Section 1 Short title
This Act may be cited as the “Parent PLUS Loan Improvement Act of 2018”.
Parent PLUS Loan Improvement Act of 2018
A BILL
To amend the Higher Education Act of 1965 to include Parent PLUS loans in income-contingent and income-based repayment plans, and for other purposes.
Sec. 2 Applicable rate of interest for PLUS Loans
Section 455(b)(8) of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)(8)) is amended—
in subparagraph (C), by inserting “and before July 1, 2018,” after “, 2013,”; and
by adding at the end the following:
“(G) Reduced rate for Parent PLUS loans—Notwithstanding the preceding paragraphs of this subsection, for Federal Direct PLUS Loans made on behalf of a dependent student for which the first disbursement is made on or after July 1, 2018, the applicable rate of interest shall be determined under subparagraph (C) of this paragraph—
“(i) by substituting “3.6 percent” for “4.6 percent”; and
“(ii) by substituting “9.5 percent” for “10.5 percent”.”
Sec. 3 Elimination of origination fee for Parent PLUS loans
Section 455(c) of the Higher Education Act of 1965 (20 U.S.C. 1087e(c)) is amended by adding at the end the following new paragraph:
“(3) PLUS loans—With respect to Federal Direct PLUS loans made on behalf of a dependent student for which the first disbursement of principal is made on or after July 1, 2018, paragraph (1) shall be applied by substituting “0.0 percent” for “4.0 percent”.”
Sec. 4 Counseling for Parent PLUS borrowers
Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is amended by adding at the end the following:
“(n) Counseling for parent PLUS borrowers
“(1) In general—The Secretary, prior to disbursement of a Federal Direct PLUS loan made on behalf of a dependent student, shall ensure that the borrower receives comprehensive information on the terms and conditions of the loan and the responsibilities the borrower has with respect to such loan. Such information—
“(A) shall be provided through the use of interactive programs that use mechanisms to check the borrower’s understanding of the terms and conditions of the borrower’s loan, using simple and understandable language and clear formatting; and
“(B) shall be provided—
“(i) during a counseling session conducted in person; or
“(ii) online.
“(2) Information to be provided—The information to be provided to the borrower under paragraph (1) shall include the following:
“(A) Information on how interest accrues and is capitalized during periods when the interest is not paid by the borrower.
“(B) An explanation of when loan repayment begins, of the options available for a borrower who may need a deferment, and that interest accrues during a deferment.
“(C) The repayment plans that are available to the borrower, including personalized information showing—
“(i) estimates of the borrower’s anticipated monthly payments under each repayment plan that is available; and
“(ii) the difference in interest paid and total payments under each repayment plan.
“(D) The obligation of the borrower to repay the full amount of the loan, regardless of whether the student on whose behalf the loan was made completes the program in which the student is enrolled.
“(E) The likely consequences of default on the loan, including adverse credit reports, delinquent debt collection procedures under Federal law, and litigation.
“(F) The name and contact information of the individual 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.”
Sec. 5 Inclusion of parent PLUS loans in income-contingent and income-based repayment plans
Income-Contingent repayment plan— Section 455(d)(1)(D) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)(1)(D)) is amended by striking “, except that the plan described in this subparagraph shall not be available to the borrower of a Federal Direct PLUS loan made on behalf of a dependent student;”.
Income-Based repayment—
in subsection (a)—
by striking “this section” and all that follows through “hardship” and inserting “In this section, the term partial financial hardship”; and
by striking, “(other than an excepted PLUS loan or excepted consolidation loan)”;
in subsection (b)—
in paragraph (1), by striking “(other than an excepted PLUS loan or excepted consolidation loan)”;
in paragraph (6)(A), by striking “(other than an excepted PLUS loan or excepted consolidation loan)”; and
in paragraph (7), by striking “(other than a loan under section 428B or a Federal Direct PLUS Loan)”; and
in subsection (c), by striking “(other than an excepted PLUS loan or excepted consolidation loan),”.
Section 455(d)(1)(E)— Section 455(d)(1)(E) of such Act (20 U.S.C. 1087e(d)(1)(D)) is amended by striking “, except that the plan described in this subparagraph shall not be available to the borrower of a Federal Direct PLUS Loan made on behalf of a dependent student or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to discharge the liability on such Federal Direct PLUS Loan or a loan under section 428B made on behalf of a dependent student”.
Application to regulations— The Secretary shall ensure that any Federal Direct PLUS Loan and any loan under section 428B of the Higher Education Act of 1965 (20 U.S.C. 1078–2) made on behalf of a dependent student are eligible for any repayment plan available under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) or regulations authorized under such Act (20 U.S.C. 1001 et seq.).