Student Borrower
Bill of Rights Act of 2007 (Introduced in Senate)
This Act may be
cited as the `Student Borrower Bill of Rights Act of 2007'.
Congress finds the
following:
(1) Postsecondary
education is increasingly a requirement for a high-paying job in the modern
economy; college graduates earn, on average, $1,000,000 more over their working
lives than people who stop their education after secondary school.
(2) As the cost of
college increases and as need-based grant aid stagnates, more and more students
go into debt to pursue higher education and better economic opportunities.
(3) The amount
students borrowed from Federal student loan programs increased by 76 percent
from academic year 1994-1995 to academic year 2004-2005, totaling
$54,000,000,000 in academic year 2004-2005.
(4) The fastest
growing source of financial aid is private credit, increasing by 734 percent
from academic year 1994-1995 to academic year 2004-2005, totaling
$14,000,000,000 in academic year 2004-2005.
(5) In academic year
2003-2004, 62 percent of students who graduated with a baccalaureate degree
from a public college or university graduated with debt, and their debt
averaged $15,500, and 73 percent of students who graduated with a baccalaureate
degree from a private college or university graduated with debt, and their debt
averaged $19,400.
(6) Some student
borrowers need additional timely, clear, and complete information about the
terms and conditions of their loans, beyond the counseling and information
currently provided.
(7) High-interest
rates and high fees have caused the balance owed by some borrowers to balloon
in short periods of time.
(8)
Income-contingent repayment plans are unavailable to many borrowers who, as a
result, are required to make unaffordable high monthly payments.
(9) The prospect of
high levels of debt, burdensome monthly payments, and confusion about rights
and repayment options deters people from taking out loans and pursuing higher
education.
(10) There is a need
to guarantee student borrowers that they will have access to timely information
about student loans and that their loan repayments will be affordable.
In this Act, the
term `lender' means any public or private entity that--
(1) lends funds to an individual to enable such individual to
attend an institution of higher education; or
(2) insures, guarantees, or collects on a loan made to an
individual to enable such individual to attend an institution of higher
education.
(a) Sense of the
Senate- It is the sense of the Senate that the Department of Education should
vigorously enforce rules requiring lenders to complete lender verification
certificates in a timely manner for borrowers seeking to consolidate loans.
(b) Accurate and
Comprehensive Reporting to Credit Bureaus- The Higher
Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended--
(1) in section 430A(a)--
(A) by striking `agreements with credit bureau organizations'
and inserting `an agreement with each national credit bureau organization (as
described in section 603(p) of the Fair Credit Reporting Act)';
(B) in paragraph (2), by striking `and' after the semicolon;
(C) by redesignating paragraph (3) as
paragraph (4);
(D) in paragraph (4), as redesignated
by subparagraph (C), by striking the period at the end and inserting `; and';
(E) by inserting after paragraph (2) the following:
`(3) of any on time
payments made for such loan;'; and
(F) by inserting at the end the following:
`(5) that such loan is
a student loan.'; and
(2) in section 463(c)--
(A) in paragraph
(1), by striking `cooperative agreements with credit bureau organizations' and
inserting `a cooperative agreement with each national credit bureau
organization (as described in section 603(p) of the Fair Credit Reporting
Act)'; and
(B) in paragraph (2)--
(i)
in subparagraph (B), by striking `and' after the
semicolon;
(ii) in subparagraph (C), by striking the period at the end and
inserting `; and'; and
(iii) by adding at the end the following:
`(D) any on time
payments made for such loan; and
`(E) such loan as a
student loan.'.
(c) A Right To Reconsolidate Loans-
(1) PART B- Section 428C(a)(3)(B) of the Higher Education Act of 1965 (20 U.S.C.
1078-3(a)(3)(B)) is amended to read as follows:
`(B)(i) Except as provided in clause (ii), an individual who has
received a consolidation loan under this section, or the consolidation lender,
shall pay a fee of 1 percent of the balance owed on the sum of such loans to be
consolidated to the Department to obtain a subsequent consolidation loan under
this section.
`(ii) An individual
who has received a consolidation loan under this section may obtain a
subsequent consolidation loan under this section for no fee if such individual
was eligible to obtain a subsequent consolidation loan pursuant to this
subparagraph on the day before the date of enactment of the Student Borrower
Bill of Rights Act of 2007.'.
