20 U.S.C. § 1083 — Student loan information by eligible lenders

submitted 40 years ago by Pub. L. 89-329 to r/title-20-EDUCATION · 2,326 words · no verdicts yet

in plain englishAI-generated · not legal advice

Eligible student-loan lenders must give borrowers clear information before the loan is paid, before repayment begins, when the loan is approved, and during repayment. The disclosures must explain the loan's costs, repayment choices, benefits, default consequences, and available help.

(a) Required disclosure before disbursement. Before or when an eligible lender pays out a loan insured or guaranteed under this part, other than a loan under section 1078–3, the lender must give the borrower complete and accurate information in simple, understandable terms. The disclosure may be written or electronic, including in application materials, the promissory note, or a separate form. The lender must give a telephone number, and may give an electronic address, for more information. The disclosure must include: (1) a prominent, clear, bold statement that the borrower is receiving a loan that must be repaid; (2) the lender's name and the address for communications and payments; (3) the principal; (4) every charge, such as origination and Federal default fees, and whether each will be collected before or when the loan is paid, deducted from the loan proceeds, paid separately by the borrower, or paid by the lender; (5) the stated interest rate; (6) for loans under section 1078–8 or loans to a student under section 1078–2, an explanation that the borrower may pay interest while the borrower is a student and, if it is not paid, when and how often it will be added to principal; (7) for a parent loan under section 1078–2, an explanation that the parent may defer payments while the student is enrolled at least half-time, when and how often unpaid interest will be added to principal, and that the parent may qualify for a deferment while enrolled at least half-time; (8) yearly and lifetime borrowing limits; (9) the total balance owed to that lender, including this loan, and an estimated monthly payment based on that balance; (10) when repayment begins and when the borrower must pay accruing interest; (11) available repayment-plan types; (12) minimum and maximum repayment periods the lender may impose and the legally required minimum yearly payment; (13) special consolidation or refinancing choices; (14) the right to prepay all or part at any time without a penalty; (15) circumstances in which repayment or interest may be deferred; (16) circumstances for forbearance; (17) forgiveness choices and requirements; (18) what default means and its consequences, including that default is reported to a consumer reporting agency; and (19) every repayment or collection cost, including late-payment fees and collection costs. (b) Required disclosure before repayment. Before, or at the start of, repayment of a loan made, insured, or guaranteed under section 1078, 1078–2, or 1078–8, the lender must give the borrower the information in this subsection in simple, understandable written or electronic form. It must again give a telephone number and may give an electronic address. The disclosure must arrive 30 to 150 days before the first payment is due. It must include: (1) the lender or servicer's name and payment and communication address; (2) the scheduled start of repayment, or the scheduled end of the section 1078–2(d)(1) deferment, as applicable; (3) the estimated balance, including interest expected to be added to principal, on that date; (4) the stated interest rate or combined rate; (5) repayment benefits, including whether behavior-based benefits exist, such as lower interest for automatic payroll or checking-account payments, lower interest after a stated number of on-time payments, or other benefits reducing the amount or length of repayment. If a benefit exists, the disclosure must state its limits, why it may be lost, how a rate reduction affects repayment length and amount, its effect on payoff amount and time if requested, and whether and how eligibility can be regained. (6) All available repayment plans and that the borrower may change plans during repayment. (7) A repayment schedule stating the first due date and the number, amount, and frequency of payments, based on the standard plan or the plan the borrower selected. (8) Special consolidation or refinancing options and their availability and terms. (9) Unless subsection (d) applies, (A) projected total interest if payments follow the schedule exactly and (B) interest already paid. (10) The nature of fees that may accrue or be charged. (11) The right to prepay without penalty. (12) Ways to avoid or leave default and related fees. (13) Additional resources known to the lender, including nonprofit organizations, advocates, and counselors, including the Department's Student Loan Ombudsman, where borrowers can obtain advice and repayment help. (c) Separate notification. When an eligible lender tells a borrower that a loan insured or guaranteed under this part has been approved, it must separately summarize, in simple, understandable terms, the borrower's rights and duties, the consequences of default, and that every borrower who defaults will be reported to a consumer reporting agency. This is in addition to subsection (a). (d) Special disclosure rules for PLUS and unsubsidized loans. Loans under sections 1078–2 and 1078–8 do not need the subsection (b)(7) projected monthly-payment disclosure if the lender instead gives simple, understandable sample monthly-payment projections for different borrowing levels and different interest amounts caused by capitalization while the borrower or the student is in school. The samples must show the cost of capitalizing interest and of paying interest as it accrues. (e) Disclosures during repayment. (1) Periodic loan information. For each payment period in which a payment is due, the lender must give a bill or statement, in simple, understandable terms, showing: (A) original principal; (B) current balance; (C) interest rate; (D) total interest paid; (E) total paid, separated into interest, fees, and amounts applied to the balance; (F) each fee charged for the preceding installment period; (G) the date and amount needed to avoid more fees and the amount of those fees; (H) the lender's or servicer's address and toll-free number for payment and billing errors; and (I) a reminder that the borrower may change plans, the available plan names, a link to the Department's detailed plan information, and instructions for requesting a change. (2) If a borrower tells the lender that payments are difficult, the lender must provide descriptions of available repayment plans and how to change plans, forbearance requirements and expected costs, and ways to avoid default with related fees or costs. (3) If the borrower is 60 days delinquent, the lender must give simple, understandable notice of: (A) the date the loan will default if no payment is made; (B) the minimum payment needed to avoid default; (C) ways to avoid default and their fees or costs, including deferment and forbearance and the requirements for each; (D) discharges the borrower may receive; and (E) known additional repayment-help resources, including nonprofit organizations, advocates, counselors, and the Department's Student Loan Ombudsman. (f) Cost and effect of disclosure. (1) Required information must be available to the borrower free of charge. (2) A lender's failure to disclose does not release the borrower from repaying under the loan terms and does not support a civil-damages claim. (3) This section does not make the lender subject to the Truth in Lending Act for loans under this part. (4) The Secretary may limit, suspend, or end an eligible lender's participation in making loans under this part if the lender fails to comply.

the actual law source: uscode.house.gov ↗public domain

(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.

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 sections 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)

capitalizing the interest; and

(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.

Source credit: (Pub. L. 89–329, title IV, § 433, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1406; amended Pub. L. 100–50, § 10(z), June 3, 1987, 101 Stat. 346; Pub. L. 102–325, title IV, § 426, July 23, 1992, 106 Stat. 548; Pub. L. 103–208, § 2(c)(53), (54), (k)(4), Dec. 20, 1993, 107 Stat. 2468, 2485; Pub. L. 105–244, title IV, § 428, Oct. 7, 1998, 112 Stat. 1704; Pub. L. 110–315, title IV, § 434(a), Aug. 14, 2008, 122 Stat. 3247.)

history & why it existsrecord from the source credit

1986Enacted · Pub. L. 89-329 · 100 Stat. 1406
1987Amended · Pub. L. 100-50 · 101 Stat. 346
1992Amended · Pub. L. 102-325 · 106 Stat. 548
1993Amended · Pub. L. 103-208 · 107 Stat. 2468, 2485
1998Amended · Pub. L. 105-244 · 112 Stat. 1704
2008Amended · Pub. L. 110-315 · 122 Stat. 3247

A history note hasn’t been published yet. The record shows enactment by Pub. L. 89-329 on 1986-10-17.

all 0 arguments · sorted by: best

no arguments yet — make the first case