Know Before You Owe Federal Student Loan Act of 2014

To revise counseling requirements for certain borrowers of student loans and for other purposes. 1. Short title This Act may be cited as the Know Before You Owe Federal Student Loan Act of 2014 2. Pre-Loan Counseling and certification of loan amount Section 485(l) of the Higher Education Act of 1965 ( 20 U.S.C. 1092(l) (1) in the subsection heading, by striking Entrance Counseling Pre-Loan Counseling (2) in paragraph (1)— (A) in subparagraph (A)— (i) in the matter preceding clause (i), by striking a disbursement to a first-time borrower of a loan the first disbursement of each new loan (or the first disbursement in each award year if more than one new loan is obtained in the same award year) (B) in clause (ii)(I), by striking an entrance counseling a counseling (3) in paragraph (2)— (A) by striking clause (i) of subparagraph (G) and inserting the following: (i) an estimate of the borrower's projected loan debt-to-income ratio upon graduation, calculated using the best available data on starting wages for the borrower’s program of study and the estimated total student loan debt, including Federal and private loan debt already incurred and the estimated future debt required to complete the program of study; and ; and (B) by adding at the end the following: (L) A statement that the borrower should borrow the minimum amount necessary to cover expenses and that the borrower does not have to accept the full amount of loans for which the borrower is eligible. (M) Information about the default risk of having a projected loan debt-to-income ratio greater than 12 percent. (N) Options for reducing borrowing through scholarships, reduced expenses, work-study, or other work opportunities. (O) An explanation of the importance of graduating on time to avoid additional borrowing, and information on how adding an additional year of study impacts total indebtedness. ; and (4) by adding at the end the following: (3) In addition to the other requirements of this subsection, each eligible institution shall, prior to certifying a Federal direct loan under part D for disbursement to a student (other than a Federal Direct Consolidation Loan or a Federal Direct PLUS loan made on behalf of a student), ensure that the student manually enter, either in writing or through electronic means, the exact dollar amount of Federal direct loan funding under part D that such student desires to borrow. . 3. Conforming Amendments (a) Program participation agreements Section 487(e)(2)(B)(ii)(IV) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(e)(2)(B)(ii)(IV) (1) by striking Entrance and exit counseling Pre-loan and exit counseling (2) by striking entrance and exit counseling pre-loan and exit counseling (b) Regulatory relief and improvement Section 487A of the Higher Education Act of 1965 ( 20 U.S.C. 1094a entrance and exit interviews pre-loan and exit interviews

Summary: Know Before You Owe Federal Student Loan Act of 2014 - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to require institutions of higher education (IHEs) to provide pre-loan counseling at or prior to the first disbursement of a new loan to a student borrower under the William D. Ford Federal Direct Loan program. (Currently, such counseling is limited to students who are first-time borrowers of such loans.) Adds to the information to be provided to students as part of such counseling: an estimate of their projected loan debt-to-income ratio upon graduation and their estimated total student loan debt, calculated for their particular program of study; a statement that they should borrow the minimum amount necessary to cover expenses; information about the default risk of having a projected loan debt-to-income ratio greater than 12%; options for reducing borrowing through scholarships, reduced expenses, work-study, or other work opportunities; and an explanation of the importance of graduating on time and of how adding an additional year of study impacts total indebtedness. Requires each IHE, prior to certifying a Federal Direct Loan for disbursement to a student borrower, to ensure that the student manually enters, either in writing or through electronic means, the exact dollar amount of such loan that the student desires to borrow.