(2) PART D- Section
455(g) of the Higher Education Act of 1965 (20 U.S.C. 1087e(g))
is amended--
(A) by striking `A borrower' and inserting the following:
`(1) IN GENERAL- A
borrower'; and
(B) by adding at the end the following:
`(2) REFINANCING
AUTHORITY- Notwithstanding any other provision of this part, a borrower may
refinance a Federal Direct Consolidation Loan.'.
(a)
In General- Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et
seq.) is amended by adding at the end the following:
`In this part:
`(1) FEDERAL STUDENT
LOAN- The term `Federal student loan' means a loan made, insured, or guaranteed
under this title (except loans made to parents under section 428B or under the
Federal Direct PLUS Loan program).
`(2) LENDER- The term
`lender' means any public or private entity that--
`(A) lends funds to an
individual to enable such individual to attend an institution of higher
education; or
`(B) insures,
guarantees, or collects on a loan made to an individual to enable such
individual to attend an institution of higher education.
`(a) Regular Bill
Providing Pertinent Information About a Loan- A lender of a Federal student
loan shall provide the borrower of such loan a bill each month or, in the case
of a loan payable less frequently than monthly, a bill that corresponds to each
payment installment time period, including a clear and conspicuous notice of--
`(1) the borrower's
principal borrowed;
`(2) the borrower's
current balance;
`(3) the interest
level on such loan;
`(4) the amount the
borrower has paid in interest;
`(5) the amount of
additional interest payments the borrower is expected to pay over the life of
the loan;
`(6) the total
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;
`(7) a description of
each fee the borrower has been charged for the current payment period;
`(8) the applicable
monthly payment amount set by the Secretary under section 499B for such
borrower and the amount such borrower would owe each month according to the
borrower's repayment plan absent the provisions of section 499B, or, in the
case of a loan payable less frequently than monthly, the amount that
corresponds to the payment installment time period taking into consideration the
applicable monthly payment amount set by the Secretary under section 499B for
such borrower and the amount such borrower would owe that corresponds to the
payment installment time period according to the borrower's repayment plan
absent the provisions of section 499B;
`(9) the date by which
the borrower needs to make the payment described in paragraph (8) to avoid
additional fees;
`(10) the amount of
such payment that will be put towards interest, the balance, and any fees;
`(11) the lender's
address and toll-free phone number for payment purposes;
`(12) the lender's
address and toll-free number for billing error purposes; and
`(13) any change in
the terms and conditions of the loan.
`(b) Information
Provided Five Months After Ceasing To Be at Least a Half-Time Student- A lender
of a Federal student loan shall provide to the borrower of such loan, on the
date that is 5 months after the borrower has ceased to be at least a half-time
student at the institution of higher education for which the loan was made, who
requests it, and make readily available on the Internet, a clear and
conspicuous notice of not less than the following information:
`(1) The conditions
under which a borrower could be charged any fee, and the amount of such fee.
`(2) The conditions
under which a loan would default and the consequences of default.
`(3) The borrower's
rights and options, including repayment options, deferments, forbearances, and
discharge rights to which the borrower may be entitled.
`(4) Legitimate
resources, including nonprofit organizations, advocates, and counselors
(including the Office of the Ombudsman at the Department), where borrowers can
receive advice and assistance, if such resources exist.
`(5) Information about
how a borrower can appeal to the Department a decision made by a lender about
their loan.
`(c) Information
Provided During Delinquency-
`(1) SENSE OF THE
SENATE- It is the sense of the Senate that the Secretary should vigorously
enforce rules requiring that a lender of a Federal student loan provide a
borrower in delinquency information about such borrower's rights and options,
means of avoiding default, and the consequences of default, at such a time and
in such manner as is most useful for such borrower.
`(2) ADDITIONAL INFORMATION-
In addition to any other information required under law, a lender of a Federal
student loan shall provide a borrower in delinquency with a clear and
conspicuous notice of the date on which the loan will default if no payment is
made, the minimum payment that must be made to avoid default, discharge rights
to which the borrower may be entitled, legitimate resources, including
nonprofit organizations, advocates, and counselors (including the Office of the
Ombudsman at the Department), where borrowers can receive advice and
assistance, if such resources exist, and information about how a borrower can
appeal to the Department a decision made by a lender about their loan.
