PRIA, Government Policy, Made Personal

Summary

Colleges and universities must give students clear, written loan information before or when they make a loan. The school must say who to contact and where to send payments; the loan principal; any charges and whether they come out of the loan money; the interest rate; yearly and total borrowing limits; when repayment and interest start; the shortest and longest repayment times the school may set, the minimum monthly payment, and penalties for default including collection costs; the total the student already owes that lender and an estimate of the monthly payment; options for consolidation or refinancing; that the borrower can prepay without penalty and when payments or interest may be deferred (including the Department of Defense repayment program, 10 U.S.C. 16302); what default means and that defaults are reported to consumer reporting agencies; how the loan may affect other student aid; any costs to make or collect the loan; a notice that these loans may stop being available in the future; that repayment/forgiveness under part D is not available for these loans; the option to consolidate into a Federal Direct Loan under part D; and special notices for new and current undergraduate Federal Perkins borrowers (see 1087aa(b)(1)(A), 1087aa(b)(1)(B), and borrowing limits in 1087e(a)(2) and 1087e(a)(2)(A)). Before the borrower’s repayment period starts, the school must also give a final disclosure free of charge. It must include the school’s name and address; the repayment start date; the estimated balance at that date (including any capitalized interest); the interest rate or combined rate; fees that may be charged during repayment; the full repayment schedule with first due date and payment amounts and frequency; consolidation options; projected total interest if payments follow the schedule; and the right to prepay without penalty. Not getting these disclosures does not cancel the borrower’s duty to repay, create a right to sue for damages, or stop the Secretary’s payment obligations.

Title 20, §1087cc–1

Education, Source: USLM XML via OLRC

(a)Each institution of higher education shall, at or prior to the time such institution makes a loan to a student borrower which is made under this part, provide thorough and adequate loan information on such loan to the student borrower. Any disclosure required by this subsection may be made by an institution of higher education 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 disclosures shall include—

(1)the name of the institution of higher education, and the address to which communications and payments should be sent;

(2)the principal amount of the loan;

(3)the amount of any charges collected by the institution at or prior to the disbursal of the loan and whether such charges are deducted from the proceeds of the loan or paid separately by the borrower;

(4)the stated interest rate on the loan;

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

(6)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;

(7)a statement as to the minimum and maximum repayment term which the institution may impose, and the minimum monthly payment required by law and a description of any penalty imposed as a consequence of default, such as liability for expenses reasonably incurred in attempts by the Secretary or institutions to collect on a loan;

(8)a statement of the total cumulative balance, including the loan applied for, owed by the student to that lender, and an estimate of the projected monthly payment, given such cumulative balance;

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

(10)a statement that the borrower has the right to prepay all or part of the loan, at any time, without penalty, a statement summarizing circumstances in which repayment of the loan or interest that accrues on the loan may be deferred, and a brief notice of the program for repayment of loans, on the basis of military service, pursuant to the Department of Defense educational loan repayment program (10 U.S.C. 16302);

(11)a definition of default and the consequences to the borrower if the borrower defaults, together with a statement that the disbursement of, and the default on, a loan under this part, shall be reported to a consumer reporting agency;

(12)to the extent practicable, the effect of accepting the loan on the eligibility of the borrower for other forms of student assistance;

(13)an explanation of any cost the borrower may incur in the making or collection of the loan;

(14)a notice and explanation regarding the end to future availability of loans made under this part;

(15)a notice and explanation that repayment and forgiveness benefits available to borrowers of loans made under part D are not available to borrowers participating in the loan program under this part;

(16)a notice and explanation regarding a borrower’s option to consolidate a loan made under this part into a Federal Direct Loan under part D, including any benefit of such consolidation;

(17)with respect to new undergraduate Federal Perkins loan borrowers, as described in section 1087aa(b)(1)(A) of this title, a notice and explanation providing a comparison of the interest rates of loans under this part and part D and informing the borrower that the borrower has reached the maximum annual borrowing limit for which the borrower is eligible as referenced under subparagraphs (A) and (D) of section 1087e(a)(2) of this title; and

(18)with respect to current undergraduate Federal Perkins loan borrowers, as described in section 1087aa(b)(1)(B) of this title, a notice and explanation providing a comparison of the interest rates of loans under this part and part D and informing the borrower that the borrower has reached the maximum annual borrowing limit for which the borrower is eligible on Federal Direct Stafford Loans as referenced under section 1087e(a)(2)(A) of this title.

