PRIA, Government Policy, Made Personal

Summary

Lenders must give clear, simple loan information to borrowers before they give out the loan and again before payments start. The information can be on paper or online and must include a bold statement that the money must be repaid, the lender’s name and address, the loan principal and interest rate, any fees and how they will be paid, options for paying or capitalizing interest while in school, parent-borrower options, yearly and total borrowing limits, the borrower’s total balance and an estimated monthly payment (or sample payment projections for PLUS or unsubsidized loans showing the cost of capitalizing interest versus paying it as it accrues), when repayment and interest payments begin, available repayment plans and benefits, consolidation or refinancing choices, the right to prepay without penalty, summaries of deferment, forbearance, forgiveness rules, a definition of default and its consequences (including reporting to credit agencies), and any costs or fees during repayment. Lenders must also give a phone number (and may give an email) for more information. Lenders must send a repayment disclosure 30 to 150 days before the first payment showing the lender or servicer, the repayment start date, estimated balance (including any capitalized interest), interest rate(s), repayment schedule (first due date, number, amount, and frequency of payments), any repayment benefits and limits, fees, ways to avoid or cure default, and places for help such as nonprofit counselors and the Student Loan Ombudsman. While repaying, borrowers must get regular bills that show original principal, current balance, interest rate, total interest paid, total paid so far, recent fees, due dates to avoid extra fees, contact info, and how to change plans. If a borrower says they are having trouble, the lender must explain plan, forbearance, and default-avoidance options and costs. If a borrower is 60 days late, the lender must warn when the loan will default, the minimum needed to avoid default, options to avoid default (including deferment and forbearance), discharge options, and sources of help. All required disclosures must be free to the borrower. Not giving the notices does not cancel the borrower’s duty to repay or allow a damage claim, but the Secretary can limit or stop a lender’s ability to make these loans for failing to comply. The rule does not make these loans subject to the Truth in Lending Act.

Title 20, §1083

Education, Source: USLM XML via OLRC

(a)Required disclosure before disbursement

Each eligible lender, at or prior to the time such lender disburses a loan that is insured or guaranteed under this part (other than a loan made under section 1078–3 of this title), shall provide thorough and accurate loan information on such loan to the borrower in simple and understandable terms. Any disclosure required by this subsection may be made by an eligible lender by written or electronic means, including as part of the application material provided to the borrower, as part of the promissory note evidencing the loan, or on a separate written form provided to the borrower. Each lender shall provide to each borrower a telephone number, and may provide an electronic address, through which additional loan information can be obtained. The disclosure shall include—

(1)a statement prominently and clearly displayed and in bold print that the borrower is receiving a loan that must be repaid;

(2)the name of the eligible lender, and the address to which communications and payments should be sent;

(3)the principal amount of the loan;

(4)the amount of any charges, such as the origination fee and Federal default fee, and whether those fees will be—

(A)collected by the lender at or prior to the disbursal of the loan;

(B)deducted from the proceeds of the loan;

(C)paid separately by the borrower; or

(D)paid by the lender;

(5)the stated interest rate on the loan;

(6)for loans made under section 1078–8 of this title or to a student borrower under section 1078–2 of this title, an explanation—

(A)that the borrower has the option to pay the interest that accrues on the loan while the borrower is a student at an institution of higher education; and

(B)if the borrower does not pay such interest while attending an institution, when and how often interest on the loan will be capitalized;

(7)for loans made to a parent borrower on behalf of a student under section 1078–2 of this title, an explanation—

(A)that the parent has the option to defer payment on the loan while the student is enrolled on at least a half-time basis in an institution of higher education;

(B)if the parent does not pay the interest on the loan while the student is enrolled in an institution, when and how often interest on the loan will be capitalized; and

(C)that the parent may be eligible for a deferment on the loan if the parent is enrolled on at least a half-time basis in an institution of higher education;

(8)the yearly and cumulative maximum amounts that may be borrowed;

(9)a statement of the total cumulative balance, including the loan being disbursed, owed by the borrower to that lender, and an estimate of the projected monthly payment, given such cumulative balance;

(10)an explanation of when repayment of the loan will be required and when the borrower will be obligated to pay interest that accrues on the loan;

(11)a description of the types of repayment plans that are available for the loan;

(12)a statement as to the minimum and maximum repayment terms which the lender may impose, and the minimum annual payment required by law;

(13)an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan;

(14)a statement that the borrower has the right to prepay all or part of the loan, at any time, without penalty;

(15)a statement summarizing circumstances in which repayment of the loan or interest that accrues on the loan may be deferred;

(16)a statement summarizing the circumstances in which a borrower may obtain forbearance on the loan;

(17)a description of the options available for forgiveness of the loan, and the requirements to obtain loan forgiveness;

(18)a definition of default and the consequences to the borrower if the borrower defaults, including a statement that the default will be reported to a consumer reporting agency; and

(19)an explanation of any cost the borrower may incur during repayment or in the collection of the loan, including fees that the borrower may be charged, such as late payment fees and collection costs.