`(d) Information
Provided During Default- A lender of a Federal student loan shall provide a
borrower in default, on not less than 2 separate occasions, with a clear and
conspicuous notice of not less than the following information:
`(1) The options
available to the borrower to get out of default.
`(2) The cost and
conditions of each option.
`(3) Information about
how a borrower can appeal to the Department a decision made by a lender about
their loan.
`(e) Sense of the
Senate- It is the sense of the Senate that the Department should--
`(1) write and
distribute a training manual for organizations, advocates, and counselors who
help people who are having problems repaying Federal student loans,
describing--
`(A) the rights of
such borrowers; and
`(B) the Department's
policies for dealing with particular programs; and
`(2) provide to such
organizations, advocates, and counselors technical assistance where needed.'.
(b) Information
Provided During the Transfer of a Loan to a New Servicer-
Section 428(b)(2)(F) of the Higher Education Act of
1965 (20 U.S.C. 1078(b)(2)(F)) is amended--
(1) in clause (i)--
(A) in subclause (III), by striking
`and' after the semicolon;
(B) in subclause (IV), by striking
`and' after the semicolon; and
(C) by adding at the end the following:
`(V) the effective
date of the transfer;
`(VI) the date the
current servicer will stop accepting payments;
`(VII) the date at
which the new servicer will begin accepting payments;
and
`(VIII) that the
transfer does not affect any term or condition of their loan documents other
than those terms directly related to the servicing of the loan;';
(2) in clause (ii)(II), by striking the comma at the end and
inserting `; and'; and
(3) by adding at the end the following:
`(iii) the
transferee will be required, during the 60-day period beginning on the effective
date of the transfer, to not treat a payment as late if the borrower mistakenly
sends such payment to the transferor instead of to the transferee and the
payment is otherwise on time,'.
(c) Information
Provided During Consolidation- Section 428C(b)(1) of
the Higher Education Act of 1965 (20 U.S.C. 1078-3(b)(1)) is amended--
(1) in subparagraph (E), by striking `and' after the semicolon;
(2) by redesignating subparagraph (F)
as subparagraph (G); and
(3) by inserting after subparagraph (E) the following:
`(F) that the lender
of the consolidation loan shall, upon application for such loan, provide the
borrower with a clear and conspicuous notice of not less than the following
information:
`(i) the effects of consolidation on total interest to be
paid, fees to be paid, and length of repayment, relative to the borrower's
currently scheduled total interest to be paid, fees to be paid, and length of
repayment at the borrower's current interest rate;
`(ii) the effects of
consolidation on a borrower's underlying loan benefits, including loan
forgiveness, cancellation, deferment, and reduced interest rates on those
underlying loans;
`(iii) the ability of
the borrower to prepay the loan, pay on a shorter schedule, and to change
repayment plans;
`(iv) that borrower
benefit programs may vary among different loan holders, and a description of
how the borrower benefits may vary among different loan holders;
`(v) the tax benefits
for which borrowers may be eligible;
`(vi) the consequences
of default; and
`(vii) that by making
the application the applicant is not obligated to agree to take the
consolidation loan; and'.
(d) Information
Provided During Consolidation or Reconsolidation of a Federal Student Loan With
a Private Loan- A lender shall, upon application for a consolidation or
reconsolidation loan of one or more loans made, insured, or guaranteed under
part B, part D, or part E of title IV of the Higher Education Act of 1965 (20
U.S.C. 1071, 1087a, 1087aa) with one or more private loans, provide the
borrower with a clear and conspicuous notice of not less than the following
information:
(1) That the
consolidation or reconsolidation loan would be a private loan, not a Federal
loan.
(2) A description of
the benefits and protections for the loan made, insured, or guaranteed under
part B, part D, or part E that the borrower would lose by consolidating such
loan with a private loan.
(3) That the lender
may be eligible to consolidate two or more loans made, insured, or guaranteed
under part B, part D, or part E within the Federal loan program.
(a) Affordable Loan
Payments- Part I of title IV of the Higher Education Act of 1965, as added by
section 5, is amended by adding at the end the following:
`(a) Limit on Monthly
Payment Amounts to an Affordable Level-
`(1) IN GENERAL-
`(A) LIMITATION-
`(i) IN GENERAL- With respect to Federal student loans that
are made, insured, or guaranteed after the date of enactment of this section,
the Secretary shall limit the total monthly payment amount for all of such
loans of a student borrower to not more than the amount determined pursuant to
subparagraph (B), except as provided in subsection (b)(3).
