To require holders of Federal student loans and private education loans to apply prepayment amounts toward loans with the highest rates of interest.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Student Loan Prepayment Standardization Act''.
SEC. 2. APPLICATION OF PREPAYMENT AMOUNTS.
Section 455(d) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)) is amended by adding at the end the following new paragraph: ``(6) Application of prepayment amounts.-- ``(A) In general.--Notwithstanding any other provision of this subsection or any other provision of law, with respect to private education loans or loans under this part or part B made to a borrower, which are held by the same holder and which have different applicable rates of interest, the holder of such loans shall apply the borrower's prepayment amount for such loans, first toward any fees due on such loans (including any late charges accrued or collection costs), and then, except if otherwise requested by the borrower, toward the outstanding balance of interest and principal due on the loan with the highest applicable rate of interest among such loans. ``(B) Income-based repayment.--Subparagraph (A) shall not apply to an income-based repayment plan under section 493C. ``(C) Definition.--The term `private education loan' has the meaning given the term in section 140 of the Truth in Lending Act.''.
SEC. 3. CONTRACT REQUIREMENT.
Section 456(a)(2) of the Higher Education Act of 1965...