(b)Required disclosure before repayment

Each eligible lender shall, at or prior to the start of the repayment period on a loan made, insured, or guaranteed under section 1078, 1078–2, or 1078–8 of this title, disclose to the borrower by written or electronic means the information required under this subsection in simple and understandable terms. Each eligible lender shall provide to each borrower a telephone number, and may provide an electronic address, through which additional loan information can be obtained. The disclosure required by this subsection shall be made not less than 30 days nor more than 150 days before the first payment on the loan is due from the borrower. The disclosure shall include—

(1)the name of the eligible lender or loan servicer, and the address to which communications and payments should be sent;

(2)the scheduled date upon which the repayment period is to begin or the deferment period under section 1078–2(d)(1) of this title is to end, as applicable;

(3)the estimated balance owed by the borrower on the loan or loans covered by the disclosure (including, if applicable, the estimated amount of interest to be capitalized) as of the scheduled date on which the repayment period is to begin or the deferment period under 1078–2(d)(1) of this title is to end, as applicable;

(4)the stated interest rate on the loan or loans, or the combined interest rate of loans with different stated interest rates;

(5)information on loan repayment benefits offered for the loan or loans, including—

(A)whether the lender offers any benefits that are contingent on the repayment behavior of the borrower, such as—

(i)a reduction in interest rate if the borrower repays the loan by automatic payroll or checking account deduction;

(ii)a reduction in interest rate if the borrower makes a specified number of on-time payments; and

(iii)other loan repayment benefits for which the borrower could be eligible that would reduce the amount of repayment or the length of the repayment period;

(B)if the lender provides a loan repayment benefit—

(i)any limitations on such benefit;

(ii)explicit information on the reasons a borrower may lose eligibility for such benefit;

(iii)for a loan repayment benefit that reduces the borrower’s interest rate—

(I)examples of the impact the interest rate reduction would have on the length of the borrower’s repayment period and the amount of repayment; and

(II)upon the request of the borrower, the effect the reduction in interest rate would have with respect to the borrower’s payoff amount and time for repayment; and

(iv)whether and how the borrower can regain eligibility for a benefit if a borrower loses a benefit;

(6)a description of all the repayment plans that are available to the borrower and a statement that the borrower may change from one plan to another during the period of repayment;

(7)the repayment schedule for all loans covered by the disclosure, including—

(A)the date the first installment is due; and

(B)the number, amount, and frequency of required payments, which shall be based on a standard repayment plan or, in the case of a borrower who has selected another repayment plan, on the repayment plan selected by the borrower;

(8)an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan and of the availability and terms of such other options;

(9)except as provided in subsection (d)—

(A)the projected total of interest charges which the borrower will pay on the loan or loans, assuming that the borrower makes payments exactly in accordance with the repayment schedule; and

(B)if the borrower has already paid interest on the loan or loans, the amount of interest paid;

(10)the nature of any fees which may accrue or be charged to the borrower during the repayment period;

(11)a statement that the borrower has the right to prepay all or part of the loan or loans covered by the disclosure at any time without penalty;

(12)a description of the options by which the borrower may avoid or be removed from default, including any relevant fees associated with such options; and

(13)additional resources, including nonprofit organizations, advocates, and counselors (including the Student Loan Ombudsman of the Department) of which the lender is aware, where borrowers may receive advice and assistance on loan repayment.

(c)Separate notification

Each eligible lender shall, at the time such lender notifies a borrower of approval of a loan which is insured or guaranteed under this part, provide the borrower with a separate notification which summarizes, in simple and understandable terms, the rights and responsibilities of the borrower with respect to the loan, including a statement of the consequences of defaulting on the loan and a statement that each borrower who defaults will be reported to a consumer reporting agency. The requirement of this subsection shall be in addition to the information required by subsection (a) of this section.

(d)Special disclosure rules on PLUS loans, and unsubsidized loans

Loans made under section 1078–2 and 1078–8 of this title shall not be subject to the disclosure of projected monthly payment amounts required under subsection (b)(7) if the lender, in lieu of such disclosure, provides the borrower with sample projections of monthly repayment amounts, assuming different levels of borrowing and interest accruals resulting from capitalization of interest while the borrower, or the student on whose behalf the loan is made, is in school, in simple and understandable terms. Such sample projections shall disclose the cost to the borrower of— (1)

(2)paying the interest as the interest accrues.

