Sponsors (5)
The bill expands access to potentially lower-cost, locally controlled student loans with added counseling, but shifts borrowers away from federally guaranteed protections and may create budgetary and administrative costs for states and colleges.
Students and parents gain access to state-run loans that must match or beat Direct PLUS loan rates and fees at origination, potentially lowering borrowing costs and saving money for many borrowers.
Students will receive required counseling from their college about exhausting federal (Part D/Direct) options and loan benefits before taking state loans, improving informed decision-making and reducing risk of choosing costlier or less suitable loans.
State governments and nonprofits can offer alternative, locally controlled loan options that are not federally guaranteed, allowing tailored features and potentially faster or more responsive programs for residents.
Students who take state-run, non‑federal loans may lose federal protections and benefits tied to federally guaranteed loans (e.g., certain repayment plans, forgiveness options, or borrower safeguards), exposing them to greater financial risk.
Requiring states to match or beat Direct PLUS terms at origination could force states to subsidize rates or fees, straining state budgets and potentially shifting costs to taxpayers.
Mandating that institutions advise borrowers about federal options may increase administrative burden and compliance costs for colleges and universities.
Based on analysis of 4 sections of legislative text.
Amends the Higher Education Act to add state-run or state-approved, nonfederal education loan programs to the set of covered loan arrangements and defines what counts as a “State-based education loan program.” The bill requires those state-based loans to meet specific conditions — they must be made by a state agency/authority or nonprofit, not be federally funded/guaranteed, be authorized by state law, and offer interest rates and fees at least as favorable as Direct PLUS loans at origination. The bill also conditions borrower access to these state-based loans on having been advised by their college or university about federal part D (Direct) loan options and the key federal loan benefits (income-driven repayment, forgiveness, deferment/forbearance, interest subsidies, tax benefits). No new funding or appropriations are specified.
Introduced March 16, 2026 by Lisa Murkowski · Last progress March 16, 2026