Section 1. Short title

This Act may be cited as the Improving Financial Aid Offers for Students Act.

Sec. 2. Financial aid offer requirements

Section 484 of the Higher Education Opportunity Act (20 U.S.C. 1092 note) is amended to read as follows:

484. Financial aid offer requirements

(a) Financial aid offer

In this section, the term financial aid offer means a document or electronic notification that is provided or made available by a postsecondary educational institution to a student (or prospective student) that outlines the amounts and details of the financial aid being offered to the student (or prospective student), which may include scholarships, grants, loans, employment, or other forms of financial assistance, to pay for expenses related to attending the institution.

(b) Standard terminology and model form

The Secretary of Education, in consultation with the heads of relevant Federal agencies and in accordance with subsections (g) and (h), shall develop standard terminology and a model form for financial aid offers based on recommendations from representatives of students, veterans, servicemembers, students’ families, institutions of higher education (including 2-year public institutions, 2-year private nonprofit institutions, for-profit institutions, 4-year public institutions, and 4-year private nonprofit institutions), higher education associations, financial aid experts, financial aid administrators, secondary school and postsecondary counselors, college access professionals, nonprofit organizations, and consumer groups. Such model form shall meet the requirements of subsections (c) and (d) and use the standard terminology developed pursuant to subsection (g)(1).

(c) Key required contents for aid offer

An institution of higher education receiving Federal financial assistance under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) shall use a financial aid offer that includes the following items in a consumer-friendly manner that is simple and understandable, with costs listed first, followed by grants and scholarships, and with each of the following categories of information clearly separated from each other with separate headings:

(1) Cost information

(A) In general

Information on the student's estimated cost of attendance, including the following:

(i) Direct costs

The total cost of all items described in section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll) that are billed to the student by the institution or otherwise required by the institution for enrollment, including such total cost disaggregated by the cost of each such item, including, as determined under such section—

(I)

tuition and fees (and other required expenses); and

(II)

housing and food for a student participating in institutionally owned or operated food services or institutionally owned or operated housing.

(ii) Indirect costs

The total cost of all items described in section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll) that are not billed to the student by the institution or otherwise required by the institution for enrollment, including such total cost disaggregated by the cost of each such item, including, as determined under such section—

(I)

the component totals each for housing and food costs for students who reside off campus or off campus with family;

(II)

books, supplies, equipment, course materials, and rental or purchase of a personal computer (if such expenses are not charged with tuition and fees); and

(III)

transportation.

(B) Academic period

The academic period covered by the financial aid offer, and an explanation that the amount of financial aid offered may change—

(i)

for academic periods not covered by the financial aid offer; or

(ii)

by program.

(C) Enrollment status

An indication of whether cost and aid estimates are based on full-time or part-time enrollment.

(D) Estimated or set

An indication, as applicable, about whether the tuition and fees are estimated based on the previous year, or are set, for the academic period indicated in accordance with subparagraph (B).

(2) Grants and scholarships

The aggregate amount of grants and scholarships, differentiated by source, that the student does not have to repay, such as grant aid offered under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) and grant aid offered through other Federal programs, grant and scholarship aid offered by the institution, grant and scholarship aid offered by the State, and, if known, grant and scholarship aid from an outside source to the student for such academic period, including—

(A)

a disclosure that the grants and scholarships do not have to be repaid; and

(B)

if institutional aid is included—

(i)

the conditions under which the student can expect to receive similar amounts of such financial aid for each academic period the student is enrolled at the institution; and

(ii)

whether the institutional aid offer may change if grants or scholarships from outside sources are applied after the student receives the financial aid offer and, to the extent practicable, how that aid may change.

(3) Net price

(A) In general

The net price that the student, or the student's family on behalf of the student, is estimated to have to pay for the student to attend the institution for such academic period, equal to—

(i)

the cost of attendance as described in paragraph (1)(A) for the student for the period indicated in paragraph (1)(B); minus

(ii)

the amount of grant and scholarship aid described in paragraph (2) that is included in the financial aid offer.

(B) Disclosure

A disclosure that the net price is an estimate of the total expenses for the year and not equivalent to the amount the student will owe directly to the institution.