`(ii) COMMENCEMENT-
The limit on the monthly payment amount described in clause (i) shall begin the day after 1 year after the date the
student ceases to carry at least one-half the normal full-time academic
workload (as determined by the institution).
`(B) FORMULA AMOUNT-
`(i) IN GENERAL- The
amount referred to in subparagraph (A) shall be the same amount for each month
of a year. Such amount shall be an amount that is the quotient of the sum of 10
percent of the borrower's annual adjusted gross income between 100 percent and
200 percent of the poverty line for the previous year and 20 percent of the
borrower's annual adjusted gross income above 200 percent of the poverty line
for the previous year divided by 12.
`(ii) POVERTY LINE-
In this subparagraph, the term `poverty line' means the poverty line described
in section 673 of the Community Services Block Grant Act (42 U.S.C. 9902),
applicable to a family of the size involved.
`(2) PROVISION OF
INFORMATION TO THE SECRETARY-
`(A) IN GENERAL- The
limit on the monthly payment amount set by the Secretary under paragraph (1)
shall apply only if a borrower provides the Secretary, in such form and at such
time--
`(i) such information
as the Secretary shall require to determine the monthly payment amount that is
applicable for such borrower; and
`(ii) certification
that the borrower is employed full time or is actively seeking full-time
employment.
`(B) UPDATE TO
INFORMATION- The Secretary shall require a borrower to--
`(i) provide the
information required under subparagraph (A)(i)
annually for the term of the loan of such borrower; or
`(ii) during each
year for the term of the loan of such borrower, authorize the Secretary to
obtain the information required under subparagraph (A)(i)
from the Internal Revenue Service for such year.
`(3) CONTINUOUS
UPDATE- Upon receiving information under paragraph (2)(B), the Secretary shall
revise the limit on the monthly payment amount for such borrower under
paragraph (1), as necessary.
`(4) APPLICABILITY
TO ALL REPAYMENT PLANS- Regardless of which repayment plan a borrower of a loan
selects under this title, the limit on the monthly payment amount set by the
Secretary under paragraph (1) shall apply to the monthly repayment amount
applicable for such repayment plan.
`(5) NO FEES OR
CHARGES- Notwithstanding any other term or condition of Federal student loans
of a borrower that are made, insured, or guaranteed after the date of enactment
of this section, if the borrower pays the maximum monthly payment amount that
is applicable for the borrower for such loans, as determined under this
section, on time according to the terms and conditions of such loans, such
borrower may not be charged any late fee, underpayment fee, or finance charge
for such loans for such month.
`(6) SUBSIDIZED
LOANS- In the case of a Federal student loan made, insured, or guaranteed after
the date of enactment of this section for which an interest subsidy is paid
under section 428(a), if the amount owed each month in interest payments for
such loan exceeds the applicable amount for such borrower as determined under
this section, and, at the discretion of the Secretary, if the borrower pays
such applicable amount, the Federal Government shall pay the difference between
such amount owed in interest payments and such amount that has been determined
is applicable.
`(b) Study-
`(1) IN GENERAL- The
Secretary shall conduct a study to determine what additional protections beyond
those described in subsection (a) are necessary, if any, to ensure that monthly
payment amounts for student borrowers of different incomes and with different
costs of living are affordable.
`(2) CONTENT OF STUDY-
The study under paragraph (1) shall--
`(A) consider the
payments required of student borrowers in other countries, including the United
Kingdom, Australia, and New Zealand, and compare such payments to the payments
required of student borrowers in the United States; and
`(B) be completed and
submitted to the appropriate committees of Congress not later than 12 months
after the date of enactment of this section.
`(3) ADDITIONAL LIMITS
ON MONTHLY REPAYMENTS- If the Secretary determines in the study under paragraph
(1) that additional protections are necessary to ensure that monthly payment
amounts of student borrowers of Federal student loans made, insured, or guaranteed
after the date of enactment of this section are affordable, the Secretary may
establish rules based on such study that limits the monthly payment amount for
a student borrower to a level that is affordable for such borrower.
