Sponsors (7)
The bill expands state and nonprofit alternatives to federal PLUS loans and strengthens borrower advisories—providing more local options and better information—while risking reduced federal protections for borrowers, potential market crowding by state lenders, and added administrative burden on colleges.
Students and parents gain access to state-run or nonprofit loan products that match or beat Direct PLUS loan terms at origination, increasing borrowing alternatives and potential competition that could lower costs or provide more local control over student loan options.
Students are required to receive institutional advisories to exhaust federal Title IV loans first and be informed about federal benefits like income-driven repayment and forgiveness before taking private or state loans, improving informed consent and borrower decision-making.
Borrowers who choose state-run loan programs remain exposed to non-federal loan risks (no federal guarantees), so students may lose federal protections and relief options if they avoid or replace federal Title IV borrowing.
Colleges and universities must add administrative steps to provide required advisories to every borrower before private or state loans, increasing institutional compliance burden and operational costs.
Expanding preferred lender arrangements to include state programs could advantage state lenders in campus referrals and potentially crowd out other private competitive options, altering campus lending markets and referral practices.
Based on analysis of 4 sections of legislative text.
Adds state-run, non-federal loan programs to the federal definition of preferred lender arrangements and sets eligibility, rate-parity, and borrower-advice requirements.
Expands the federal definition of “preferred lender arrangement” to explicitly include state-run, non-federal student loan programs and adds a clear statutory definition of a “State-based education loan program.” The definition sets eligibility rules and consumer protections: programs must be run by state agencies/authorities or nonprofits, be authorized under state law, not be federally funded/insured/guaranteed, offer loans with interest rates and fees at least as favorable as Direct PLUS loans (based on Truth in Lending Act calculations), and be available only to borrowers who have first been advised by their institution to exhaust federal Title IV Part D loan options and informed about federal loan benefits like income-driven repayment, forgiveness, and deferment/forbearance.
Introduced March 16, 2026 by Lisa Murkowski · Last progress March 16, 2026