United States 115th Congress Status: Died 1 D cosponsors

HR 3836 — Student Loan Fair Prepayment Act

Last action — Referred to the Committee on Education and the Workforce, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

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  1. ✓
    Introduced
  2. ✓
    In Committee
  3. Died in session

This bill died with 115th Congress. It reached “In Committee” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.

This bill is no longer active — its legislative session has ended, so there is no live prognosis. It would have to be reintroduced in the current session to move again.

Summary

Student Loan Fair Prepayment Act This bill amends the Higher Education Act of 1965 to set forth how a student loan borrower's prepayment amount on a Federal Family Education Loan, Federal Direct Loan, or Federal Perkins Loan must be applied.

Bill Text

Sections of law this bill changes

3 sections in 2 laws

From the bill's own amending language, matched to the official United States Code (current through Public Law 119-124).

Consumer credit protection · 15 U.S.C. ch. 41 1 section
  • § 1638 Transactions other than under an open end credit plan Amends

    15 U.S.C. § 1638 — at 1638(e)

    The law today

    (a) Required disclosures by creditor For each consumer credit transaction other than under an open end credit plan, the creditor shall disclose each of the following items, to the extent applicable: (1) The identity of the creditor required to make disclosure. (2) (A) The “amount financed”, using that term, which shall be the amount of credit of which the consumer has actual use. This amount shall be computed as follows, but the computations need not be disclosed and shall not be disclosed with the disclosures conspicuously segregated in accordance with subsection (b)(1): (i) take the principal amount of the loan or the cash price less downpayment and trade-in; (ii) add any charges which are not part of the finance charge or of the principal amount of the loan and which are financed by the consumer, including the cost of any items excluded from the finance charge pursuant to section 1605 of this title; and (iii) subtract any charges which are part of the finance charge but which will be paid by the consumer before or at the time of the consummation of the transaction, or have been withheld from the proceeds of the credit. (B) In conjunction with the disclosure of the amount financed, a creditor shall provide a statement of the consumer’s right to obtain, upon a written request, a written itemization of the amount financed. The statement shall include spaces for a “yes” and “no” indication to be initialed by the consumer to indicate whether the consumer wants a written itemization of the amount financed. Upon receiving an affirmative indication, the creditor shall provide, at the time other disclosures are required to be furnished, a written itemization of the amount financed. For the purposes of this subparagraph, “itemization of the amount financed” means a disclosure of the following items, to the extent applicable: (i) the amount that is or will be paid directly to the consumer; (ii) the amount that is or will be credited to the consumer’s account to discharge obligations owed to the creditor; (iii) each amount that is or will be paid to third persons by the creditor on the consumer’s behalf, together with an identification of or reference to the third person; and (iv) the total amount of any charges described in the preceding subparagraph (A)(iii). (3) The “finance charge”, not itemized, using that term. (4) The finance charge expressed as an “annual percentage rate”, using that term. This shall not be required if the amount financed does not exceed $75 and the finance charge does not exceed $5, or if the amount financed exceeds $75 and the finance charge does not exceed $7.50. (5) The sum of the amount financed and the finance charge, which shall be termed the “total of payments”. (6) The number, amount, and due dates or period of payments scheduled to repay the total of payments. (7) In a sale of property or services in which the seller is the creditor required to disclose pursuant to section 1631(b) of this title, the “total sale price”, using that term, which shall be the total of the cash price of the property or services, additional charges, and the finance charge. (8) Descriptive explanations of the terms “amount financed”, “finance charge”, “annual percentage rate”, “total of payments”, and “total sale price” as specified by the Bureau. The descriptive explanation of “total sale price” shall include reference to the amount of the downpayment. (9) Where the credit is secured, a statement that a security interest has been taken in (A) the property which is purchased as part of the credit transaction, or (B) property not purchased as part of the credit transaction identified by item or type. (10) Any dollar charge or percentage amount which may be imposed by a creditor solely on account of a late payment, other than a deferral or extension charge. (11) A statement indicating whether or not the consumer is entitled to a rebate of any finance charge upon refinancing or prepayment in full pursuant to acceleration or o...

