H.R.3298 - Know Before You Owe Federal Student Loan Act of 2025 (119th Congress)
Summary
H.R. 3298, the "Know Before You Owe Federal Student Loan Act of 2025," aims to revise counseling requirements for federal student loan borrowers. The bill mandates more comprehensive pre-loan counseling, including personalized estimates of monthly payments relative to income and living expenses. It also requires students to confirm the exact loan amount they wish to borrow and receive periodic disclosures during periods when loan payments are not required.
Expected Effects
The likely effect of this bill is increased awareness among student loan borrowers regarding their debt obligations and repayment options. This could lead to reduced borrowing and potentially lower default rates. The enhanced counseling and disclosure requirements may also encourage students to make informed decisions about their education and finances.
Potential Benefits
- Increased borrower awareness of loan terms and repayment obligations.
- Potential reduction in student loan debt and default rates.
- More informed decision-making regarding educational investments.
- Encourages students to borrow only what is necessary.
- Provides ongoing information during periods of non-payment to prevent surprises.
Potential Disadvantages
- Increased administrative burden on educational institutions.
- Potential for information overload for borrowers.
- May not address the root causes of high tuition costs.
- The effectiveness depends on the accuracy of income and expense estimates.
- Could delay loan disbursement due to additional requirements.
Constitutional Alignment
The bill aligns with the General Welfare Clause of the Constitution, as it aims to promote the economic well-being of citizens by reducing student loan debt and improving financial literacy. Specifically, the bill does not infringe upon any enumerated rights or reserved powers, and it falls within the broad authority of Congress to regulate interstate commerce through the provision of federal student loans.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).