20 U.S.C. § 1087cc–1 — Student loan information by eligible institutions
submitted 40 years ago by Pub. L. 89-329 to r/title-20-EDUCATION · 1,082 words · no verdicts yet
An institution must give a borrower detailed information before a loan is paid out and again before repayment begins. The information covers the loan’s amount, interest, repayment, costs, options, reporting, and availability, and must be provided without charge.
(a) Disclosure required before disbursement. When an institution makes a loan under this part, it must give the student borrower thorough and adequate information at or before the time the loan is made. The institution may include the information in the written application, the promissory note, or a separate written form. It must include:
(1) the institution’s name and the address for communications and payments;
(2) the loan’s principal amount;
(3) every charge the institution collects at or before disbursement, and whether the charge is taken from the loan proceeds or paid separately by the borrower;
(4) the stated interest rate;
(5) the maximum amount that may be borrowed each year and in total;
(6) when repayment is required and when the borrower must pay interest that builds up on the loan;
(7) the minimum and maximum repayment periods the institution may impose, the minimum monthly payment required by law, and a description of penalties for default, such as responsibility for reasonable collection expenses incurred by the Secretary* or institutions;
(8) the student’s total balance owed to that lender, including the loan being requested, and an estimated monthly payment based on that total balance;
(9) any special loan-consolidation or other refinancing options the borrower may have;
(10) that the borrower may prepay all or part of the loan at any time without a penalty; a summary of when repayment or interest may be deferred; and a brief notice of the military-service repayment program under the Department* of Defense educational loan repayment program, 10 U.S.C. 16302;
(11) a definition of default, its consequences for the borrower, and a statement that both the loan’s disbursement and any default must be reported to a consumer reporting agency*.
(12) as far as practicable, the effect of accepting the loan on the borrower’s eligibility for other student aid;
(13) any cost the borrower may incur in making or collecting the loan;
(14) notice and an explanation that loans under this part will no longer be available in the future;
(15) notice and an explanation that repayment and forgiveness benefits available to borrowers under part D are not available to borrowers under this part;
(16) notice and an explanation of the option to consolidate a loan under this part into a Federal Direct Loan under part D, including any benefit of consolidation;
(17) for a new undergraduate Federal Perkins borrower described in section 1087aa(b)(1)(A), a notice comparing interest rates under this part and part D and telling the borrower that the borrower has reached the maximum annual borrowing limit for which the borrower is eligible under section 1087e(a)(2)(A) and (D); and
(18) for a current undergraduate Federal Perkins borrower described in section 1087aa(b)(1)(B), a notice comparing interest rates under this part and part D and telling the borrower that the borrower has reached the maximum annual borrowing limit for Federal Direct Stafford Loans under section 1087e(a)(2)(A).
(b) Disclosure required before repayment. Each institution must make an agreement with the Secretary under which, before repayment begins on the student’s loans under this part, the institution gives the student the information required here. It may give the information in a promissory note for the loan or loans or in a written statement. It must include:
(1) the institution’s name and the address for communications and payments;
(2) the scheduled date repayment begins;
(3) the estimated balance owed on the covered loan or loans on that date, including, when applicable, estimated interest that will be added to the principal;
(4) the stated interest rate for each loan, or the combined rate for loans with different stated rates;
(5) the kinds of fees that may build up or be charged during repayment;
(6) the repayment schedule for all covered loans, including the first due date and the number, amount, and frequency of payments;
(7) any special consolidation or other refinancing options;
(8) the projected total interest the borrower will pay if payments are made exactly as scheduled; and
(9) that the borrower may prepay all or part of the covered loan or loans at any time without a penalty.
(c) Costs and effects of disclosures. The borrower must receive this information for free. If an eligible institution fails to provide information required by this section, that failure does not:
(1) release the borrower from repaying the loan according to its terms;
(2) create a basis for a civil-damages claim; or
(3) cancel the Secretary’s duty to make payments related to the loan.
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—
the name of the institution of higher education, and the address to which communications and payments should be sent;
the principal amount of the loan;
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;
the stated interest rate on the loan;
the yearly and cumulative maximum amounts that may be borrowed;
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;
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;
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;
an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan;
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);
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*;
to the extent practicable, the effect of accepting the loan on the eligibility of the borrower for other forms of student assistance;
an explanation of any cost the borrower may incur in the making or collection of the loan;
a notice and explanation regarding the end to future availability of loans made under this part;
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;
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;
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
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.
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—
the name of the institution of higher education, and the address to which communications and payments should be sent;
the scheduled date upon which the repayment period is to begin;
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);
the stated interest rate on the loan or loans, or the combined interest rate of loans with different stated interest rates;
the nature of any fees which may accrue or be charged to the borrower during the repayment period;
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;
an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan;
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
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.
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.
Source credit: (Pub. L. 89–329, title IV, § 463A, as added Pub. L. 99–498, title IV, § 405(a), Oct. 17, 1986, 100 Stat. 1446; amended Pub. L. 100–50, § 13(g), (h), June 3, 1987, 101 Stat. 349; Pub. L. 102–325, title IV, § 463(c), July 23, 1992, 106 Stat. 579; Pub. L. 103–208, § 2(f)(8), Dec. 20, 1993, 107 Stat. 2471; Pub. L. 104–106, div. A, title XV, § 1501(e)(4), Feb. 10, 1996, 110 Stat. 501; Pub. L. 110–315, title IV, § 432(b)(6), Aug. 14, 2008, 122 Stat. 3246; Pub. L. 111–39, title IV, § 405(3), July 1, 2009, 123 Stat. 1947; Pub. L. 114–105, § 3, Dec. 18, 2015, 129 Stat. 2220.)
- 1986Enacted · Pub. L. 89-329 · 100 Stat. 1446
- 1987Amended · Pub. L. 100-50 · 101 Stat. 349
- 1992Amended · Pub. L. 102-325 · 106 Stat. 579
- 1993Amended · Pub. L. 103-208 · 107 Stat. 2471
- 1996Amended · Pub. L. 104-106 · 110 Stat. 501
- 2008Amended · Pub. L. 110-315 · 122 Stat. 3246
- 2009Amended · Pub. L. 111-39 · 123 Stat. 1947
- 2015Amended · Pub. L. 114-105 · 129 Stat. 2220
A history note hasn’t been published yet. The record shows enactment by Pub. L. 89-329 on 1986-10-17.
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