The Know Before You Owe Federal Student Loan Act of 2025 requires colleges and universities to provide more detailed financial counseling to all student loan borrowers before they receive loan funds, not just first-time borrowers. Students must receive information comparing their estimated monthly loan payments to their expected income after taxes and expenses, along with warnings about debt-to-income ratios and options for reducing borrowing through scholarships or work opportunities. The bill also mandates that students manually confirm the exact dollar amount they want to borrow before the institution processes the loan, and requires loan servicers to send quarterly statements to borrowers in non-repayment periods (such as those still in school) explaining their loan balances, interest rates, and options for making voluntary payments to reduce future interest. These requirements aim to help borrowers make more informed decisions about student loan debt and understand the long-term cost of their borrowing. The bill contains no specific new federal funding or implementation timeline beyond requiring compliance with these enhanced counseling and disclosure standards.
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