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Replaces the phrase "Entrance and exit counseling" with "Pre-loan and exit counseling" at the specified subsection.
Strikes the phrase "entrance and exit interviews" in 20 U.S.C. 1094a wherever it appears (replacement text not specified in the provided excerpt).
Redesignates existing subsection (f) as subsection (g) and inserts a new subsection (f) requiring eligible lenders to provide borrowers quarterly statements during any period when loan payments are not required, specifying nine required disclosure items.
Amends subsection (l) of Section 485 of the Higher Education Act (20 U.S.C. 1092) to (1) change timing language around required counseling and disbursement, (2) replace subparagraph (G) with a detailed required estimate of borrower monthly payment vs. post-tax income using BLS Consumer Expenditure Survey data and including current and projected debt, (3) add new counseling content requirements in new subparagraphs (L)–(O) (borrow minimum, debt-to-income warning, options to reduce borrowing, importance of graduating on time), and (4) add a new paragraph (3) requiring the student to manually enter the exact dollar amount of Federal Direct Loan funding desired with specified timing constraints.
Requires stronger, clearer student-loan counseling and borrower communications. Students must receive expanded pre-loan information (costs, payments vs. income, debt estimates, ways to borrow less, and importance of timely graduation) and must manually enter the exact dollar amount they want to borrow before a school certifies a Direct Loan. Lenders/servicers must send quarterly statements to borrowers during any period when payments are not required that show loan balances, interest, interest paid, total paid, and plain-language explanations about interest accrual, capitalization, and voluntary payments. Minor wording updates replace “entrance counseling” phrasing with “pre-loan counseling.”
Amend Section 485(l) of the Higher Education Act of 1965 (20 U.S.C. 1092(l)).
In the subsection heading, strike and insert text (subsection heading revised).
In paragraph (1)(A), change the trigger for counseling from "a disbursement to a first-time borrower of a loan" to "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 the broader term "a counseling."
Replace paragraph (2) subparagraph (G) with a requirement to provide an estimate comparing the borrower’s monthly loan payment 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 other relevant expenses. The estimate must be based on (i) 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 Federal debt, private loan debt to the best of the institution’s knowledge, and estimated future debt needed to complete the program of study.
Primary impacts:
Students and federal student-loan borrowers: More and clearer information before borrowing should help borrowers understand long-term costs and may reduce the amount they request. Manually entering the exact loan amount adds an explicit confirmation step that can prevent accidental over-acceptance of loan funds. Quarterly statements during nonpayment periods increase transparency about interest accrual and options for voluntary payments.
Institutions of higher education and financial aid offices: Must update counseling content, online loan-acceptance workflows, and certification procedures to require manual dollar-amount entry. These changes will require staff training, IT updates, and possible changes to third-party loan-acceptance tools or portals.
Lenders and loan servicers: Must generate and deliver compliant quarterly statements for borrowers while payments are paused. Servicers will need to ensure statements include required fields and plain-language explanations and maintain delivery and recordkeeping processes.
Federal student-aid oversight and compliance entities: Will need to incorporate these requirements into guidance, audits, and enforcement. Agencies may issue technical guidance about acceptable formats and delivery methods for statements and counseling materials.
Net effects and trade-offs:
Expand sections to see detailed analysis
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
Introduced May 1, 2025 by Charles Ernest Grassley · Last progress May 1, 2025
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
Introduced in Senate