Students would have access to information and counseling about federal student loans and the student’s ability to repay them down the road under legislation introduced on Tuesday by U.S. Sen. Joni Ernst (R-IA).
The Know Before You Owe Federal Student Loan Act would enhance loan disclosure requirements of the Higher Education Act by requiring annual loan counseling. It would also require that students manually enter the desired amount of a federal direct loan to help ensure they receive the amount they need, not what they’re eligible for.
“Across the state of Iowa, many students look to going to college as a step toward a good education and career; however, what they don’t always see until after graduation is the mountain of debt they accrued from their federal student loans,” Ernst said. “The bipartisan Know Before You Owe Federal Student Loan Act provides the much needed counseling for students prior to borrowing to ensure they have the most comprehensive information on student loans before making a financial commitment.”
The bill would also require that student borrowers receive estimated loan debt-to-income ratio based on starting wages of the student’s program of study. Other information that would be shared with students includes a statement that the student should borrow the minimum amount needed, information about scholarship and work-study opportunities to reduce expenses, and guidance on the importance of graduating on time.
“With the federal government sharing roughly 90 percent of the student loan market, we must make sure students have access to the right tools and resources to succeed,” Ernst said.
Ernst introduced the bill with U.S. Sens. Chuck Grassley (R-IA) and Al Franken (D-MN).