This bill excludes state-based education loan programs from certain federal regulations that apply to preferred lender arrangements between colleges and private lenders. The legislation defines a state-based education loan program as one provided by a state agency, nonprofit organization, or state authority that is not federally funded, insured, or guaranteed, and offers interest rates and fees comparable to or better than federal Direct PLUS loans. To qualify for this exemption, borrowers must be informed by their college that they have exhausted federal loan options and must be advised about federal loan benefits including income-driven repayment plans and loan forgiveness opportunities. The bill has no specific funding or timeline associated with it, as it primarily amends existing higher education law to clarify regulatory treatment. This change could make it easier for states to establish alternative lending programs without triggering the same disclosure and transparency requirements that typically apply to preferred lender partnerships.
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