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Higher education resources and student assistance · 20 U.S.C. ch. 28 2 sections
  • § 1087dd Terms of loans Amends

    20 U.S.C. § 1087dd — at 1087dd(c)(1)(C)

    The law today

    (a) Terms and conditions (1) Loans from any student loan fund established pursuant to an agreement under section 1087cc of this title to any student by any institution shall, subject to such conditions, limitations, and requirements as the Secretary shall prescribe by regulation, be made on such terms and conditions as the institution may determine. (2) (A) Except as provided in paragraph (4), the total of loans made to a student in any academic year or its equivalent by an institution of higher education from a loan fund established pursuant to an agreement under this part shall not exceed— (i) $5,500, in the case of a student who has not successfully completed a program of undergraduate education; or (ii) $8,000, in the case of a graduate or professional student (as defined in regulations issued by the Secretary). (B) Except as provided in paragraph (4), the aggregate unpaid principal amount for all loans made to a student by institutions of higher education from loan funds established pursuant to agreements under this part may not exceed— (i) $60,000, in the case of any graduate or professional student (as defined by regulations issued by the Secretary, and including any loans from such funds made to such person before such person became a graduate or professional student); (ii) $27,500, in the case of a student who has successfully completed 2 years of a program of education leading to a bachelor’s degree but who has not completed the work necessary for such a degree (determined under regulations issued by the Secretary), and including any loans from such funds made to such person before such person became such a student; and (iii) $11,000, in the case of any other student. (3) Regulations of the Secretary under paragraph (1) shall be designed to prevent the impairment of the capital student loan funds to the maximum extent practicable and with a view toward the objective of enabling the student to complete his course of study. (4) In the case of a program of study abroad that is approved for credit by the home institution at which a student is enrolled and that has reasonable costs in excess of the home institution’s budget, the annual and aggregate loan limits for the student may exceed the amounts described in paragraphs (2)(A) and (2)(B) by 20 percent. (b) Demonstration of need and eligibility required (1) A loan from a student loan fund assisted under this part may be made only to a student who demonstrates financial need in accordance with part F of this subchapter, who meets the requirements of section 1091 of this title, and who provides the institution with the student’s drivers license number, if any, at the time of application for the loan. A student who is in default on a loan under this part shall not be eligible for an additional loan under this part unless such loan meets one of the conditions for exclusion under section 1087bb(g)(1)(E) of this title. (2) If the institution’s capital contribution under section 1087bb of this title is directly or indirectly based in part on the financial need demonstrated by students who are (A) attending the institution less than full time, or (B) independent students, then a reasonable portion of the loans made from the institution’s student loan fund containing the contribution shall be made available to such students. (c) Contents of loan agreement (1) Any agreement between an institution and a student for a loan from a student loan fund assisted under this part— (A) shall be evidenced by note or other written instrument which, except as provided in paragraph (2), provides for repayment of the principal amount of the loan, together with interest thereon, in equal installments (or, if the borrower so requests, in graduated periodic installments determined in accordance with such schedules as may be approved by the Secretary) payable quarterly, bimonthly, or monthly, at the option of the institution, over a period beginning nine months after the date on which the student...

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  • § 1087e Terms and conditions of loans Amends

