PRIA, Government Policy, Made Personal

Summary

Requires the Secretary, working with the Federal Reserve Board, to decide what minimum loan details schools and related groups must give students and families about certain education loans. The Secretary had to make that decision no later than 18 months after August 14, 2008, after talking with students, school staff, lenders, servicers, and others. The required details must include the kinds of facts the Federal Reserve requires for similar loans and may include, for each loan type: the interest rate and key terms (like forgiveness and deferment), fees and whether they are taken from the loan or paid by the lender, yearly and total borrowing limits, the average amount recent graduates borrowed from that lender by degree type, an estimate of interest paid under a standard repayment plan (with separate estimates depending on whether interest accrues while in school), default consequences (including limits on bankruptcy discharge), lender contact info, and other helpful items suggested by the consulted groups. After making those decisions, the Secretary must require schools and their affiliated groups that have preferred lender arrangements to give that information to prospective borrowers and families. The Secretary will create a model disclosure form (and update it as needed) that schools, affiliated groups, and lenders can use, though schools may use their own form if it includes the required information. Lenders with preferred arrangements must annually send the required information to the school and to the Secretary by a date the Secretary sets. Schools and affiliated groups must give the information in time for students and families to use it before picking a lender, file an annual report to the Secretary explaining why they chose each preferred lender and how those loan terms help students, make that report public and give it to students, and follow a required code of conduct. Affiliated organizations must follow the school’s code, post it on their website if they have one, and tell their agents about the code each year.

Title 20, §1019b

Education, Source: USLM XML via OLRC

(a)Duties of the Secretary

(1)Determination of minimum disclosures

(A)In general

Not later than 18 months after August 14, 2008, the Secretary, in coordination with the Board of Governors of the Federal Reserve System, shall determine the minimum information that lenders, covered institutions, and institution-affiliated organizations of such covered institutions participating in preferred lender arrangements shall make available regarding education loans described in section 1019(3)(A) of this title that are offered to students and the families of such students.

(B)Consultation and content of minimum disclosures

In carrying out subparagraph (A), the Secretary shall—

(i)consult with students, the families of such students, representatives of covered institutions (including financial aid administrators, admission officers, and business officers), representatives of institution-affiliated organizations, secondary school guidance counselors, lenders, loan servicers, and guaranty agencies;

(ii)include, in the minimum information under subparagraph (A) that is required to be made available, the information that the Board of Governors of the Federal Reserve System requires to be disclosed under section 1638(e)(1) of title 15, modified as necessary to apply to such loans; and

(iii)consider the merits of requiring each covered institution, and each institution-affiliated organization of such covered institution, with a preferred lender arrangement to provide to prospective borrowers and the families of such borrowers the following information for each type of education loan offered pursuant to such preferred lender arrangement:

(I)The interest rate and terms and conditions of the loan for the next award year, including loan forgiveness and deferment.

(II)Information on any charges, such as origination and Federal default fees, that are payable on the loan, and whether those charges will be—

(aa)collected by the lender at or prior to the disbursal of the loan, including whether the charges will be deducted from the proceeds of the loan or paid separately by the borrower; or

(bb)paid in whole or in part by the lender.

(III)The annual and aggregate maximum amounts that may be borrowed.

(IV)The average amount borrowed from the lender by students who graduated from such institution in the preceding year with certificates, undergraduate degrees, graduate degrees, and professional degrees, as applicable, and who obtained loans of such type from the lender for the preceding year.

(V)The amount the borrower may pay in interest, based on a standard repayment plan and the average amount borrowed from the lender by students who graduated from such institution in the preceding year and who obtained loans of such type from the lender for the preceding year, for—

(aa)borrowers of loans made under section 1078 of this title;

(bb)borrowers of loans made under section 1078–2 or 1078–8 of this title, who pay the interest while in school; and

(cc)borrowers of loans made under section 1078–2 or 1078–8 of this title, who do not pay the interest while in school.

(VI)The consequences for the borrower of defaulting on a loan, including limitations on the discharge of an education loan in bankruptcy.

(VII)Contact information for the lender.

(VIII)Other information suggested by the persons and entities with whom the Secretary has consulted under clause (i).

(2)Required disclosures

After making the determinations under paragraph (1), the Secretary, in coordination with the Board of Governors of the Federal Reserve System and after consultation with the public, shall—

(A)(i)provide that the information determined under paragraph (1) shall be disclosed by covered institutions, and institution-affiliated organizations of such covered institutions, with preferred lender arrangements to prospective borrowers and the families of such borrowers regarding the education loans described in section 1019(3)(A) of this title that are offered pursuant to such preferred lender arrangements; and

(ii)make clear that such covered institutions and institution-affiliated organizations may provide the required information on a form designed by the institution or organization instead of the model disclosure form described in subparagraph (B);

(B)develop a model disclosure form that may be used by covered institutions, institution-affiliated organizations, and preferred lenders that includes all of the information required under subparagraph (A)(i) in a format that—

(i)is easily usable by students, families, institutions, institution-affiliated organizations, lenders, loan servicers, and guaranty agencies; and

(ii)is similar in format to the form developed by the Board of Governors of the Federal Reserve System under paragraphs (1) and (5)(A) of section 1638(e) of title 15, in order to permit students and the families of students to easily compare private education loans and education loans described in section 1019(3)(A) of this title; and

(C)update such model disclosure form periodically, as necessary.