`(c) Notification of
Right To Make Payments of More Than Minimum- Notwithstanding any other
provision of this section, a borrower whose applicable monthly payment amount
set by the Secretary under this section is less than the amount such borrower
would owe each month according to the borrower's repayment plan absent the
provisions of this section--
`(1) shall be notified
of the amount the borrower would owe each month according to the borrower's
repayment plan absent the provisions of this section; and
`(2) may pay the
amount described in paragraph (1) or another amount that is greater than the
applicable monthly payment amount set by the Secretary under this section.'.
(b) Income
Contingent Repayment- Section 455(e) of the Higher Education Act of 1965 (20
U.S.C.
1087e(e)) is amended by adding at the end
the following:
`(7) TAX BURDEN- The
balance due on a loan made under this part at the end of the maximum repayment
period is exempted from the definition of income for the purpose of taxes.'.
(c) Discharge Rights
in Cases of Severe Need-
(1) DISCHARGE AND
CANCELLATION RIGHTS IN CASES OF DISABILITY-
(A) AMENDMENTS-
(i)
FFEL AND DIRECT LOANS- Section 437(a) of the Higher Education Act of 1965 (20
U.S.C. 1087(a)) is amended by striking `or becomes permanently and totally
disabled (as determined in accordance with regulations of the Secretary)' and
inserting `or is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that can be
expected to result in death or has lasted, or can be expected to last, for a
continuous period of not less than 60 months'.
(ii) PERKINS-
Section 464(c)(1)(F) of the Higher Education Act of 1965 (20 U.S.C.
1087dd(c)(1)(F)) is amended by striking `or if he' and all that follows through
the semicolon and inserting `or if the borrower is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or has lasted, or
can be expected to last, for a continuous period of not less than 60 months;'.
(B) SENSE OF THE
SENATE- It is the Sense of the Senate that the Department of Education should
continue to administer the discharge and cancellation right provisions of the
Higher Education Act of 1965 amended in subparagraph (A) in such a way as to
prevent fraud and abuse.
(2) DISCHARGE RIGHTS
IN CASES OF BANKRUPTCY-
(A) SENSE OF THE
SENATE- It is the Sense of the Senate that the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 (Public Law 109-8) affords sufficient
protections to prevent fraud and abuse in the carefully regulated discharge of
student loans in bankruptcy.
(B) AMENDMENT-
Section 523(a)(8) of title 11, United States Code, is
amended to read as follows:
`(8) unless--
`(A) excepting such
debt from discharge under this paragraph would impose an undue hardship on the
debtor and the debtor's dependents, for a debt that does not meet the
requirements of subparagraph (B) and that is--
`(i) an educational benefit overpayment or loan made,
insured, or guaranteed by a governmental unit, or made under any program funded
in whole or in part by a governmental unit or nonprofit institution;
`(ii) an obligation to
repay funds received as an educational benefit, scholarship, or stipend; or
`(iii) an
educational loan that is a qualified education loan, as defined in section
221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an
individual; or
`(B) such debt is for
an overpayment, loan, obligation, or qualified education loan described in
clause (i), (ii) or (iii) of subparagraph (A) that--
`(i) was made, entered
into, or incurred after the date of enactment of the Student Borrower Bill of
Rights Act of 2007; and
`(ii) first became due
more than 7 years (exclusive of any applicable suspension of the repayment
period) before the date of the filing of the petition;'.
(a) In General- Part
I of title IV of the Higher Education Act of 1965, as added by section 5 and
amended by section 6, is further amended by adding at the end the following:
`(a) In General- The
Secretary shall conduct a study of the interest rates and fees that are charged
of borrowers of private student loans, including--
`(1) the conditions
under which the interest rate charged of such a borrower is raised or lowered,
including the conditions under which the interest rate is raised on delinquent
payments, and the amount and frequency of such interest rate changes;
`(2) the conditions
under which fees are charged of such a borrower and frequency of such fees,
including fees that are charged as a condition of taking a deferment or
forbearance, and the amount and frequency of such fees;
`(3) identifying
such practices as described in paragraphs (1) and (2) that are exploitative or
unreasonable; and
`(4) determining what
remedies exist for such practices identified in paragraph (3).