    20 U.S.C. § 1087e — at 1087e(d)

    The law today

    (a) In general (1) Parallel terms, conditions, benefits, and amounts Unless otherwise specified in this part, loans made to borrowers under this part shall have the same terms, conditions, and benefits, and be available in the same amounts, as loans made to borrowers, and first disbursed on June 30, 2010, under sections 1078, 1078–2, 1078–3, and 1078–8 of this title. (2) Designation of loans Loans made to borrowers under this part that, except as otherwise specified in this part, have the same terms, conditions, and benefits as loans made to borrowers under— (A) section 1078 of this title shall be known as “Federal Direct Stafford Loans”; (B) section 1078–2 of this title shall be known as “Federal Direct PLUS Loans”; (C) section 1078–3 of this title shall be known as “Federal Direct Consolidation Loans”; and (D) section 1078–8 of this title shall be known as “Federal Direct Unsubsidized Stafford Loans”. (3) Termination of authority to make interest subsidized loans and Federal Direct PLUS loans to graduate and professional students (A) Termination of authority to make interest subsidized loans to graduate and professional students Subject to subparagraph (B), and notwithstanding any provision of this part or part B— (i) for any period of instruction beginning on or after July 1, 2012, a graduate or professional student shall not be eligible to receive a Federal Direct Stafford loan under this part; and (ii) for any period of instruction beginning on July 1, 2012, and ending on June 30, 2026, the maximum annual amount of Federal Direct Unsubsidized Stafford loans such a student may borrow in any academic year (as defined in section 1088(a)(2) of this title) or its equivalent shall be the maximum annual amount for such student determined under section 1078–8 of this title, plus an amount equal to the amount of Federal Direct Stafford loans the student would have received in the absence of this subparagraph. (B) Exception Subparagraph (A) shall not apply to an individual enrolled in course work specified in paragraph (3)(B) or (4)(B) of section 1091(b) of this title. (C) Termination of authority to make Federal Direct PLUS loans to graduate and professional students Subject to paragraph (8) and notwithstanding any provision of this part or part B, for any period of instruction beginning on or after July 1, 2026, a graduate or professional student shall not be eligible to receive a Federal Direct PLUS Loan under this part. (4) Graduate and professional annual and aggregate limits for Federal Direct Unsubsidized Stafford loans beginning July 1, 2026 (A) Annual limits beginning July 1, 2026 Subject to paragraphs (7)(A) and (8), beginning on July 1, 2026, the maximum annual amount of Federal Direct Unsubsidized Stafford loans— (i) a graduate student, who is not a professional student, may borrow in any academic year or its equivalent shall be $20,500; and (ii) a professional student may borrow in any academic year or its equivalent shall be $50,000. (B) Aggregate limits Subject to paragraphs (6), (7)(A), and (8), beginning on July 1, 2026, the maximum aggregate amount of Federal Direct Unsubsidized Stafford loans, in addition to the amount borrowed for undergraduate education, that— (i) a graduate student— (I) who is not (and has not been) a professional student, may borrow for programs of study described in subparagraph (C)(i) shall be $100,000; or (II) who is (or has been) a professional student, may borrow for programs of study described in subparagraph (C)(i) shall be an amount equal to— (aa) $200,000; minus (bb) the amount such student borrowed for programs of study described in subparagraph (C)(ii); and (ii) a professional student— (I) who is not (and has not been) a graduate student, may borrow for programs of study described in subparagraph (C)(ii) shall be $200,000; or (II) who is (or has been) a graduate student, may borrow for programs of study described in subparagraph (C)(ii) shall be an amount equal to— (aa) $200,000...

    314 other bills also change this section · Follow it → Official text at uscode.house.gov ↗

How this bill changes current law

3 changes Share ↗

Compared against current U.S. Code AI-generated reading aid — verify against the official bill.

The bill establishes requirements for how prepayment amounts on student loans are to be applied, specifically prioritizing payments based on interest rates and principal balances.

  • 20 U.S.C. 1087e(d)

    (6) Application of prepayment amounts.-- (A) Requirement.--Notwithstanding any other provision of this subsection or any other provision of law, with respect to loans made to an eligible borrower under this part or part B, which are held by the same holder and-- (i) which have different applicable rates of interest, the holder of such loans shall, unless otherwise requested by the borrower in writing, apply the borrower's prepayment amount (within the meaning of section 682.209(b)(2) of title 34, Code of Federal Regulations, or a successor regulation) for one or more of such loans, first toward the outstanding balance of principal due on the loan with the highest applicable rate of interest among such loans; and (ii) which have the same applicable rates of interest, the holder of such loans shall, unless otherwise requested by the borrower in writing, apply the borrower's prepayment amount (as described in clause (i)) for one or more of such loans, first toward the outstanding balance of principal due on the loan with the highest principal balance among such loans. (B) Eligible borrower.-- (i) In general.--The term 'eligible borrower' means a borrower with no outstanding balance of fees, including collection costs and authorized late charges, due on any loan made under this part or part B. (ii) Prepayment amounts.--A prepayment amount (as described in subparagraph (A)) made by a borrower who is not an eligible borrower to a holder shall be applied first toward the borrower's outstanding balance of fees, including collection costs and authorized late charges, due on any loan made under this part or part B held by such holder. (C) Exceptions.--This paragraph shall not apply to an income-based repayment plan under section 493C or an income contingent repayment plan under section 455(d)(1)(D), such as a Pay As You Earn repayment plan.

