Student Loan Transparency: Mandatory Annual Manual Loan Amount Selection.
This Act significantly increases transparency in federal student lending by requiring borrowers (students and parents) to actively and manually enter the exact loan amount they wish to borrow each year, preventing automatic acceptance of the maximum eligible amount. Educational institutions must now provide comprehensive, personalized disclosures, including median debt levels, repayment rates, and median earnings specific to the institution and program. These changes empower borrowers to make more informed financial decisions regarding their education debt.
Key points
Active Borrowing Required: Borrowers must manually enter the exact dollar amount of the federal loan they want to accept each award year, rather than passively accepting the full amount offered.
Enhanced Risk Disclosure: Institutions must provide detailed data on median student indebtedness, repayment rates, and median annual earnings for graduates of that specific school or program.
Annual Counseling: Financial aid counseling and disclosures are now required annually for all borrowers, not just first-time borrowers.
Work Study Clarification: Financial aid notifications must clearly state that Work Study funds are not grants but must be earned through work completed over time.
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