II 

114TH CONGRESS 

1ST SESSION S. 2043 

To revise counseling requirements for certain borrowers of student loans 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 16, 2015 

Mr. GRASSLEY introduced the following bill; which was read twice and referred 

to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To revise counseling requirements for certain borrowers of 

student loans and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Know Before You Owe 

5 Federal Student Loan Act of 2015’’. 


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1 SEC. 2. REQUIRED PERIODIC DISCLOSURES DURING PERI2 ODS WHEN LOAN PAYMENTS ARE NOT RE3 QUIRED. 

4 Section 433 of the Higher Education Act of 1965 (20 

5 U.S.C. 1083) is amended by adding at the end the fol6 lowing: 

7 ‘‘(f) REQUIRED PERIODIC DISCLOSURES DURING PE8 RIODS WHEN LOAN PAYMENTS ARE NOT REQUIRED.— 

9 During any period of time when a borrower of one or more 

10 loans, made, insured, or guaranteed under this part or 

11 part D is not required to make a payment to an eligible 

12 lender on the borrower’s loan from that eligible lender, 

13 such eligible lender shall provide such borrower with a 

14 statement that corresponds to each payment installment 

15 time period in which a payment would be due if payments 

16 were required to be made, and that includes, in simple 

17 and understandable terms— 

18 ‘‘(1) the original principal amount of each of 

19 the borrower’s loans, and the original principal 

20 amount of those loans in the aggregate; 

21 ‘‘(2) the borrower’s current balance, as of the 

22 time of the statement, as applicable; 

23 ‘‘(3) the interest rate on each loan; 

24 ‘‘(4) the total amount the borrower has paid in 

25 interest on each loan; 


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1 ‘‘(5) the aggregate amount the borrower has 

2 paid for each loan, including the amount the bor3 rower has paid in interest, the amount the borrower 

4 has paid in fees, and the amount the borrower has 

5 paid against the balance; 

6 ‘‘(6) the lender’s or loan servicer’s address and 

7 toll-free phone number for payment and billing error 

8 purposes; 

9 ‘‘(7) an explanation— 

10 ‘‘(A) that the borrower has the option to 

11 pay the interest that accrues on each loan while 

12 the borrower is a student at an institution of 

13 higher education or during a period of 

14 deferment or forbearance, if applicable; and 

15 ‘‘(B) if the borrower does not pay such in16 terest while attending an institution or during 

17 a period of deferment or forbearance, any accu18 mulated interest on the loan will be capitalized 

19 when the loan goes into repayment, resulting in 

20 more interest being paid over the life of the 

21 loan; 

22 ‘‘(8) the amount of interest that has accumu23 lated since the last statement based on the typical 

24 installment time period and the aggregate interest 

25 accrued to date; and 


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1 ‘‘(9) a suggested payment amount equal to the 

2 interest charged since the last installment time pe3 riod.’’. 

4 SEC. 3. PRE-LOAN COUNSELING AND CERTIFICATION OF 

5 LOAN AMOUNT. 

6 Section 485(l) of the Higher Education Act of 1965 

7 (20 U.S.C. 1092(l)) is amended— 

8 (1) in the subsection heading, by striking ‘‘EN9 TRANCE COUNSELING’’ and inserting ‘‘PRE-LOAN

10 COUNSELING’’; 

11 (2) in paragraph (1)— 

12 (A) in subparagraph (A)— 

13 (i) in the matter preceding clause (i), 

14 by striking ‘‘a disbursement to a first-time 

15 borrower of a loan’’ and inserting ‘‘the 

16 first disbursement of each new loan (or the 

17 first disbursement in each award year if 

18 more than one new loan is obtained in the 

19 same award year)’’; and 

20 (B) in clause (ii)(I), by striking ‘‘an en21 trance counseling’’ and inserting ‘‘a coun22 seling’’; 

23 (3) in paragraph (2)— 

24 (A) by striking clause (i) of subparagraph 

25 (G) and inserting the following: 


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1 ‘‘(i) an estimate of the borrower’s pro2 jected loan debt-to-income ratio upon grad3 uation, calculated using— 

4 ‘‘(I) the best available data on 

5 starting wages for the borrower’s pro6 gram of study; and 

7 ‘‘(II) the estimated total student 

8 loan debt, including Federal debt and, 

9 to the best of the institution’s knowl10 edge, private loan debt already in11 curred, and the estimated future debt 

12 required to complete the program of 

13 study; and’’; and 

14 (B) by adding at the end the following: 

15 ‘‘(L) A statement that the borrower should 

16 borrow the minimum amount necessary to cover 

17 expenses and that the borrower does not have 

18 to accept the full amount of loans for which the 

19 borrower is eligible. 

20 ‘‘(M) A warning that the higher the bor21 rower’s debt-to-income ratio is, the more dif22 ficulty the borrower is likely to experience in re23 paying the loan. 


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1 ‘‘(N) Options for reducing borrowing 

2 through scholarships, reduced expenses, work3 study, or other work opportunities. 

4 ‘‘(O) An explanation of the importance of 

5 graduating on time to avoid additional bor6 rowing, what course load is necessary to grad7 uate on time, and information on how adding 

8 an additional year of study impacts total in9 debtedness.’’; and 

10 (4) by adding at the end the following: 

11 ‘‘(3) In addition to the other requirements of 

12 this subsection, each eligible institution shall, prior 

13 to certifying a Federal direct loan under part D for 

14 disbursement to a student (other than a Federal Di15 rect Consolidation Loan or a Federal Direct PLUS 

16 loan made on behalf of a student), ensure that the 

17 student manually enter, either in writing or through 

18 electronic means, the exact dollar amount of Federal 

19 direct loan funding under part D that such student 

20 desires to borrow.’’. 

21 SEC. 4. CONFORMING AMENDMENTS. 

22 (a) PROGRAM PARTICIPATION AGREEMENTS.—Sec23 tion 487(e)(2)(B)(ii)(IV) of the Higher Education Act of 

24 1965 (20 U.S.C. 1094(e)(2)(B)(ii)(IV)) is amended— 


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1 (1) by striking ‘‘Entrance and exit counseling’’ 

2 and inserting ‘‘Pre-loan and exit counseling’’; and 

3 (2) by striking ‘‘entrance and exit counseling’’ 

4 and inserting ‘‘pre-loan and exit counseling’’. 

5 (b) REGULATORY RELIEF AND IMPROVEMENT.—Sec6 tion 487A of the Higher Education Act of 1965 (20 

7 U.S.C. 1094a) is amended by striking ‘‘entrance and exit 

8 interviews’’ and inserting ‘‘pre-loan and exit interviews’’ 

9 each place the term appears. 

Æ 


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