`(b) Maximum
Collection Fees-
`(1) IN GENERAL-
Notwithstanding any other provision of this title, the fee charged to a
borrower for collecting on a defaulted Federal student loan shall not exceed
the lesser of the expenses incurred in collecting on such loan or the amount
calculated for such loan based on the following:
`(A) In the case of a
defaulted loan that is paid off through consolidation by the borrower under
this title, the amount that is 7.5 percent of the balance of such loan.
`(B) In the case of a
defaulted loan rehabilitated under part D or pursuant to section 428F(a)(1)(A),
the amount that is 13.5 percent of the balance of such loan.
`(C) In the case of
a defaulted loan collected under part D or part B and not described in
subparagraph (A) or (B), the amount that is 18 percent of the balance of such
loan.
`(2) ITEMIZED LIST
OF EXPENSES- An entity that charges a borrower for collecting on a defaulted
Federal student loan shall provide such borrower an itemized list of any
expenses incurred in collecting on such loan.
`(c) Cap on Total
Charges-
`(1) IN GENERAL- The
Department shall set a cap on the maximum total amount that can be charged of a
borrower on a Federal student loan, including all interest and fees, as a
percentage of the original loan balance, over a period of 10 years, 15 years,
and 20 years.
`(2) LEVEL OF CAP- The
cap set under paragraph (1) shall be set--
`(A) at the minimum
level beyond which additional amount charged on a loan is unreasonable or
exploitative; and
`(B) for each time
period, at a level that is higher than the amount the borrower, who makes
regularly scheduled payments in accordance with a standard repayment plan,
currently pays over such time period.'.
(b) Conforming
Amendments-
(1) LOANS PAID OFF
THROUGH CONSOLIDATION- Section 428(c)(6)(B) of the
Higher Education Act of 1965 (20 U.S.C. 1078(c)(6)(B)) is amended--
(A) by striking clause (i) and
inserting the following:
`(i) on or after October 1, 2007, not charge the borrower
collection costs in excess of the amount provided in section 499C(b)(1)(A);
and'; and
(B) in clause (ii), by striking `clause (i)(I)'
and inserting `clause (i)'.
(2) REHABILITATED
LOANS- Section 428F(a)(1)(C) of the Higher Education
Act of 1965 (20 U.S.C. 1078-6(a)(1)(C)) is amended by striking `not to exceed'
and all that follows through the period and inserting `not to exceed the amount
provided in section 499C(b)(1)(B).'.
Part I of title IV
of the Higher Education Act of 1965, as added by section 5 and amended by
sections 6 and 7, is further amended by adding at the end the following:
`(a) Publication of
Job Placement Information-
`(1) IN GENERAL-
Each institution of higher education (as defined in section 102) that enrolls a
student receiving assistance under this Act and that is determined by the
Secretary, in accordance with paragraph (2), to be a disclosure institution,
shall make publicly available and include in institution materials (including
applications for admission to the institution) a clear and conspicuous notice
of group level job placement information for each of the past 5 years of
graduates (or, if the institution has not been in operation for 5 years, for as
long as the institution has been in operation), including not less than the
following information:
`(A) The percentage of
students entering the institution who graduated within 150 percent of their
expected graduation date.
`(B) The percentage of
graduates employed within 6 months of graduating.
`(C) The percentage
of graduates employed in the field that the graduates studied at the
institution.
`(D) The median annual
earnings of those graduates who are employed.
`(E) The percentage of
former students of the institution who took out a loan to attend the
institution who defaulted on such loan at least once after leaving the
institution.
`(2) DISCLOSURE
INSTITUTION- In determining whether an institution is a disclosure institution,
the Secretary primarily shall consider whether the institution makes claims
relating to the employment prospects of the graduates of the institution. In
addition, the Secretary shall consider each of the following criteria as a
supplementary factor in determining whether an institution is a disclosure
institution with respect to a particular year:
`(A) More than 75
percent of the institution's revenue for such year is loan volume.
`(B) Fewer than 50
percent of the students enrolled in the institution the previous year, who did
not graduate from such institution in such previous year, are still enrolled in
the institution.
`(C) More than 10
percent of the students who have taken out loans to attend the institution have
defaulted on such loans at least once after leaving the institution.
`(3) RECORDS- Each
institution of higher education (as defined in section 102) that enrolls a
student receiving assistance under this Act and that is determined by the
Secretary, in accordance with paragraph (2), to be a disclosure institution, shall
keep, for a period of 5 years, the records that substantiate the information
the institution is required to publicize under paragraph (1).
