H.R. 1635 — what changed

Section 485(l) of the Higher Education Act of 1965 (20 U.S.C. 1092(l)) is amended to read as follows:

“(l) Annual financial aid counseling

“(1) Annual disclosure required

“(A) In general—Each eligible institution shall ensure that each individual who receives a Federal Pell Grant or a loan made under part D (other than a Federal Direct Consolidation Loan) receives comprehensive information on the terms and conditions of such Federal Pell Grant or loan and the responsibilities the individual has with respect to such Federal Pell Grant or loan. Such information shall be provided, for each award year for which the individual receives such Federal Pell Grant or loan, in a simple and understandable manner—

“(i) during a counseling session conducted in person;

“(ii) online, with the individual acknowledging receipt of the information; or

“(iii) through the use of the online counseling tool described in subsection (n)(1)(B).

“(B) Use of interactive programs—In the case of institutions not using the online counseling tool described in subsection (n)(1)(B), the Secretary shall require such institutions to carry out the requirements of subparagraph (A) through the use of interactive programs, during an annual counseling session that is in-person or online, that test the individual’s understanding of the terms and conditions of the Federal Pell Grant or loan awarded to the individual, using simple and understandable language and clear formatting.

“(2) All individuals—The information to be provided under paragraph (1)(A) to each individual receiving counseling under this subsection shall include the following:

“(A) An explanation of how the individual may budget for typical educational expenses and a sample budget based on the cost of attendance for the institution.

“(B) An explanation that an individual has a right to annually request a disclosure of information collected by a consumer reporting agency pursuant to section 612(a) of the Fair Credit Reporting Act (15 U.S.C. 1681j(a)).

“(C) Based on the most recent data available from the American Community Survey available from the Department of Commerce, the estimated average income and percentage of employment in the State of domicile of the individual for individuals with—

“(i) a high school diploma or equivalent;

“(ii) some post-secondary education without completion of a degree or certificate; and

“(iii) a bachelor’s degree.

“(D) An introduction to the financial management resources provided by the Financial Literacy and Education Commission.

added “(E) An explanation of how the student may seek additional financial assistance from the institution’s financial aid office due to a change in the student’s financial circumstances, and the contact information for such office.

“(3) Students receiving Federal Pell Grants—The information to be provided under paragraph (1)(A) to each student receiving a Federal Pell Grant shall include the following:

“(A) An explanation of the terms and conditions of the Federal Pell Grant.

“(B) An explanation of approved educational expenses for which the student may use the Federal Pell Grant.

“(C) An explanation of why the student may have to repay the Federal Pell Grant.

“(D) An explanation of the maximum number of semesters or equivalent for which the student may be eligible to receive a Federal Pell Grant, and a statement of the amount of time remaining for which the student may be eligible to receive a Federal Pell Grant.

removed “(E) An explanation that if the student transfers to another institution not all of the student’s courses may be acceptable in transfer toward meeting specific degree or program requirements at such institution, but the amount of time remaining for which a student may be eligible to receive a Federal Pell Grant, as provided under subparagraph (D), will not change.

changed “(F) “(E) An explanation that, in the case of how a student who transfers to another institution, the amount of time remaining for which a student may seek additional financial assistance from the institution’s financial aid office due be eligible to receive a change in the student’s financial circumstances, and Federal Pell Grant, as provided under subparagraph (D), will not change, regardless of whether all of the contact information courses completed by such student are accepted for purposes of meeting specific degree or program requirements by the institution to which such office.student transfer.

“(4) Borrowers receiving loans made under part D (other than Parent PLUS Loans)—The information to be provided under paragraph (1)(A) to a borrower of a loan made under part D (other than a Federal Direct PLUS Loan made on behalf of a dependent student) shall include the following:

“(A) To the extent practicable, the effect of accepting the loan to be disbursed on the eligibility of the borrower for other forms of student financial assistance.

