H.R. 3298: Know Before You Owe Federal Student Loan Act of 2025

This bill, known as the Know Before You Owe Federal Student Loan Act of 2025, aims to amend the counseling requirements for borrowers of federal student loans. The main goals of the bill include ensuring that borrowers are better informed about their loans before they accept them and making certain changes to the information that educational institutions must provide. Below are the key components of the bill:

1. Pre-Loan Counseling Requirements

The bill changes the current "Entrance Counseling" to "Pre-Loan Counseling." This requires institutions to provide detailed counseling to students before they take out a new loan. Key aspects include:

• Providing students with a detailed estimate of their potential monthly payment compared to their expected monthly income, considering factors such as taxes, living expenses, and health insurance costs.
• Informing students about their total estimated student loan debt, including both federal and private loans, as well as any future borrowing needed to complete their program of study.
• Encouraging students to borrow only the minimum amount necessary for their expenses and warning them about the impact of a high debt-to-income ratio on loan repayment difficulty.
• Offering options for reducing borrowing, such as scholarships, work-study programs, and reducing overall expenses.
• Emphasizing the importance of graduating on time to avoid additional borrowing costs.

2. Borrower Confirmation of Loan Amount

The bill requires that students manually enter the exact dollar amount of federal student loan funding they wish to borrow as part of the acceptance process. This confirmation must happen before the loan is certified for disbursement, ensuring that students are fully aware of the amount they are committing to borrow.

3. Periodic Disclosures During Non-Payment Periods

For borrowers who are not required to make payments on their loans, lenders must provide quarterly statements. These statements will include:

• The original principal amounts of the loans and the current balance.
• The interest rates for each loan.
• Total interest paid to date.
• An explanation of the option to pay interest while in school or during deferment, and the consequences of not doing so.
• Information on how to make voluntary payments even when loans are not in repayment status.

4. Conforming Amendments

The bill also updates various references in the Higher Education Act to reflect the change from "Entrance and Exit Counseling" to "Pre-Loan and Exit Counseling."

Relevant Companies

• SLM Corporation (SLM) - As a key provider of student loans, SLM Corporation may be directly impacted by the changes in loan counseling requirements and borrower education stipulated in the bill.
• Navient Corporation (NAVI) - This company, involved in student loan servicing, may need to adjust its communication and reporting processes to comply with the new disclosure and counseling requirements.