past borrowing rates and 
                other criteria the Secretary may determine) to be used 
                in making the projections under clauses (i) and (ii) of 
                paragraph (2)(A) with respect to loans described in 
                paragraph (6)(A)(i).
                    ``(E) Encryption technology software to enable 
                institutions to provide the estimate under paragraph 
                (2) to students in a secure format for institutions 
                that choose to provide the estimate to students in an 
                electronic format.
            ``(6) Definitions.--In this subsection:
                    ``(A) Education loan.--The term `education loan' 
                means--
                            ``(i) a loan made under part D (other than 
                        a Federal Direct Consolidation Loan or a 
                        Federal Direct PLUS loan made on behalf of a 
                        student);
                            ``(ii) a loan made under a State-sponsored 
                        loan program for the purpose of paying a 
                        student's cost of attendance at an institution 
                        of higher education; and
                            ``(iii) a private education loan with 
                        respect to which the institution should 
                        reasonably be aware.
                    ``(B) Private education loan.--The term `private 
                education loan' has the meaning given the term in 
                section 140 of the Truth in Lending Act.
                    ``(C) Student.--The term `student', when used with 
                respect to an eligible institution, does not include 
                any student who has transferred to the institution less 
                than 60 days before the first day of the academic year 
                for which an estimate would be provided.''.

SEC. 4. ANNUAL PROVISION OF INFORMATION BY THE SECRETARY OF EDUCATION.

    Not later than April 1, 2019, and annually thereafter, the 
Secretary of Education shall provide to each institution (as defined in 
section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002)) the 
following information:
            (1) The amount of any loans made under part D of title IV 
        of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) 
        (other than a Federal Direct Consolidation Loan or a Federal 
        Direct PLUS loan made on behalf of a student) expected to be 
        disbursed to any borrower enrolled in that institution for the 
        next academic year.
            (2) The projected cumulative balance of such loans, as 
        determined in accordance with section 485(n)(5)(D) of such Act 
        (20 U.S.C. 1092(n)(5)(D)), as added by this Act, that will be 
        owed by each borrower that is enrolled in the institution after 
        the completion of the borrower's course of study at the 
        institution of higher education.
            (3) The projected monthly payment amounts of such loans, as 
        determined in accordance with section 485(n)(5) of the Higher 
        Education Act of 1965 (20 U.S.C. 1092(n)(5)), assuming a 
        standard repayment schedule (as described in section 
        455(d)(1)(A) of such Act (20 U.S.C. 1087e(d)(1)(A))).
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