(4) Loans

(A) In general

Information on any loan under part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) (except a Federal Direct PLUS Loan under part D of that Act) that the institution recommends for the student for the academic period covered by the financial aid offer, which shall be made—

(i)

with clear use of the word loan to describe the recommended loan amounts; and

(ii)

with clear labeling of subsidized and unsubsidized loans.

(B) Disclosure on repayment

A disclosure that such loans have to be repaid and a disclosure that the student can borrow a lesser or, if applicable, greater amount than the recommended loan amount.

(C) Disclosure on interest rates and fees

A disclosure that the interest rates and fees on such loans are set annually and affect total cost over time, and a link to a Department of Education website that includes current information on interest rates and fees.

(D) Link to repayment calculator

A link to the Department of Education's repayment calculator website for students with instruction that this website contains customizable estimates of expected repayment costs under different loan repayment plans.

(5) Process for accepting, adjusting, or declining aid and next steps

(A) In general

The deadlines and a summary of the process (including the next steps) for—

(i)

accepting the financial aid offered;

(ii)

adjusting the amount of financial aid offered; and

(iii)

declining the financial aid offered.

(B) Information on paying costs

Information on when and how costs described in paragraph (1)(A)(i) must be paid, including a clear indication of whether such cost is required or optional for the student.

(C) Disclosure on verification of information

A disclosure that verification of information provided on the Free Application for Federal Student Aid, or other applicable financial aid applications, may require the student to submit further documentation.

(D) Contact information

Information about where a student or the student’s family can seek additional information regarding the financial aid offered, including contact information for the institution’s financial aid office and the Department of Education’s website on financial aid.

(d) Optional contents for financial aid offer

A financial aid offer made by an institution of higher education receiving Federal financial assistance under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) may include, at the institution’s discretion, the information described in paragraphs (1), (2), or (3). If an institution does include information described in paragraph (1), (2), or (3), such information shall meet the requirements of the applicable paragraphs.

(1) Additional options

Any of the following, which, if included, shall comply with the requirements of this paragraph:

(A)

Additional options and potential resources for paying for the amount listed in subsection (c)(3), such as tuition payment plans and the terms and conditions of those plans.

(B)

A disclosure that Federal Direct PLUS Loans made under part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.), private education loans, or other financing products may be available to cover remaining need, except that—

(i)

the institution may not include an amount for such Federal Direct PLUS Loans, private education loans, or other financing products, except as part of a revised or updated offer provided after such loan or financing product has been requested by the student or parent and approved or certified;

(ii)

if a Federal Direct PLUS Loan, private education loan, or other financing product amount is included in accordance with clause (i), the institution shall not represent the amount of such a loan or financing product in a manner in which that amount is commingled with the amount of other forms of financial assistance, such as those described in paragraphs (2) and (4) of subsection (c); and

(iii)

the institution shall include a disclosure that such loans and agreements—

(I)

are subject to an additional application process and have to be repaid by the borrower; and

(II)

may not be eligible for all the benefits available for Federal Direct Stafford Loans or Federal Direct Unsubsidized Stafford Loans.

(C)

Information about the net bill, which—

(i)

is defined as the amount the student, or the student’s family on behalf of the student, is estimated to have to pay directly to the institution for the academic period, equal to—

(I)

the direct costs of attending the covered institution as described in subsection (c)(1)(A)(i); minus

(II)

the amount of grant and scholarship aid described in subsection (c)(2) that is included in the financial aid offer; and

(ii)

shall include a clear explanation of how this net bill amount differs from the net price amount described in subsection (c)(3).

(2) Information on private education loans and other financing products

Information relating to private education loans and other financing products, which, if included, shall contain the following:

(A)

A disclosure that students considering borrowing to cover the cost of attendance should consider available Federal student loans and compare the terms and repayment options prior to accepting private education loans or other financing products, including an explanation that Federal student loans generally offer more flexible repayment and forgiveness options than private education loans and other financing products.

(B)

The impact of a proposed private education loan or other financing product on the student’s potential eligibility for other financial assistance, including Federal financial assistance under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.).

(C)

A statement explaining the student’s ability to select a private educational lender or other financing product provider of the student’s choice.

