Informed Student Borrowing Act of 2023

To modify requirements relating to financial aid disclosures. 1. Short title This Act may be cited as the Informed Student Borrowing Act of 2023 2. Entrance counseling financial aid disclosures Section 485(l) of the Higher Education Act of 1965 ( 20 U.S.C. 1092(l) (1) in the subsection heading, by striking Entrance (2) in paragraph (1)(A)— (A) in the matter preceding clause (i), by striking a disbursement to a first-time borrower the first disbursement to a borrower in each award year (B) in the matter preceding subclause (I) of paragraph clause (ii), by striking may shall (3) in paragraph (2)— (A) by redesignating subparagraphs (A) through (K) as subparagraphs (B) through (L); (B) by inserting before subparagraph (B), as so redesignated, the following: (A) An explanation that the borrower will need to affirmatively determine and manually enter, in accordance with subsection (n), the Federal loan amount that the borrower will borrow (which may be equal to or less than the Federal loan amount for which the borrower is eligible) for each award year. ; (C) by striking subparagraph (G) and inserting the following: (G) Sample monthly repayment amounts, under a standard repayment plan and under the income-driven repayment plan that had the highest enrollment in the previous year for borrowers (excluding parent borrowers), based on— (i) (I) the median levels of indebtedness, as appropriate, of— (aa) undergraduate borrowers of Federal Direct Stafford Loans or Federal Unsubsidized Stafford Loans who were enrolled in the institution; (bb) graduate borrowers of Federal Direct Stafford Loans, Federal Unsubsidized Stafford Loans, or Federal Direct Plus Loans who were enrolled in the institution; and (cc) parent borrowers of Federal Direct Plus Loans made on behalf of dependent students who were enrolled at the institution; (II) the median cumulative indebtedness of borrowers of loans described in subclause (I) in the same program as the borrower at the same institution; and (ii) the median annual earnings for individuals who attended the institution, as described in subparagraph (N). ; and (D) by adding at the end the following: (M) A statement that the borrower does not have to accept the full amount of loans for which the borrower is eligible, and an explanation that loan eligibility calculations are determined based on a cost of attendance that may include expenses such as housing, food, and transportation. (N) The most recent College Scorecard information (or information from a similar successor website) that shows the median annual earnings of students who received Federal student aid and who are no longer enrolled at the institution and are working, at the time that is 10 years after the date of such students' entry to the institution— (i) for individuals who were enrolled in the institution; and (ii) if available through the College Scorecard (or similar successor website), for individuals who were enrolled in the borrower's undergraduate or graduate program. (O) The percentage of borrowers who attended the institution and have completed or are no longer enrolled that are in active repayment (as compared to all borrowers who attended the institution and have completed or are no longer enrolled). (P) For undergraduate borrowers, the completion rate of the institution, as available through the College Scorecard (or similar successor website), for the most recent year for which data are available. (Q) A statement that— (i) the statistics provided under this paragraph are averages and median values based on past years; (ii) the borrower's repayment amounts, median earnings, and likelihood of completion may vary from such statistics; and (iii) as appropriate, parent borrowers should be aware that information about the median earnings, completion rate, and percentage of borrowers in active repayment is based on data that excludes parent borrowers. (R) A statement in writing and in a form the borrower may keep, of the annual percentage rate applicable to the loan based on a 10 year standard repayment plan, taking into account— (i) the amount of the loan; (ii) the stated interest rate of the loan; (iii) the standard term for a loan of the same type; (iv) any fees or additional costs associated with the loan; and (v) any capitalization of interest on the loan. ; and (4) by adding at the end the following: (3) Information from the Department of Education The Secretary shall provide institutions with the data and statistics necessary to enable institutions to carry out this subsection. . 3. Annual requirement to manually enter loan amount Section 485 of the Higher Education Act of 1965 ( 20 U.S.C. 1092 (n) Annual requirement To manually enter loan amount (1) In general In addition to the other requirements of this section and in accordance with paragraph (2), each eligible institution shall ensure that, for each award year, each borrower enrolled in the institution who receives a Federal Direct Loan (other than a Federal Direct Consolidation Loan) and each parent borrower who is borrowing a Federal Direct PLUS Loan made on behalf of a student who is enrolled in the institution, for such year, shall manually enter, either in writing or through electronic means, the exact dollar amount of Federal Direct Loan funding that such borrower desires to borrow for such year. (2) Method The eligible institution shall ensure that the borrower carries out the activity described in paragraph (1)— (A) in the case of a student borrower, in the course of the process used by the institution for students to accept a student loan award; (B) prior to the institution certifying a Federal Direct Loan (other than a Federal Direct Consolidation Loan), including a Federal Direct PLUS Loan made on behalf of a student, for disbursement to a borrower; and (C) in the case of a student borrower, after ensuring that the student has completed all of the counseling requirements under subsection (l). . 4. Work study Section 485 of the Higher Education Act of 1965 ( 20 U.S.C. 1092 (n) Work study If an institution provides a student or a prospective student with a financial aid award notification that includes work study, the institution shall ensure that the notification includes an explanation that any work study funds are not directly awarded to the student or institution, and such amounts must be earned through the student's completion of work over time. .

Summary: 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.