(e)Required disclosures during repayment

(1)Pertinent information about a loan provided on a periodic basis

Each eligible lender shall provide the borrower of a loan made, insured, or guaranteed under this part with a bill or statement (as applicable) that corresponds to each payment installment time period in which a payment is due and that includes, in simple and understandable terms—

(A)the original principal amount of the borrower’s loan;

(B)the borrower’s current balance, as of the time of the bill or statement, as applicable;

(C)the interest rate on such loan;

(D)the total amount the borrower has paid in interest on the loan;

(E)the aggregate amount the borrower has paid for the loan, including the amount the borrower has paid in interest, the amount the borrower has paid in fees, and the amount the borrower has paid against the balance;

(F)a description of each fee the borrower has been charged for the most recently preceding installment time period;

(G)the date by which the borrower needs to make a payment in order to avoid additional fees and the amount of such payment and the amount of such fees;

(H)the lender’s or loan servicer’s address and toll-free phone number for payment and billing error purposes; and

(I)a reminder that the borrower has the option to change repayment plans, a list of the names of the repayment plans available to the borrower, a link to the appropriate page of the Department’s website to obtain a more detailed description of the repayment plans, and directions for the borrower to request a change in repayment plan.

(2)Information provided to a borrower having difficulty making payments

Each eligible lender shall provide to a borrower who has notified the lender that the borrower is having difficulty making payments on a loan made, insured, or guaranteed under this part with the following information in simple and understandable terms:

(A)A description of the repayment plans available to the borrower, including how the borrower should request a change in repayment plan.

(B)A description of the requirements for obtaining forbearance on a loan, including expected costs associated with forbearance.

(C)A description of the options available to the borrower to avoid defaulting on the loan, and any relevant fees or costs associated with such options.

(3)Required disclosures during delinquency

Each eligible lender shall provide to a borrower who is 60 days delinquent in making payments on a loan made, insured, or guaranteed under this part with a notice, in simple and understandable terms, of the following:

(A)The date on which the loan will default if no payment is made.

(B)The minimum payment the borrower must make to avoid default.

(C)A description of the options available to the borrower to avoid default, and any relevant fees or costs associated with such options, including a description of deferment and forbearance and the requirements to obtain each.

(D)Discharge options to which the borrower may be entitled.

(E)Additional resources, including nonprofit organizations, advocates, and counselors (including the Student Loan Ombudsman of the Department), of which the lender is aware, where the borrower can receive advice and assistance on loan repayment.

(f)Cost of disclosure and consequences of nondisclosure

(1)No cost to borrowers

The information required under this section shall be available without cost to the borrower.

(2)Consequences of nondisclosure

The failure of an eligible lender to provide information as required by this section shall not—

(A)relieve a borrower of the obligation to repay a loan in accordance with the loan’s terms; or

(B)provide a basis for a claim for civil damages.

(3)Rule of construction

Nothing in this section shall be construed as subjecting the lender to the Truth in Lending Act [15 U.S.C. 1601 et seq.] with regard to loans made under this part.

(4)Actions by the Secretary

The Secretary may limit, suspend, or terminate the continued participation of an eligible lender in making loans under this part for failure by that lender to comply with this section.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Truth in Lending Act, referred to in subsec. (f)(3), is title I of Pub. L. 90–321, May 29, 1968, 82 Stat. 146, which is classified generally to subchapter I (§ 1601 et seq.) of chapter 41 of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see

Short Title

note set out under section 1601 of Title 15 and Tables.

Prior Provisions

A prior section 1083, Pub. L. 89–329, title IV, § 433, Nov. 8, 1965, 79 Stat. 1247; Pub. L. 90–575, title I, § 116(d), Oct. 16, 1968, 82 Stat. 1024; Pub. L. 92–318, title I, § 132(c),

June 23, 1972, 86 Stat. 261; Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2129; Pub. L. 95–43, § 1(a)(34),

