State-Based Education Loan Awareness Act

Recognition of state-run student loans

If enacted, the bill would create a legal category called a State-based education loan program. These programs would have to be run by a State agency, State authority, or nonprofit and not be funded, insured, or guaranteed by the federal government. Loans would need interest rates and fees at least as favorable as Direct PLUS loans when made, using Truth in Lending rules to compare. The bill would also add these state loan arrangements into federal school disclosure rules so schools and states include them in required agreements. State loans would only be available to borrowers who were told by their school to exhaust federal Part D loans first and who were informed about federal loan rates, income-driven repayment, forgiveness, deferment or forbearance, interest subsidies, and tax benefits.