text: 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).''.
target: 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.
feat_title: A bill to amend the Higher Education Opportunity Act to add disclosure requirements to the institution financial aid offer form and to amend the Higher Education Act of 1965 to make such form mandatory.