Know Before You Owe Federal Student Loan Act of 2025

House Votes

This bill would change how federal student loans are explained and managed for students. Before taking each new loan, students would get clearer, more practical counseling. That counseling would include a rough monthly payment estimate compared to expected take‑home pay and living costs, using data tied to their program, plus a picture of total debt needed to finish school. It would also urge students to borrow only what they need, warn about high debt-to-income ratios, suggest ways to cut borrowing (like scholarships, work‑study, or lower expenses), and explain why finishing on time matters. Importantly, students would have to manually enter the exact dollar amount they want to borrow before the school certifies the loan, after completing this counseling .

When borrowers are not required to make payments (for example, while in school or in deferment), lenders would send a quarterly statement. It would show original loan amounts, current balances, interest rates, how much interest and fees have been paid, and how to contact the servicer. The statement would explain that paying interest during school or deferment is optional, that unpaid interest will be added to the loan later (which increases total costs), how much interest has built up since the last statement, and how even small payments can reduce interest over time .

Key points

• Who is affected: Students with federal loans, colleges and universities, and loan servicers/lenders .
• What changes: Stronger pre‑loan counseling tied to expected income and total debt; student must type in the exact loan amount they want; quarterly statements during non‑payment periods with clear interest and cost details .