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Requires stronger pre-loan counseling and an explicit borrower confirmation of the exact dollar amount a student wants to borrow before a Federal Direct Loan is certified, and requires lenders to send clear quarterly statements to borrowers whenever they are not required to make loan payments. Also makes small wording updates to replace “entrance” counseling language with “pre-loan” counseling language in relevant Higher Education Act text. The changes focus on borrower understanding of costs, interest, and repayment options and on regular disclosure of loan balances and interest information during non-payment periods.
Amend the subsection heading of Section 485(l) of the Higher Education Act (text to be struck and inserted is indicated in the amendment language in the bill).
In paragraph (1)(A), replace the phrase "a disbursement to a first-time borrower of a loan" with "the first disbursement of each new loan (or the first disbursement in each award year if more than one new loan is obtained in the same award year)."
In paragraph (1)(A), clause (ii)(I), replace the phrase "an entrance counseling" with "a counseling."
Replace paragraph (2) subparagraph (G) so that pre-loan counseling must include an estimate of the borrower’s monthly payment compared to the borrower’s estimated monthly income after taxes, after living expenses (using Consumer Expenditure Survey data from the Bureau of Labor Statistics), after estimated health insurance costs, and after any other relevant expenses. That estimate must be based on (i) the best available data on starting wages for the borrower’s program of study, if available, and (ii) the borrower’s estimated total student loan debt, including (I) Federal debt, (II) private loan debt already incurred to the best of the institution’s knowledge, and (III) estimated future debt required to complete the program of study.
Add to paragraph (2) a new subparagraph (L): a statement that the borrower should borrow the minimum amount necessary to cover expenses and that the borrower does not have to accept the full amount of loans for which the borrower is eligible.
Redesignates existing subsection (f) as subsection (g) and inserts a new subsection (f) requiring eligible lenders to provide quarterly statements to borrowers during any period when the borrower is not required to make loan payments, specifying nine required disclosure elements (original principal amounts, current balance, interest rates, total interest paid, aggregate amounts paid including fees and principal, lender/servicer contact information and payment options including voluntary payments, explanations about paying accrued interest and capitalization, interest accrued since last statement and aggregate interest, and a note that small payments can offset interest accrual).
Amends section 487(e)(2)(B)(ii)(IV) of the Higher Education Act (20 U.S.C. 1094) by replacing the phrases 'Entrance and exit counseling' and 'entrance and exit counseling' with 'Pre-loan and exit counseling' and 'pre-loan and exit counseling', respectively.
Amends section 487A of the Higher Education Act (20 U.S.C. 1094a) by striking the phrase 'entrance and exit interviews' where it appears.
Amends subsection (l) of 20 U.S.C. 1092 (HEA section 485(l)) to revise timing and content of pre-loan counseling and to add a student confirmation requirement for loan amounts.
Primary effects: Students and student loan borrowers will get more comprehensive pre-loan counseling and must actively confirm the specific loan dollar amount before certification; this should increase borrower awareness of total costs and reduce accidental or excessive borrowing. Institutions of higher education will need to update counseling materials, loan application/certification flows, and student-facing systems to collect manual borrower-entered amounts and to cover the expanded counseling topics. Lenders and loan servicers must produce and deliver standardized quarterly statements during non-payment periods and include specified balance/interest and contact information; this increases ongoing disclosure and may require system and process changes. Outcomes: better-informed borrowers, potentially lower average borrowing per student, and clearer ongoing visibility into accrued interest during deferment/forbearance. Trade-offs: administrative and IT compliance costs for schools and lenders/servicers; a modest increase in borrower friction at the loan certification step (manual entry/confirmation). No changes to loan eligibility, repayment terms, interest rates, or federal funding are specified in the text provided.
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Referred to the House Committee on Education and Workforce.
Introduced May 8, 2025 by Mariannette Miller-Meeks · Last progress May 8, 2025
Referred to the House Committee on Education and Workforce.
Introduced in House
