article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Understanding the True Cost of College Act of 2012''. SEC. 2. INSTITUTION FINANCIAL AID OFFER FORM. (a) Institution Financial Aid Offer Form.--Section 484 of the Higher Education Opportunity Act (20 U.S.C. 1092 note) is amended-- (1) by striking subsection (a) and inserting the following: ``(a) Standard Format.--The Secretary of Education, in consultation with the heads of relevant Federal agencies, shall develop a standard format for financial aid offer forms based on recommendations from representatives of students, students' families, institutions of higher education, secondary school and postsecondary counselors, and nonprofit consumer groups.''; (2) by striking subsection (b) and inserting the following: ``(b) Key Required Contents for Offer Form.--The standard format developed under subsection (a) shall include, in a consumer-friendly manner that is simple and understandable, the following items clearly separated from each other and listed on the first page of the financial aid offer form in either electronic or written format: ``(1) Information on the student's cost of attendance based on the most current costs for the academic period covered by the financial aid offer form, including the following: ``(A) Tuition and fees, as determined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll). ``(B) Room and board costs, as determined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll). ``(C) Books and supplies, as determined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll). ``(D) Transportation, as determined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll). ``(E) Miscellaneous personal expenses, as determined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll). ``(2) The amount of financial aid that the student does not have to repay, such as scholarships, grant aid offered under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), or grant aid offered by the institution, a State, or an outside source to the student for such academic period, including a disclosure that the financial aid does not have to be repaid and whether the student can expect to receive similar amounts of such financial aid for each academic period the student is enrolled at the institution. ``(3) The net amount that the student, or the student's family on behalf of the student, will have to pay for the student to attend the institution for such academic period, equal to-- ``(A) the cost of attendance as described in paragraph (1) for the student for such academic period, minus ``(B) the amount of financial aid described in paragraph (2) that is included in the financial aid offer form. ``(4) Work study assistance, including a disclosure that the aid must be earned by the student and a disclosure that the assistance offered is subject to the availability of employment opportunities. ``(5) The types and amounts of loans under part D or E of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq., 1087aa et seq.) that the institution recommends for the student for such academic period, a disclosure that such loans have to be repaid, a disclosure that the student can borrow a lesser amount than the recommended loan amount, a clear use of the word `loan' to describe the recommended loan amounts, the interest rates, fees, the expected monthly repayment amounts assuming a 10-year repayment plan, and the total amounts the student will pay over the life of the loans. ``(6) 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. ``(7) A disclosure that Federal student loans offer generally more favorable terms and beneficial repayment options than private education loans so students should examine available Federal student loan options before applying for private education loans, and an explanation to be written by the Secretary of Education, in consultation with the heads of relevant Federal agencies, of the benefits unique to Federal student loans, including various repayment plans, loan forgiveness, and loan deferment, and the terms to examine carefully if considering a private education loan. ``(8) The deadline and summary of the process, if any, for accepting the financial aid offered in the financial aid offer form. ``(9) The academic period covered by the financial aid offer form and a clear indication whether the aid offered is based on full-time or part-time enrollment. ``(10) With respect to institutions where more than 30 percent of enrolled students borrow loans to pay for their education, the institution's most recent cohort default rate, as defined in section 435(m) of the Higher Education Act of 1965 (20 U.S.C. 1085(m)), compared to the national average cohort default rate. ``(11) Any other information the Secretary of Education, in consultation with the heads of relevant Federal agencies, determines necessary so that students and parents can make informed loan borrowing decisions, including quality metrics such as percentage of students at the institution who take out student loans and average debt at graduation for students at the institution.''; and (3) by adding at the end the following: ``(c) Other Required Contents for the Offer Form.--The standard format developed under subsection (a) shall also include the following information to be included on the financial aid offer form in a concise format determined by the Secretary of Education, in consultation with the heads of relevant Federal agencies: ``(1) A concise summary of the terms and conditions of financial aid recommended under paragraphs (2), (4), and (5) of subsection (b) and a method to provide students with additional information about such terms and conditions, such as links to the supplementary information, including that the student may be eligible for longer loan repayment terms. ``(2) At the institution's discretion, additional options for paying for the net amount listed in subsection (b)(3), such as the amount recommended to be paid by the student or student's family, Federal Direct PLUS Loans under section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e), or private education loans. If the institution recommends private education loans, as defined in section 140 of the Truth in Lending Act (15 U.S.C. 1650), the financial aid offer form shall contain the additional following disclosures on the offer form: ``(A) The availability of, and the student's potential eligibility for, Federal financial assistance under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.). ``(B) The impact of a proposed private education loan 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) The student's ability to select a private educational lender of the student's choice. ``(D) The student's right to accept or reject a private education loan within the 30-day period following a private educational lender's approval of a student's application and a student's 3-day right-to- cancel period. ``(E) With respect to dependent students, any reference to private education loans shall be accompanied by information about the recommended family contribution and the availability of, and terms and conditions associated with, Federal Direct PLUS Loans under section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e) for the student's parents regardless of family income, and of the student's increased eligibility for Federal student loans under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) if the student's parents are not able to borrow under the Federal Direct PLUS Loan program. ``(3) The following disclosures: ``(A) That the financial aid offer form only contains information for 1 academic period and the financial aid offered in following academic periods may change, unless the institution is offering aid that covers multiple academic periods. ``(B) How non-institutional scholarships awarded to the student affect the financial aid package offered to the student. ``(C) A concise summary of any Federal 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. ``(d) Additional Requirements for Financial Aid Offer Form.