(3) Student employment

Information on work-study employment opportunities offered in accordance with part C of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087–51 et seq.), institutional work-study programs, or State work-study programs, which, if included shall contain the following:

(A)

The maximum annual amount the student may earn through the program.

(B)

A disclosure that any work-study amount offered may be—

(i)

subject to the availability of qualified employment opportunities upon the student's enrollment; and

(ii)

disbursed over time as earned by the student.

(e) Additional requirements for financial aid offers

Each financial aid offer made by an institution of higher education receiving Federal financial assistance under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) shall meet the following requirements:

(1)

The financial aid offer shall include, in addition to the requirements described in subsection (c), a concise summary, in plain language, of—

(A)

the terms and conditions of financial aid recommended under paragraphs (2) and (4) of subsection (c) (and subsection (d)(3), if included), and a method to provide students with additional information about such terms and conditions, such as links to the supplementary information; and

(B)

Federal, State, or institutional conditions required to receive and renew financial aid and a method to provide students with additional information about these conditions, such as links to the supplementary information.

(2)

The financial aid offer shall clearly distinguish between the aid offered under subsection (c)(2), subsection (c)(4), and subsection (d)(3) (if included), by including a subtotal for the aid offered in each of such paragraphs and by refraining from commingling the different types of aid described in such paragraphs.

(3)

The financial aid offer shall use standard terminology and definitions, as described in subsection (g)(1) and use plain language where possible.

(4)

If an institution’s recommended Federal student loan aid offered in subsection (c)(4) is less than the Federal maximum available to the student, the institution shall provide additional information on Federal student loans, including the types and amounts for which the student is eligible in an attached document or web page.

(5)

The financial aid offer shall include the standardized statement regarding the possible availability of Federal education benefits, as established by the Secretary in accordance with subsection (g)(2).

(6)

With respect to dependent students, any reference to private education loans in the financial aid offer shall be accompanied by—

(A)

information about the availability of, and terms and conditions associated with, Federal Direct PLUS Loans under part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) for the student's parents regardless of family income; and

(B)

a notification of the student’s increased eligibility for Federal student loans under part D of such title if the student's parents are not able to borrow under the Federal Direct PLUS Loan program under part D of such title.

(7)

The financial aid offer shall include an explanation of how the indirect costs included in the financial aid offer pursuant to subsection (c)(1)(A)(ii) are estimated, and a disclosure that the student’s actual costs for these items may differ from the estimated costs.

(8)

The financial aid offer shall not include any net price information except cost of attendance information in accordance with subsection (c)(1), net price information in accordance with subsection (c)(3), or (as applicable) net bill information in accordance with subsection (d)(1)(C).

(9)

The financial aid offer shall not be titled or otherwise referred to as an award.

(f) Supplemental information; removal of information

(1) Supplemental information

Nothing in this section shall preclude an institution of higher education receiving Federal financial assistance under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) from supplementing the financial aid offer with additional information if such additional information utilizes the same standard terminology identified in subsection (g)(1) and does not misrepresent costs, financial aid offered, or net price.

(2) Removal of information

Nothing in this section shall preclude an institution from deleting a required item on a financial aid offer if—

(A)

the student is ineligible for such item;

(B)

the institution does not participate in the program related to such item; or

(C)

the cost of attendance item is not applicable to the student.

(g) Standard terminology and definitions; additional benefits

(1) Standard terminology and definitions

Not later than 9 months after the date of enactment of the Improving Financial Aid Offers for Students Act, the Secretary of Education, in consultation with the heads of relevant Federal agencies, including the Secretary of the Treasury and the Director of the Consumer Financial Protection Bureau, and the individuals and entities described in subsection (b), shall establish standard terminology and definitions for the terms described in subsections (c) and (d).

(2) Additional benefits

The Secretary of Education, in consultation with the heads of relevant Federal agencies, including the Secretary of the Treasury, the Secretary of Veterans Affairs, the Secretary of Defense, and the Director of the Consumer Financial Protection Bureau, shall establish standard language notifying students that they may be eligible for education benefits (and where students can locate more information about such benefits) including benefits in accordance with each of the following:

(A)

Chapter 30, 31, 32, 33, 34, or 35 of title 38, United States Code.