“(B) An explanation of the use of the master promissory note.

“(C) An explanation that the borrower is not required to accept the full amount of the loan offered to the borrower.

“(D) An explanation that the borrower should consider accepting any grant, scholarship, or State or Federal work-study jobs for which the borrower is eligible prior to accepting Federal student loans.

“(E) A recommendation to the borrower to exhaust the borrower’s Federal student loan options prior to taking out private education loans, an explanation that Federal student loans typically offer better terms and conditions than private education loans, an explanation of treatment of loans made under part D and private education loans in bankruptcy, and an explanation that if a borrower decides to take out a private education loan—

“(i) the borrower has the ability to select a private educational lender of the borrower’s choice;

“(ii) the proposed private education loan may impact the borrower’s potential eligibility for other financial assistance, including Federal financial assistance under this title; and

“(iii) the borrower has a right—

“(I) to accept the terms of the private education loan within 30 calendar days following the date on which the application for such loan is approved and the borrower receives the required disclosure documents, pursuant to section 128(e) of the Truth in Lending Act (15 U.S.C. 1638(e)); and

“(II) to cancel such loan within 3 business days of the date on which the loan is consummated, pursuant to section 128(e)(7) of such Act (15 U.S.C. 1638(e)(7)).

“(F) An explanation of the approved educational expenses for which the borrower may use a loan made under part D.

“(G) Information on the annual and aggregate loan limits for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans.

changed “(H) Information on how interest accrues and is capitalized during periods when An explanation that, in the interest is not paid by either case of a student who transfers to another institution, the borrower loan amounts such student received before such transfer shall be used in determining the aggregate loan amount of the student, regardless of whether all of the courses completed by such student are accepted for purposes of meeting specific degree or program requirements by the Secretary.institution to which such student transfers.

changed “(I) In the case of a Federal Direct PLUS Loan or a Federal Direct Unsubsidized Stafford Loan, the option of the borrower to pay Information on how interest accrues and is capitalized during periods when the interest while is not paid by either the borrower is in school.or the Secretary.

changed “(J) The definition of half-time enrollment at In the institution, during regular terms and summer school, if applicable, and case of a Federal Direct PLUS Loan or a Federal Direct Unsubsidized Stafford Loan, the consequences option of not maintaining at least half-time enrollment.the borrower to pay the interest while the borrower is in school.

changed “(K) An explanation of the importance The definition of contacting the appropriate offices half-time enrollment at the institution of higher education institution, during regular terms and summer school, if the borrower withdraws prior to completing applicable, and the borrower's program consequences of study so that the institution can provide exit counseling, including information regarding the borrower's repayment options and loan consolidation.not maintaining at least half-time enrollment.

changed “(L) For a first-time borrower—An explanation of the importance of contacting the appropriate offices at the institution of higher education if the borrower withdraws prior to completing the borrower's program of study so that the institution can provide exit counseling, including information regarding the borrower's repayment options and loan consolidation.

added “(M) For a first-time borrower—

“(i) a statement of the anticipated balance on the loan for which the borrower is receiving counseling under this subsection;

“(ii) based on such anticipated balance, the anticipated monthly payment amount under, at minimum—

“(I) the standard repayment plan; and

added “(II) the income-driven repayment plans the borrower is eligible for, as determined using regionally available data from the Bureau of Labor Statistics of the average starting salary for the occupation in which the borrower has an interest in or intends to be employed; and

removed “(II) an income-based repayment plan under section 493C, as determined using regionally available data from the Bureau of Labor Statistics of the average starting salary for the occupation in which the borrower has an interest in or intends to be employed; and

“(iii) an estimate of the projected monthly payment amount under each repayment plan described in clause (ii), based on the average cumulative indebtedness at graduation for borrowers of loans made under part D who are in the same program of study as the borrower.

added “(N) For a borrower with an outstanding balance of principal or interest due on a loan made under this title—

removed “(M) For a borrower with an outstanding balance of principal or interest due on a loan made under this title—