--In addition to the requirements listed under subsections (b) and (c), the financial aid offer form shall meet the following requirements: ``(1) Clearly distinguish between the aid offered in paragraphs (2), (4), and (5) of subsection (b), 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. ``(2) Use standard definitions and names for the terms described in subsection (b) that are developed by the Secretary of Education in consultation with the heads of relevant Federal agencies, representatives of institutions of higher education, nonprofit consumer groups, students, and secondary school and higher education guidance counselors, not later than 3 months after the date of enactment of the Understanding the True Cost of College Act of 2012. ``(3) If an institution's recommended Federal student loan aid offered in subsection (b)(5) 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 webpage. ``(4) Use standard formatting and design that the Secretary of Education, in consultation with the heads of relevant Federal agencies, representatives of institutions of higher education, nonprofit consumer groups, students, and secondary school and higher education guidance counselors determine is appropriate to produce multiple draft financial aid offer designs for consumer testing not later than 3 months after the date of enactment of the Understanding the True Cost of College Act of 2012 to ensure-- ``(A) that figures described in paragraphs (1) through (5) of subsection (b) are in the same font, appear in the same order, and are displayed prominently on the first page of the financial aid offer form whether produced in written or electronic format; and ``(B) that the other information required in (b) and (c) appears in a standard format and design on the financial aid offer form. ``(5) Include an attestation that the student has accessed and read the financial aid offer form, if provided to the student in electronic format. ``(6) Include language developed by the Secretary of Education, in consultation with the heads of relevant Federal agencies, notifying eligible students that they may be eligible for education benefits, and where they can locate more information about such benefits, described in the following provisions: ``(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. ``(e) Additional Information.--Nothing in this section shall preclude an institution from supplementing the financial aid offer form with additional information so long as such additional information supplements the financial aid offer form and is not located on the financial aid offer form. ``(f) Consumer Testing.-- ``(1) In general.--Not later than 3 months after the date of enactment of the Understanding the True Cost of College Act of 2012, the Secretary of Education, in consultation with the heads of relevant Federal agencies, shall establish a process to submit the financial aid offer form developed under this section for consumer testing among representatives of students (including low-income students, first generation college students, adult students, 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. ``(2) Length of consumer testing.--The Secretary of Education shall ensure that the consumer testing lasts no longer than 6 months after the process for consumer testing is developed under paragraph (1). ``(3) Use of results.--The results of consumer testing under paragraph (1) shall be used in the final development of the financial aid offer form. ``(4) Reporting requirement.--Not later than 3 months after the date the consumer testing under paragraph (1) concludes, the Secretary of Education shall submit to Congress the final standard financial aid offer form and a report detailing the results of such testing, including whether the Secretary added any additional items to the standard financial aid offer form pursuant to subsection (b)(10). ``(5) Authority to modify.--The Secretary of Education may modify the definitions, terms, formatting, and design of the financial aid offer form based on the results of consumer testing required under this subsection and before finalizing the form.''. (b) Mandatory Form.--Part B of title I of the Higher Education Act of 1965 (20 U.S.C. 1011 et seq.) is amended by adding at the end the following: ``SEC. 124. USE OF MANDATORY FINANCIAL AID OFFER FORM. ``(a) In General.--Notwithstanding any other provision of law, each institution of higher education that receives Federal financial assistance under this Act shall use the financial aid offer form developed under section 484 of the Higher Education Opportunity Act (20 U.S.C. 1092 note) in providing written or electronic financial aid offers to students enrolled in, or accepted for enrollment in, the institution. ``(b) Effective Date.--The requirement under subsection (a) shall take effect 8 months after the Secretary of Education finalizes the offer form developed under section 484(a) of the Higher Education Opportunity Act (20 U.S.C. 1092 note).''.
summary: Understanding the True Cost of College Act of 2012 - Amends the Higher Education Opportunity Act to refer to the Secretary of Education's model institution of higher eduction (IHE) financial aid offer form as the standard form. Requires the standard form to include certain additional items, such as: (1) information concerning work study assistance, including its dependence on the availability of employment opportunities; (2) the disclosure that federal student loans offer generally more favorable terms and repayment options than private education loans; (3) the deadline for and a summary of the financial aid acceptance process; (4) the academic period covered by the offer and whether the aid is based on full-time or part-time enrollment; and (5) the IHE's most recent cohort default rate compared to the national average cohort default rate, if more than 30% of the school's students take out student loans. Requires more detailed information to be included on the form. Includes among those details, with respect to federal education loans, information: (1) identifying the type and amount of loan recommended for the applicable student; (2) clearly indicating that such loans need to be repaid; (3) disclosing the student's right to borrow less than the recommended amount; and (4) detailing the interest rates, fees, expected monthly repayment amounts, and sums to be paid over the life of such loans. Requires that certain steps be taken to improve the clarity of the form and provide recipients with access to additional information. Directs the Secretary, before finalizing the standard form, to submit it to consumer testing among students, their families, IHEs, secondary school and postsecondary counselors, and nonprofit consumer groups. Amends title IV (Student Assistance) of the Higher Education Act of 1965 to require each IHE receiving federal financial assistance under the Act to use the standard form in providing written or electronic financial aid offers to students enrolled in, or accepted for enrollment in, the IHE.