[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6473 Introduced in House (IH)]
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115th CONGRESS
2d Session
H. R. 6473
To increase transparency with respect to loan repayment options for
Federal student loan borrowers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 23, 2018
Ms. DeLauro introduced the following bill; which was referred to the
Committee on Education and the Workforce
_______________________________________________________________________
A BILL
To increase transparency with respect to loan repayment options for
Federal student loan borrowers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Transparency in Student Loan
Consultation Act of 2018''.
SEC. 2. FINDINGS.
Congress finds as follows:
(1) Loopholes in Federal law allow institutions of higher
education and third party consultants that contract with such
institutions to provide borrowers with inaccurate or incomplete
information, including with respect to borrower repayment
options.
(2) The Higher Education Act of 1965 (20 U.S.C. 1001 et
seq.) does not contain borrower-centered provisions that would
allow the Secretary of Education to establish minimum standards
governing communications that institutions of higher education
and third party consultants may have with borrowers who are no
longer enrolled at such an institution.
(3) The Higher Education Act of 1965 requires that
institutions of higher education provide certain information to
borrowers about the borrower's student loans when the borrower
enters and exits the student loan program, but such Act does
not require or permit the Department of Education to oversee
communications between the institutions or third party
consultants and the borrowers after the borrowers are no longer
enrolled at an institution.
(4) In a report released April, 26, 2018, the Government
Accountability Office (hereinafter referred to as ``GAO'')
found that some institutions of higher education hired third
party consultants that encouraged student loan borrowers with
past-due payments to put loans in forbearance, an option that
allows borrowers to temporarily postpone payments.
(5) Loan forbearance can help borrowers avoid default in
the short-term, but ultimately increases loan costs over time.
(6) The GAO found that 5 of the 9 third party consultants
hired by institutions of higher education, that served about
800 out of 1,300 institutions, encouraged forbearance over
potentially more beneficial options.
(7) The GAO also found that 4 of the 5 third party
consultants provided inaccurate or incomplete information to
borrowers about their repayment options. Inaccurate information
about the consequences of default could cause a borrower to
feel undue pressure to choose forbearance, even when the
borrower is eligible for more favorable repayment and
postponement options.
(8) Borrowers who only receive a forbearance application
may inaccurately assume that forbearance is the only or
preferred option to avoid default.
(9) Moreover, borrowers may miss the opportunity to learn
about other, potentially more favorable repayment and
postponement options from the Department of Education's loan
servicers, who are responsible for counseling borrowers and
approving forbearance requests.
(10) Student loan borrowers deserve accurate and complete
information about loan repayment options to make informed
decisions about loan repayment that are in their best interest,
not the interest of institutions of higher education or third
party consultants.
SEC. 3. LOAN REPAYMENT TRANSPARENCY.
Section 487(a) of the Higher Education Act of 1965 (20 U.S.C. 1094)
is amended by adding at the end the following:
``(30) The institution will ensure that any information
related to student loan repayment that is provided to a
borrower who is in repayment status or who will enter repayment
status within 6 months, whether provided directly by the
institution or by a third party servicer who has a contract
with the institution--
``(A) is accurate and complete;
``(B) if such information is related to the
provision, explanation, selection, or revision of any
loan repayment or consolidation option, includes a list
and explanation of each of the loan repayment options
and Federal loan consolidation options available to the
borrower, including an explanation of any special
options that may be available due to the particular
circumstances of the borrower; and
``(C) with respect to a borrower who has failed to
make an installment payment when due, or who is
otherwise requesting default prevention, aversion, or
debt management counseling, includes an explanation of
the borrower's repayment status and repayment schedule,
and a description of each option for which the borrower
is eligible to make, schedule, postpone, or reduce loan
payments, including loan forgiveness, cancellation,
deferment, and forbearance opportunities.''.
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