“(i) a current statement of the amount of such outstanding balance and interest accrued;

added “(ii) based on such outstanding balance, the anticipated monthly payment amount under, at minimum, the standard repayment plan and, using regionally available data from the Bureau of Labor Statistics of the average starting salary for the occupation the borrower intends to be employed, the income-driven repayment plans the borrower is eligible for; and

removed “(ii) based on such outstanding balance, the anticipated monthly payment amount under, at minimum, the standard repayment plan and, using regionally available data from the Bureau of Labor Statistics of the average starting salary for the occupation the borrower intends to be employed, an income-based repayment plan under section 493C; and

“(iii) an estimate of the projected monthly payment amount under each repayment plan described in clause (ii), based on—

“(I) the outstanding balance described in clause (i);

“(II) the anticipated outstanding balance on the loan for which the student is receiving counseling under this subsection; and

“(III) a projection for any other loans made under part D that the borrower is reasonably expected to accept during the borrower’s program of study based on at least the expected increase in the cost of attendance of such program.

removed “(N) The obligation of the borrower to repay the full amount of the loan, regardless of whether the borrower completes or does not complete the program in which the borrower is enrolled within the regular time for program completion.

changed “(O) The likely consequences obligation of default on the loan, including adverse credit reports, delinquent debt collection procedures under Federal law, and litigation, and a notice of borrower to repay the institution’s most recent cohort default rate (defined in section 435(m)), an explanation full amount of the cohort default rate, the most recent national average cohort default rate, and loan, regardless of whether the most recent national average cohort default rate for borrower completes or does not complete the category of institution described program in section 435(m)(4) to which the institution belongs.borrower is enrolled within the regular time for program completion.

changed “(P) Information The likely consequences of default on the National Student Loan Data System loan, including adverse credit reports, delinquent debt collection procedures under Federal law, and how litigation, and a notice of the borrower can access institution’s most recent cohort default rate (defined in section 435(m)), an explanation of the borrower's records.cohort default rate, the most recent national average cohort default rate, and the most recent national average cohort default rate for the category of institution described in section 435(m)(4) to which the institution belongs.

changed “(Q) The contact information for the institution’s financial aid office or other appropriate office at the institution Information on the borrower may contact if National Student Loan Data System and how the borrower has any questions about can access the borrower's rights and responsibilities or the terms and conditions of the loan.records.

added “(R) The contact information for the institution’s financial aid office or other appropriate office at the institution the borrower may contact if the borrower has any questions about the borrower's rights and responsibilities or the terms and conditions of the loan.

“(5) Borrowers receiving Parent PLUS Loans for dependent students—The information to be provided under paragraph (1)(A) to a borrower of a Federal Direct PLUS Loan made on behalf of a dependent student shall include the following:

removed “(A) The information described in subparagraphs (A) through (C) and (N) through (Q) of paragraph (4).

changed “(B) “(A) The option of the borrower to pay the interest on the loan while the loan is information described in deferment.subparagraphs (A) through (C) and (O) through (R) of paragraph (4).

added “(B) A notification that some students may qualify for other financial aid and an explanation that the student for whom the borrower is taking out the loan should consider accepting any grant, scholarship, or State or Federal work-study jobs for which such student is eligible prior to borrowing Parent PLUS Loans.

“(C) For a first-time borrower of such loan—

“(i) a statement of the anticipated balance on the loan for which the borrower is receiving counseling under this subsection;

“(ii) based on such anticipated balance, the anticipated monthly payment amount under the standard repayment plan; and

“(iii) an estimate of the projected monthly payment amount under the standard repayment plan, based on the average cumulative indebtedness of other borrowers of Federal Direct PLUS Loans made on behalf of dependent students who are in the same program of study as the student on whose behalf the borrower borrowed the loan.