    This adds a new section governing the application of prepayment amounts to loans, ensuring they are applied to the highest interest or principal balance loans first.

  • 20 U.S.C. 1087dd(c)(1)(C)

    and → and (iii) shall provide that the institution shall, in the case of a borrower with no outstanding balance of fees (including collection costs and authorized late charges) due on the loans held by the institution and who repays more than the amount due for a repayment period, with respect to loans held by the same institution and-- (I) which have different applicable rates of interest, use the excess to prepay (within the meaning of section 674.31(b)(4)(iv) of title 34, Code of Federal Regulations, or a successor regulation) the principal due on the loan with the highest applicable rate of interest among such loans, unless otherwise requested by the borrower in writing; and (II) which have the same applicable rates of interest, use the excess to prepay (as described in subclause (I)) the principal due on the loan with the highest principal balance among such loans, unless otherwise requested by the borrower in writing; and (iv) shall provide that the institution shall, in the case of a borrower with an outstanding balance of fees (such as collection costs and authorized late charges) due on the loans held by the institution and who repays more than the amount due for a repayment period, first apply such excess toward such outstanding balance of fees;

    This updates the rules for institutions regarding the handling of excess payments made on Perkins loans.

  • 15 U.S.C. 1638(e)

    (12) Application of prepayment amounts.-- (A) In general.--Notwithstanding any other provision of law, with respect to a borrower with more than one private education loan which are held by the same holder and-- (i) which have different applicable rates of interest, the holder of such loans shall, unless otherwise requested by the borrower in writing, apply the borrower's prepayment amount (within the meaning of section 682.209(b)(2) of title 34, Code of Federal Regulations, or a successor regulation) for one or more of such loans, first toward the outstanding balance of principal due on the loan with the highest applicable rate of interest among such loans; and (ii) which have the same applicable rates of interest, the holder of such loans shall, unless otherwise requested by the borrower in writing, apply the borrower's prepayment amount (as described in clause (i)) for one or more of such loans, first toward the outstanding balance of principal due on the loan with the highest principal balance among such loans. (B) Exception.-- (i) In general.--Subparagraph (A) shall not apply to any prepayment amount made by a borrower to a holder if the borrower has an outstanding balance of fees, including collection costs and authorized late charges, due on any private education loan held by such holder. (ii) Prepayment amounts.--A prepayment amount made by a borrower described in clause (i) of this subparagraph to a holder shall be applied first toward the borrower's outstanding balance of fees, including collection costs and authorized late charges, due on any private education loan held by such holder.

    This introduces a similar framework for private education loans regarding the application of prepayment amounts as for FFEL and Direct loans.

Action History

  1. Introduced in House

  2. Introduced in House

  3. Referred to the Committee on Education and the Workforce, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

  4. Referred to the Committee on Education and the Workforce, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Sponsors

Sponsorship breakdown

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1 sponsors · 0 co-sponsors · 546 not signed on

Sponsors (1)

Co-sponsors (0)

None.

Not signed on (546)

546 members have not signed on to this bill.

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"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Subjects

finance education
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Frequently asked questions

What does HR 3836 do?
Student Loan Fair Prepayment Act This bill amends the Higher Education Act of 1965 to set forth how a student loan borrower's prepayment amount on a Federal Family Education Loan, Federal Direct Loan, or Federal Perkins Loan must be applied.
Who sponsors HR 3836?
HR 3836 is sponsored by Davis, Susan A. (Democratic).
What is the current status of HR 3836?
This bill died with 115th Congress. It reached “In Committee” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.
Where can I track HR 3836?
Track HR 3836 free on One Click Politics — get push/email alerts when it moves.

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