June 15, 1977, 91 Stat. 216; Pub. L. 96–374, title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1503, related to requirements for institutional lenders, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2008—Pub. L. 110–315 amended section generally. Prior to amendment, section consisted of subsecs. (a) to (e) relating to student loan information by eligible lenders. 1998—Subsec. (a). Pub. L. 105–244, § 428(a), amended heading and introductory provisions generally. Prior to amendment, introductory provisions read as follows: “Each eligible lender shall, at or prior to the time such lender disburses a loan which is insured or guaranteed under this part (other than a loan made under section 1078–3 of this title), provide thorough and accurate loan information on such loan to the borrower. Any disclosure required by this subsection may be made by an eligible lender as part of the written application material provided to the borrower, or as part of the promissory note evidencing the loan, or on a separate written form provided to the borrower. The disclosure shall include—”. Subsec. (b). Pub. L. 105–244, § 428(b), amended heading and introductory provisions generally. Prior to amendment, introductory provisions read as follows: “Each eligible lender shall, at or prior to the start of the repayment period of the student borrower on loans made, insured, or guaranteed under this part, disclose to the borrower the information required under this subsection. For any loan made, insured, or guaranteed under this part, other than a loan made under section 1078–2 or 1078–3 of this title, such disclosure required by this subsection shall be made not less than 30 days nor more than 240 days before the first payment on the loan is due from the borrower. The disclosure shall Ðinclude—”. 1993—Subsec. (b). Pub. L. 103–208, § 2(c)(53), substituted “30 days” for “60 days” in introductory provisions. Subsec. (e). Pub. L. 103–208, § 2(k)(4), amended directory language of Pub. L. 102–325, § 426(c). See 1992 Amendment note below. Pub. L. 103–208, § 2(c)(54), substituted “sections” for “section” before “1078–1”. 1992—Subsec. (a). Pub. L. 102–325, § 426(a), added par. (1) and redesignated former pars. (1) to (13) as (2) to (14), respectively. Subsec. (b). Pub. L. 102–325, § 426(b)(1), in introductory provisions, inserted second sentence and struck out former second sentence which read as follows: “Any disclosure required by this subsection may be made by an eligible lender either in a promissory note evidencing the loan or loans or in a written statement provided to the borrower.” Subsec. (b)(8). Pub. L. 102–325, § 426(b)(2), inserted “except as provided in subsection (e) of this section,” before “the projected”. Subsec. (e). Pub. L. 102–325, § 426(c), as amended by Pub. L. 103–208, § 2(k)(4), added subsec. (e). 1987—Subsec. (a). Pub. L. 100–50, § 10(z)(1), inserted “(other than a loan made under section 1078–3 of this title)” after “this part” in first sentence. Subsec. (a)(8). Pub. L. 100–50, § 10(z)(2), added par. (8) and struck out former par. (8) which read as follows: “a statement of the total cumulative balance, including the loan applied for, owed by the student to that lender, the projected level of indebtedness of the student based on a 4-year college career, and an estimate of the projected monthly repayment given the level of indebtedness over a 4- or 5-year college career;”. Subsec. (b)(7). Pub. L. 100–50, § 10(z)(3), inserted “, except that such explanation is not required when the loan being made is a consolidation loan under section 1078–3 of this title” before semicolon at end. Subsec. (d). Pub. L. 100–50, § 10(z)(4), substituted “notifies a borrower of approval of a loan” for “makes the first disbursement of a loan with respect to a borrower”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2008 Amendment Pub. L. 110–315, title IV, § 434(b), Aug. 14, 2008, 122 Stat. 3252, provided that: “(1) Regular disclosure requirements and disclosure requirements to borrowers having difficulty making payments.—Paragraphs (1) and (2) of section 433(e) of the Higher Education Act of 1965 [20 U.S.C. 1083(e)(1), (2)], as amended by subsection (a), shall apply with respect to loans for which the first payment is due on or after

July 1, 2009. “(2) Disclosure requirements for borrowers with delinquent loans.—section 433(e)(3) of the Higher Education Act of 1965 [20 U.S.C. 1083(e)(3)], as amended by subsection (a), shall apply with respect to loans that become delinquent on or after

July 1, 2009.”

Effective Date

of 1998 AmendmentAmendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as a note under section 1001 of this title.

Effective Date

of 1993 AmendmentAmendment by section 2(c)(53) of Pub. L. 103–208 effective on and after 60 days after Dec. 20, 1993 and

Amendments

by section 2(c)(54), (k)(4) of Pub. L. 103–208 effective, except as otherwise provided, as if included in the Higher Education

Amendments

of 1992, Pub. L. 102–325, see section 5(a), (b)(4) of Pub. L. 103–208, set out as a note under section 1051 of this title.

Effective Date

of 1987 AmendmentAmendment by Pub. L. 100–50 effective as if enacted as part of the Higher Education

Amendments

of 1986, Pub. L. 99–498, see section 27 of Pub. L. 100–50, set out as a note under section 1001 of this title.

Effective Date

Section effective Oct. 17, 1986, with subsecs. (a), (b), and (d) of this section applicable only with respect to loans disbursed on or after Jan. 1, 1987, or made to cover the costs of instruction for periods of enrollment beginning on or after Jan. 1, 1987, see section 402(b) of Pub. L. 99–498, set out as a note under section 1071 of this title.

§1083 Student Loan Information by Eligible Lenders

Summary

Title 20, §1083

Notes & Related Subsidiaries

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References in Text

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Prior Provisions

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Statutory Notes and Related Subsidiaries

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Amendments

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Citations & Metadata