“(D) For a borrower with an outstanding balance of principal or interest due on such loan—

“(i) a statement of the amount of such outstanding balance;

“(ii) based on such outstanding balance, the anticipated monthly payment amount under the standard repayment plan; and

“(iii) an estimate of the projected monthly payment amount under the standard repayment plan, based on—

“(I) the outstanding balance described in clause (i);

“(II) the anticipated outstanding balance on the loan for which the borrower is receiving counseling under this subsection; and

“(III) a projection for any other Federal Direct PLUS Loan made on behalf of the dependent student that the borrower is reasonably expected to accept during the program of study of such student based on at least the expected increase in the cost of attendance of such program.

“(E) Debt management strategies that are designed to facilitate the repayment of such indebtedness.

added “(F) An explanation that the borrower has the options to prepay each loan, pay each loan on a shorter schedule, pay each loan while the dependent child is still in school, pay the interest on the loan while the loan is in deferment, and change repayment plans.

removed “(F) An explanation that the borrower has the options to prepay each loan, pay each loan on a shorter schedule, and change repayment plans.

“(G) For each Federal Direct PLUS Loan made on behalf of a dependent student for which the borrower is receiving counseling under this subsection, the contact information for the loan servicer of the loan and a link to such servicer’s Website.

added “(6) Annual loan acceptance—Prior to making the first disbursement of a loan made under part D (other than a Federal Direct Consolidation Loan) to a borrower for an award year, an eligible institution, shall, as part of carrying out the counseling requirements of this subsection for the loan, ensure that after receiving the applicable counseling under paragraphs (2), (4), and (5) for the loan the borrower accepts the loan for such award year and for such amount as is specified by the borrower by—

removed “(6) Annual loan acceptance—Prior to making the first disbursement of a loan made under part D (other than a Federal Direct Consolidation Loan) to a borrower for an award year, an eligible institution, shall, as part of carrying out the counseling requirements of this subsection for the loan, ensure that after receiving the applicable counseling under paragraphs (2), (4), and (5) for the loan the borrower accepts the loan for such award year by—

“(A) signing the master promissory note for the loan;

“(B) signing and returning to the institution a separate written statement that affirmatively states that the borrower accepts the loan; or

added “(C) electronically signing an electronic version of the statement described in subparagraph (B).

added “(7) Construction—Nothing in this section shall be construed to prohibit an eligible institution from providing additional information and counseling services to recipients of Federal student aid under this title, provided that any additional information and counseling services for recipients of Federal student aid shall not preclude or be considered a condition for disbursement of such aid.

added “(8) Counseling sessions conducted in person—Institutions of higher education may encourage individuals to attend in-person loan counseling sessions under paragraph (1)(A).”

removed “(C) electronically signing an electronic version of the statement described in subparagraph (B).”

Section 485(b) of the Higher Education Act of 1965 (20 U.S.C. 1092(b)) is amended—

“(i) a summary of the outstanding balance of principal and interest due on the loans made to the borrower under part B, D, or E;

“(ii) an explanation of the grace period preceding repayment and the expected date that the borrower will enter repayment;

changed “(iii) an explanation that the borrower has the option to pay any interest that has accrued while the borrower was in school or that may accrue during the grace period preceding repayment or during an authorized period of deferment or forbearance, prior to the capitalization of the interest;”interest;

added “(iv) an explanation that the borrower may be approached during the repayment process by third-party student debt relief companies, that they should use caution in any such dealings, and that the typical services provided by these companies are already offered to borrowers free of charge through servicers;”

changed “(xiii) “(xiv) for each of the borrower’s loans made under part B, D, or E for which the borrower is receiving counseling under this subsection, the contact information for the loan servicer of the loan and a link to such servicer’s Website; and

changed “(xiv) “(xv) an explanation that an individual has a right to annually request a disclosure of information collected by a consumer reporting agency pursuant to section 612(a) of the Fair Credit Reporting Act (15 U.S.C. 1681j(a)).”