(B)

Chapter 101, 105, 106A, 1606, 1607, or 1608 of title 10, United States Code.

(C)

Section 1784a, 2005, or 2007 of title 10, United States Code.

(3) Authority to Modify

The Secretary of Education may modify the standard terminology and definitions for the terms described in subsections (c) and (d) if such modifications are made after consultation with the individuals and entities described in subsection (b) and are issued not less than 12 months before the Free Application for Federal Student Aid for the affected award year first becomes available.

(h) Development of model financial aid offer form

(1) Model form

(A) In general

The Secretary of Education shall develop multiple draft financial aid offer forms for consumer testing, carry out consumer testing for such forms, and establish a finalized model financial aid offer form, in accordance with the process established under this subsection and the requirements of this section.

(B) Separate financial aid offer forms

The Secretary may develop separate model financial aid offer forms for—

(i)

undergraduate students and graduate students; and

(ii)

first-time students and returning students.

(2) Draft model form

Not later than 1 year after the date of enactment of the Improving Financial Aid Offers for Students Act, the Secretary of Education, in consultation with the heads of relevant Federal agencies, including the Secretary of the Treasury and the Director of the Consumer Financial Protection Bureau, and the individuals and entities described in subsection (b), shall design and produce multiple draft financial aid offer forms for consumer testing with postsecondary students or prospective students. In developing those forms, the Secretary shall ensure—

(A)

that the headings described in paragraphs (1) through (4) of subsection (c) are in the same font, appear in the same order, and are displayed prominently on the financial aid offer form, such that none of that information is inappropriately omitted or de-emphasized;

(B)

that the other information required in subsection (c) appears in a standard format and design on the financial aid offer; and

(C)

that the institution may include a logo or brand alongside the title of the financial aid offer.

(3) Consumer testing

(A) In general

Not later than 1 year after the date of enactment of the Improving Financial Aid Offers for Students Act, the Secretary of Education, in consultation with the heads of relevant Federal agencies, shall establish a process for consumer testing of the draft model forms developed under paragraph (2) among representatives of students (including low-income students, first-generation college students, adult students, veterans, servicemembers, and prospective students), students’ families (including low-income families, families with first-generation college students, and families with prospective students), institutions of higher education, secondary school and postsecondary counselors, and nonprofit consumer groups.

(B) Pilot

During such consumer testing, the Secretary may conduct a pilot in which eligible institutions, on a voluntary basis, use the draft forms developed under paragraph (2).

(C) Length of consumer testing

The Secretary of Education shall ensure that the consumer testing under this paragraph lasts no longer than 1 year after the process for consumer testing is developed under subparagraph (A).

(4) Final model form

(A) In general

The results of consumer testing under paragraph (3) shall be used in the final development of the model financial aid offer form.

(B) Reporting requirement

Not later than 3 months after the date the consumer testing under paragraph (3) concludes, the Secretary of Education shall submit to Congress and publish on its website the final model financial aid offer form and a report detailing the results of such testing, including whether the Secretary of Education added any additional items to the model financial aid offer.

(5) Authority to modify

The Secretary of Education may modify or remove the definitions, terms, formatting, or design of the model financial aid offer form based on the results of consumer testing required under this subsection and before finalizing the model form, or in subsequent consumer testing. The Secretary may also recommend additional changes to Congress.

Sec. 3. Mandatory use of terms; financial aid offer form requirements

Sec. 4. GAO study

Not later than 1 year after the date on which the financial aid offer form templates of institutions of higher education are submitted to the Secretary of Education in accordance with section 125 of the Higher Education Act of 1965, as added by section 3 of this Act, the Comptroller General of the United States shall prepare and submit to Congress, and make publicly available, an initial study of such financial aid offer form templates, and 3 years after the initial study is submitted to Congress, the Comptroller General shall submit a final study examining such templates. Both studies shall include recommendations about how to improve such templates, as appropriate. Additional studies of such financial aid offer form templates may be conducted, as determined necessary by the Comptroller General or the Chair or Ranking Member of the Committee on Health, Education, Labor, and Pensions of the Senate or the Committee on Education and Workforce of the House of Representatives.

Sec. 5. Rules of construction