H.R.890 - Student Loan Sunshine Act110th Congress (2007-2008)
Summary: H.R.890 — 110th Congress (2007-2008)
Passed House amended (05/09/2007)
Student Loan Sunshine Act - (Sec. 2) Amends title I of the Higher Education Act of 1965 to create a new part E (Lender and Institution Requirements Relating to Educational Loans). Requires each lender entering into a preferred lender arrangement with a covered institution (schools that provide postsecondary studies and receive federal funds) to: (1) certify annually to the Secretary of Education that all of the preferred lender arrangements in which it participates are in compliance with the requirements of this Act; (2) inform borrowers of their loan options under title IV (Student Assistance), including information on more favorable loans under such title, before extending private educational loans for attendance at such institution; and (3) be barred by such school from marketing such loans in a manner implying the institution's endorsement.
Directs the Secretary to report to specified congressional committees on the adequacy of educational loan information provided to borrowers. Requires such report to include a model disclosure form developed and prescribed by the Secretary for lender use in providing annual loan information to the Secretary and covered institutions with which they have a preferred lender arrangement. Requires such lenders to disclose, in addition to specified loan information, any philanthropic contributions made to such institutions. Requires such institutions to provide the Secretary, prospective borrowers, and the public with the disclosure form information as well as a detailed explanation of why such loans are beneficial to borrowers.
Requires covered institutions to disclose on their websites and in their informational materials: (1) that they cannot limit students to recommended lenders and must process the loan documents of any eligible lender; (2) the information provided on the model disclosure form with regard to recommended lenders; (3) the maximum federal grant and loan aid available; and (4) the cost of attendance.
Requires covered institutions that provide prospective borrowers with private educational loan information to: (1) include information on their title IV assistance eligibility; and (2) compare and distinguish private loans from title IV loans.
Requires institutions of higher education (IHEs) to develop, publicize, and enforce codes of conduct for their officers, employees, and agents prohibiting actual or apparent conflicts of interest with their financial aid duties, including, at a minimum, compliance with the following requirements of this section. Prohibits an institution's officers, employees and agents that have financial aid duties from accepting certain financial benefits or fees from, or participating on the advisory councils of, student loan providers or their affiliates.
Bars lenders, guarantors, or servicers of educational loans from offering gifts to officers, employees, or agents of covered institutions. Directs the Inspector General of the Department of Education to investigate and report annually to Congress on gift ban violations.
Bans IHEs from: (1) entering into educational loan arrangements that involve lender payments for recommended lender status; (2) requesting or accepting lender assistance with call center or financial aid office staffing; or (3) requesting, accepting, or considering any lender's offer of funds for private educational student loans in exchange for concessions or promises.
Conditions the receipt of federal funds and assistance by schools and lenders on their compliance with part E. Establishes penalties for noncompliant schools and lenders, including: (1) a ban from participating in title VI programs; and (2) a $25,000 civil penalty (which may also be imposed on lenders not participating in such programs).
(Sec. 3) Requires an IHE with a preferred lender list to: (1) fully disclose on such list the reason for each lender's inclusion and students' right to choose other lenders; (2) include at least three unaffiliated lenders; and (3) establish and disclose a process to ensure that lenders are listed on the basis of the benefits they provide borrowers.
(Sec. 4) Amends the Truth in Lending Act to require private educational loan providers to inform consumers, in applications and solicitations for such loans, that they may qualify for federal educational assistance, that federal student loans may have more beneficial terms than private loans, and that they may obtain additional information concerning such assistance from their IHE and the Department of Education's website.
Requires such lenders to: (1) obtain written confirmation that a consumer understands such information and any other information the Board of Governors of the Federal Reserve System may require them to disclose; (2) make its model disclosure form information available; and (3) notify the relevant school of the proposed loan if the loan equals or exceeds $1,000.
(Sec. 5) Directs the Secretary to display a link to the Department's federal student financial aid website in a prominent place on the homepage of the Department's website. Authorizes the Secretary to use administrative funds available for the Department's operations and expenses to promote the availability of the financial aid website.
Requires the Secretary to collect and provide parents and students with easy access via the federal student financial aid website to detailed information concerning student financial aid options provided by other federal departments and agencies. Requires such other departments and agencies to respond promptly to the Secretary's requests for student financial aid information.