(b)Each institution of higher education shall enter into an agreement with the Secretary under which the institution will, prior to the start of the repayment period of the student borrower on loans made under this part, disclose to the student borrower the information required under this subsection. Any disclosure required by this subsection may be made by an institution of higher education either in a promissory note evidencing the loan or loans or in a written statement provided to the borrower. The disclosures shall include—

(1)the name of the institution of higher education, and the address to which communications and payments should be sent;

(2)the scheduled date upon which the repayment period is to begin;

(3)the estimated balance owed by the borrower on the loan or loans covered by the disclosure as of the scheduled date on which the repayment period is to begin (including, if applicable, the estimated amount of interest to be capitalized);

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

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

(6)the repayment schedule for all loans covered by the disclosure including the date the first installment is due, and the number, amount, and frequency of required payments;

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

(8)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

(9)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.

(c)Such information shall be available without cost to the borrower. The failure of an eligible institution to provide information as required by this section shall not (1) relieve a borrower of the obligation to repay a loan in accordance with its terms, (2) provide a basis for a claim for civil damages, or (3) be deemed to abrogate the obligation of the Secretary to make payments with respect to such loan.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 1087cc–1, Pub. L. 89–329, title IV, § 463A, as added Pub. L. 96–374, title IV, § 447(b), Oct. 3, 1980, 94 Stat. 1443; amended Pub. L. 97–301, § 13, Oct. 13, 1982, 96 Stat. 1405; Pub. L. 98–79, § 3(b), Aug. 15, 1983, 97 Stat. 478; Pub. L. 99–272, title XVI, § 16027, Apr. 7, 1986, 100 Stat. 353, related to student loan information to be provided by institutions, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2015—Subsec. (a)(14) to (18). Pub. L. 114–105 added pars. (14) to (18). 2009—Subsec. (a). Pub. L. 111–39 struck out “, in order to carry out the provisions of section 1087cc(a)(8) of this title,” after “Each institution of higher education” in introductory provisions. 2008—Subsec. (a)(11). Pub. L. 110–315 substituted “consumer” for “credit bureau or credit”. 1996—Subsec. (a)(10). Pub. L. 104–106 substituted “(10 U.S.C. 16302)” for “(10 U.S.C. 2172)”. 1993—Subsecs. (d), (e). Pub. L. 103–208 struck out subsecs. (d) and (e), which read as follows: “(d) Limitation on Use of Interest Bearing Accounts.—In carrying out the provisions of subsection (a)(10) of this section, the Secretary may not require that any collection agency, collection attorney, or loan servicer collecting loans made under this part deposit amounts collected on such loans in interest bearing accounts, unless such agency, attorney, or servicer holds such amounts for more than 45 days. “(e) Special Due Diligence Rule.—In carrying out the provisions of subsection (a)(5) of this section relating to due diligence, the Secretary shall make every effort to ensure that institutions of higher education may use Internal Revenue Service skip-tracing collection procedures on loans made under this part.” 1992—Subsec. (a)(11). Pub. L. 102–325, § 463(c)(1), substituted “together with a statement that the disbursement of, and the default on, a loan under this part, shall be” for “including a statement that the default may be”. Subsecs. (d), (e). Pub. L. 102–325, § 463(c)(2), added subsecs. (d) and (e). 1987—Subsec. (a)(8). Pub. L. 100–50, § 13(g), added par. (8) and struck out former par. (8) which read as follows: “a statement of the total cumulative balance owed by the student to that institution, the projected level of indebtedness of the student based on a 2- or 4-year college career, and an estimate of the projected monthly repayment given the level of indebtedness over a 2-, 4-, or 5-year college career;”. Subsec. (a)(10). Pub. L. 100–50, § 13(h), substituted “the Department of Defense educational loan repayment program (10 U.S.C. 2172)” for “section 902 of the Department of Defense Authorization Act, 1981 (10 U.S.C. 2141, note)”.

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.

Effective Date

of 1996 AmendmentAmendment by Pub. L. 104–106 effective as if included in the Reserve Officer Personnel Management Act, title XVI of Pub. L. 103–337, as enacted on Oct. 5, 1994, see section 1501(f)(3) of Pub. L. 104–106, set out as a note under section 113 of Title 10, Armed Forces.

Effective Date

of 1993 AmendmentAmendment by Pub. L. 103–208 effective as if included in the Higher Education

Amendments

of 1992, Pub. L. 102–325, except as otherwise provided, see section 5(a) 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 applicable only to loans made for periods of enrollment beginning on or after July 1, 1987, see section 405(b) of Pub. L. 99–498, as amended, set out as a note under section 1087dd of this title.

§1087cc–1 Student Loan Information by Eligible Institutions

Summary

Title 20, §1087cc–1

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

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Amendments

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Amendments

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Citations & Metadata