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Informed Student Borrowing Act of 2023
3/12/2024, 12:34 PM
Summary of Bill S 1970
The main goal of the bill is to increase transparency and accountability in the student loan process. It requires colleges and universities to provide students with personalized information about their loan options, including the total amount borrowed, estimated monthly payments, and potential future earnings based on their chosen field of study. This information is intended to help students understand the financial implications of taking out student loans and make more informed decisions about their education and career paths.
Additionally, the bill requires schools to provide financial literacy counseling to students before they take out loans, to ensure they understand the terms and responsibilities of borrowing money for education. This counseling will cover topics such as budgeting, loan repayment options, and the consequences of defaulting on student loans. Overall, the Informed Student Borrowing Act of 2023 aims to empower students to make more informed decisions about their education and finances, ultimately reducing the burden of student loan debt and improving financial outcomes for graduates.
Congressional Summary of S 1970
Informed Student Borrowing Act of 2023
This bill revises and expands loan counseling for borrowers of federal student loans.
Specifically, the bill requires an institution of higher education (IHE) that participates in federal student aid programs to provide loan counseling to a student borrower of a federal student loan at the first disbursement of a loan in each award year. 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 loan counseling. For example, required elements of loan counseling must include (1) an explanation that the borrower must affirmatively determine and manually enter the federal loan amount that the borrower will borrow for each award year, and (2) sample monthly repayment amounts based on the standard repayment plan and the most commonly used income-driven repayment plan.
Each IHE must ensure that student borrowers and parent borrowers manually enter the exact dollar amount of the loan that they wish to borrow for the year.
If an IHE provides a student or prospective student with a financial aid award notification that includes funds under the Federal Work-Study Program, then the IHE must ensure that the notification includes an explanation that these funds are not directly awarded to the student or IHE and that such amounts must be earned through the student's completion of work over time.
