Know Before You Owe Federal Student Loan Act of 2025
Sponsored By: Senator Chuck Grassley
Introduced
Summary
Clearer, personalized pre-loan counseling and loan-amount confirmation. This bill would rename Entrance Counseling to Pre-Loan Counseling and expand what borrowers must see before taking federal student loans. It would also add required quarterly statements while payments are paused.
Show full summary
- Students and borrowers: Pre-loan counseling would include an estimated monthly payment after taxes and living expenses using Bureau of Labor Statistics data, expected health insurance costs, and estimates based on starting wages for the program if available and the borrower’s total estimated debt including known private loans.
- Colleges and certification staff: Institutions would have to ensure borrowers complete pre-loan counseling and manually enter the exact dollar amount of Federal Direct Loan funding they want before the school certifies a disbursement for new Part D loans.
- Lenders and servicers: During any period when payments are not required the lender would send a quarterly statement showing original principal, current balance, interest rate, interest accrued since the last statement, total interest paid, aggregate payments made, how to make voluntary payments, and contact information for billing errors.
Your PRIA Score
Personalized for You
How does this bill affect your finances?
Sign up for a PRIA Policy Scan to see your personalized alignment score for this bill and every other piece of legislation we track. We analyze your financial profile against policy provisions to show you exactly what matters to your wallet.
Bill Overview
Analyzed Economic Effects
2 provisions identified: 2 benefits, 0 costs, 0 mixed.
Pre-loan counseling and confirmation
If enacted, this bill would rename entrance counseling to pre-loan counseling and expand what schools must tell you before a Federal Direct Loan disburses. Counseling would be triggered at the first disbursement of each new loan or the first disbursement in an award year when you get more than one new loan. You would get an estimate of likely monthly payments compared with estimated monthly income after taxes and common living expenses using BLS Consumer Expenditure Survey data and starting-wage data for your program when available. Counseling would also warn you to borrow only the minimum needed, explain how a high debt-to-income ratio raises repayment difficulty, list ways to reduce borrowing (scholarships, work-study, reduced expenses, other work), and explain how taking extra time to graduate raises total debt. The school would have to make you manually enter the exact dollar amount of Federal Direct Loan money you want before certifying the loan for disbursement. This manual confirmation would not apply to Direct Consolidation Loans or Direct PLUS loans made for a student.
Quarterly statements during pause
If enacted, this bill would require your eligible lender or servicer to send a simple statement every three months whenever you are not required to make payments. The statement would show the original principal and current balance for each loan and in total, each loan's interest rate, total interest paid on each loan, and how much interest accrued since the last statement. It would show the aggregate amount you have paid so far and include lender contact and website info and how to make voluntary payments while paused. The statement would explain that interest can accrue during school, deferment, or forbearance, that unpaid interest can be capitalized at repayment, and that small voluntary payments can reduce interest accrual over time.
Sponsors & CoSponsors
Sponsor
Chuck Grassley
IA • R
Cosponsors
Tina Smith
MN • D
Sponsored 5/1/2025
Maggie Hassan
NH • D
Sponsored 5/5/2025
Roll Call Votes
No roll call votes available for this bill.
View on Congress.govTake It Personal
Get Your Personalized Policy View
Start a Free Government Policy Watch to see how policy affects your household, then upgrade to PRIA Full Coverage for year-round monitoring.
Already have an account? Sign in