`(b) Sense of the
Senate- It is the sense of the Senate that the Secretary should enforce the
rights of borrowers of private student loans and Federal student loans to raise
claims and defenses related to the actions of for-profit institutions of higher
education against lenders from which the borrowers borrowed money to attend such
institutions, including the Federal Trade Commission Rule.
`(c) Appeal to the
Secretary-
`(1) IN GENERAL-
`(A) IN GENERAL- Any
borrower of a Federal student loan who has suffered an economic loss as a
result of a violation of the borrower's rights under this title shall have the
right to appeal such action to the Secretary.
`(B) RIGHTS OF
BORROWER- For the purpose of this subsection, the rights of a borrower
described in subparagraph (A) are those rights involved in the solicitation
for, disbursement of, repayment of (including rights to terminate or suspend
repayment), or collection of a Federal student loan, including--
`(i) such rights
described in this part and under the Student Borrower Bill of Rights Act of
2007 and the amendments made by such Act; and
`(ii) borrower rights
under the following sections of this Act: 427, 428, 428C, 428F, 428J, 428K,
430A, 433, 437, 438, 463, 463A, 464, 465, 484, 484B, 485 (except subsections
(f) and (g) of section 485), and 488A.
`(2) NOTIFICATION- Not
less than 30 days before making an appeal under this subsection, the borrower
shall jointly notify the Secretary and the party whose action the borrower
wishes to appeal (referred to in this subsection as the `respondent') that the
borrower intends to make an appeal, the action that the borrower intends to
appeal, and the economic loss that the borrower suffered as a result of the
violation.
`(3) SETTLEMENT-
`(A) IN GENERAL- After
the notification under paragraph (2), the borrower and the respondent shall
make a good faith effort to settle the dispute. If no settlement is reached or
if the respondent fails to respond to the borrower's notice within 30 days of
the borrower providing such notice, the borrower may appeal the applicable
action to the Secretary, which shall adjudicate the borrower's claim in a fair,
impartial, and timely manner. In so doing, the Secretary may, if it should
choose, develop a policy by which borrowers who make appeals work with the
office of the Ombudsman or another relevant office within the Department to
facilitate dispute resolution before providing a formal hearing. Whether or not
the Secretary develops such a policy, the Secretary shall provide a formal
hearing of the borrower's appeal within 60 days of the start of the appeal,
unless the Secretary determines that there is no basis for such a hearing or if
the borrower making the appeal provides written consent to waive the borrower's
right to a hearing or to delay or withdraw the appeal.
`(B) JUDICIAL REVIEW-
Any borrower who is adversely affected by the final agency action shall be
entitled to judicial review of such action pursuant to section 706 of title 5,
United States Code.
`(4) INFORMATION- The
Secretary shall make publicly available on the Internet and elsewhere
information about how borrowers can make appeals under this subsection and in
what circumstances they can do so.
`(5) SAME RIGHTS-
Borrowers shall have the same right to appeal, including the same rights and
remedies, whether their loans are held under part B, part D, or part E, and
whether the respondent is the Department or another lender that participates in
programs described in part B, part D, or part E.
`(6) INAPPLICABILITY
OF APA- The Secretary shall not be required to comply with the provisions of
subchapter II of chapter 5, and chapter 7, of title 5, United States Code
(commonly referred to as the Administrative Procedure Act), in implementing
this subsection, except as provided in paragraph (3)(B).
`(d) Admissions
Officers as Salespersons- Notwithstanding any other provision of this Act, an
institution of higher education that does not comply with section 487(a) by
violating paragraph (20) of such section shall be liable to a borrower of a
Federal student loan taken out to attend such institution for the entire amount
of such loan.
`(e) Right To Pay
Off Principal Faster Than Scheduled- A lender of a Federal student loan shall
provide a borrower who pays more than the amount required for any regularly
scheduled payment an easy and unbiased means of choosing whether such overpayment
payment should count as a--
`(1) prepayment for a
subsequently scheduled payment; or
`(2) payment against
the principal owed on such loan.'.
Section 487(a) of
the Higher Education Act of 1965 (20 U.S.C. 1088) is amended by adding at the
end the following:
`(24) The institution
will not cause any unnecessary loan processing delay for a borrower who uses a
lender that is not recommended or suggested by the institution.'.