(b)Duties of lenders

Each lender that has a preferred lender arrangement with a covered institution, or an institution-affiliated organization of such covered institution, with respect to education loans described in section 1019(3)(A) of this title shall annually, by a date determined by the Secretary, provide to such covered institution or such institution-affiliated organization, and to the Secretary, the information the Secretary requires pursuant to subsection (a)(2)(A)(i) for each type of education loan described in section 1019(3)(A) of this title that the lender plans to offer pursuant to such preferred lender arrangement to students attending such covered institution, or to the families of such students, for the next award year.

(c)Duties of covered institutions and institution-affiliated organizations

(1)Providing information to students and families

(A)In general

Each covered institution, and each institution-affiliated organization of such covered institution, that has a preferred lender arrangement shall provide the following information to students attending such institution, or the families of such students, as applicable:

(i)The information the Secretary requires pursuant to subsection (a)(2)(A)(i), for each type of education loan described in section 1019(3)(A) of this title offered pursuant to a preferred lender arrangement to students of such institution or the families of such students.

(ii)(I)In the case of a covered institution, the information that the Board of Governors of the Federal Reserve System requires to be disclosed under section 1638(e)(11) of title 15 to the covered institution, for each type of private education loan offered pursuant to such preferred lender arrangement to students of such institution or the families of such students.

(II)In the case of an institution-affiliated organization, the information the Board of Governors of the Federal Reserve System requires to be disclosed under section 1638(e)(1) of title 15, for each type of private education loan offered pursuant to such preferred lender arrangement to students of the institution with which such organization is affiliated or the families of such students.

(B)Timely provision of information

The information described in subparagraph (A) shall be provided in a manner that allows for the students or the families to take such information into account before selecting a lender or applying for an education loan.

(2)Annual report

Each covered institution, and each institution-affiliated organization of such covered institution, that has a preferred lender arrangement, shall—

(A)prepare and submit to the Secretary an annual report, by a date determined by the Secretary, that includes, for each lender that has a preferred lender arrangement with such covered institution or organization—

(i)the information described in clauses (i) and (ii) of paragraph (1)(A); and

(ii)a detailed explanation of why such covered institution or institution-affiliated organization entered into a preferred lender arrangement with the lender, including why the terms, conditions, and provisions of each type of education loan provided pursuant to the preferred lender arrangement are beneficial for students attending such institution, or the families of such students, as applicable; and

(B)ensure that the report required under subparagraph (A) is made available to the public and provided to students attending or planning to attend such covered institution and the families of such students.

(3)Code of conduct

(A)In general

Each covered institution, and each institution-affiliated organization of such covered institution, that has a preferred lender arrangement, shall comply with the code of conduct requirements of subparagraphs (A) through (C) of section 1094(a)(25) of this title.

(B)Applicable code of conduct

For purposes of subparagraph (A), an institution-affiliated organization of a covered institution shall—

(i)comply with the code of conduct developed and published by such covered institution under subparagraphs (A) and (B) of section 1094(a)(25) of this title;

(ii)if such institution-affiliated organization has a website, publish such code of conduct prominently on the website; and

(iii)administer and enforce such code of conduct by, at a minimum, requiring that all of such organization’s agents with responsibilities with respect to education loans be annually informed of the provisions of such code of conduct.

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 1638(e) of title 15, referred to in subsec. (a)(2)(B)(ii), was in the original “section 128(e)”, and was translated as meaning section 128(e) of Pub. L. 90–321, which is classified to section 1638(e) of title 15, to reflect the probable intent of Congress.

Amendments

2009—Subsec. (a)(1)(B)(iii)(V). Pub. L. 111–39 substituted “borrowers of loans made under” for “borrowers who take out loans under” wherever appearing.

Statutory Notes and Related Subsidiaries

Effective Date

of 2009 AmendmentAmendment by Pub. L. 111–39 effective as if enacted on the date of enactment of Pub. L. 110–315 (Aug. 14, 2008), see section 3 of Pub. L. 111–39, set out as a note under section 1001 of this title.

§1019b Loan Information to Be Disclosed and Model Disclosure Form for Covered Institutions, Institution-affiliated Organizations, and Lenders Participating in Preferred Lender Arrangements

Summary

Title 20, §1019b

Notes & Related Subsidiaries

Editorial Notes

References in Text

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Citations & Metadata