S.887 - Know Before You Owe Federal Student Loan Act of 2019116th Congress (2019-2020)
|Sponsor:||Sen. Grassley, Chuck [R-IA] (Introduced 03/27/2019)|
|Committees:||Senate - Health, Education, Labor, and Pensions|
|Latest Action:||Senate - 03/27/2019 Read twice and referred to the Committee on Health, Education, Labor, and Pensions. (All Actions)|
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Summary: S.887 — 116th Congress (2019-2020)All Information (Except Text)
Introduced in Senate (03/27/2019)
Know Before You Owe Federal Student Loan Act of 2019
This bill expands lender disclosure requirements and modifies loan counseling requirements.
A lender must provide a quarterly statement to a Federal Family Education Loan or Direct Loan borrower during a period when loan payments are not required, including specified information on the loan and interest amounts. The statement must also explain the option to pay accrued interest while a student is in deferment or forbearance.
The bill requires an institution of higher education (IHE) that participates in federal student aid programs to provide pre-loan counseling to a student borrower of a federal student loan upon or prior to the first disbursement of each new loan. Currently, an IHE must provide one-time entrance counseling to a student who is a first-time federal student loan borrower.
The bill also revises and expands required elements of pre-loan counseling to include an estimate of the borrower's monthly payment amount compared to the borrower's estimated monthly income after taxes and other expenses, a statement to borrow the minimum necessary amount, a warning that a high debt-to-income ratio makes repayment more difficult, options to reduce borrowing, and an explanation of the importance of on-time graduation.
Prior to certifying a Federal Direct Loan disbursement to a student, an IHE must ensure that the student manually enters the exact dollar amount of the loan.