Sponsors (3)
The bill increases borrower transparency and encourages more informed, restrained student borrowing—potentially reducing defaults and taxpayer costs—but does so at the cost of added administrative work, potential delays and expenses, and risks of inaccurate or overwhelming information for some borrowers.
Students and former students receive quarterly, loan-by-loan statements showing balances, interest rates, total interest paid, accrued interest since the last statement, voluntary payment guidance, and servicer contact/billing-error instructions, improving transparency, helping borrowers reduce interest costs, and making it easier to dispute servicing errors.
Students are shown estimated monthly loan payments alongside likely post-tax income after living and health expenses, must manually confirm the exact dollar amount they want to borrow, receive counseling at the first disbursement of each new loan/award year, and are presented options to reduce borrowing (scholarships, work-study, reduced expenses), which together make borrowing decisions more well
By encouraging minimal borrowing and warning about high debt-to-income ratios, the bill can reduce future defaults and long-term costs for students and taxpayers.
Schools, servicers, the Department of Education, and students face increased administrative burden and potentially slower processing: manual confirmation and extra counseling steps plus system/training updates may delay loan certification and disbursement and raise institutional compliance costs, risking cash-flow problems for timeline-sensitive, low-income students.
Students could receive inaccurate or misleading estimates of post-tax income and loan payments because the bill requires program-specific wage/expense calculations that may not reflect local labor markets or individual circumstances.
Servicers and lenders will incur additional costs to produce quarterly statements, and those higher administrative/mailing costs could be passed on to borrowers through fees or higher servicing costs.
Based on analysis of 4 sections of legislative text.
Requires expanded pre-loan counseling, borrower confirmation of exact federal loan amounts, and quarterly lender statements showing balances, interest, and repayment info.
Introduced May 1, 2025 by Charles Ernest Grassley · Last progress May 1, 2025
Requires stronger, earlier loan counseling and new borrower confirmations before schools certify federal student loans, and forces lenders to send regular statements while loans are in non-payment status. Schools must give a counseling session at the first disbursement of each new loan (or first disbursement in an award year) that compares expected monthly loan payments to post-tax income after living costs and tallies total estimated student debt. Students must also manually type the exact dollar amount of Federal Direct Loan funds they choose to borrow before the school can certify the loan (with limited exceptions). Requires lenders/servicers to send quarterly statements when payments are not required showing loan-by-loan and total balances, interest rates, interest accrued, total interest paid, payment history totals, contact information, and clear guidance about making voluntary payments and how interest accrues or capitalizes.