Section 1 Short title
This Act may be cited as the “Empowering Student Borrowers Act”.
Empowering Student Borrowers Act
A BILL
To establish best practices for teaching financial literacy, and to establish an annual estimate of student borrowing costs.
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:
“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:
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.
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.
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))).