WeVote
Log In

Bill

Bill

S 4097

State-Based Education Loan Awareness Act

119th Congress Introduced by Bill Cassidy and 5 co-sponsors

States-based education loan programs are exempt from certain federal preferred lender rules, while requiring borrower awareness of federal loan options.

Committee on Health, Education, Labor, and Pensions. Reported by Senator Cassidy with an amendment in the nature of a substitute. Without written report.
0
WeVote Research Nonpartisan
Bill Summary · S 4097

Summary of S.4097 (119th Congress) — State-Based Education Loan Awareness Act

Purpose

S.4097 aims to clarify and protect certain state-based education loan programs from federal requirements tied to “preferred lender” arrangements. The bill designates State-based education loan programs as a distinct category and ensures they are excluded from specific federal rules that govern preferred lender practices, while also emphasizing borrower awareness about Federal student loan options.

Key Provisions

  • Definition of State-Based Education Loan Program (Section 2, new paragraph in §151 of the Higher Education Act of 1965):
    A State-based education loan program is defined as:

    • A loan program operated by a State agency, State authority, or a nonprofit organization (either independently or in partnership).
    • Loans are not funded, insured, or guaranteed by the Federal Government.
    • Authorized, established, or chartered by State law or approved by the State.

  • Conditions for eligibility of State-based programs (Section 2, new subsection (10)):
    A program qualifies as State-based if it meets all of the following:

    • Offers one or more loans with interest rates and fees that are at least as favorable as the Direct PLUS Loans under the federal Title IV program, according to Truth in Lending Act (TILA) standards (15 U.S.C. 1605; 1606), at the time the loan is originated.
    • Limits availability to borrowers who have been advised by an institution of higher education (as defined in §102) that:
    • The borrower has the opportunity to exhaust eligibility for Federal education loans under Part D of Title IV before taking a private education loan.
    • The advisor provides information about the terms of Federal loans, including:
      • Interest rates, fees, and benefits (e.g., income-driven repayment options, loan forgiveness, forbearance or deferment, interest subsidies, and tax benefits).

  • Exclusion from certain “preferred lender” requirements:
    The bill adds explicit language to exclude State-based education loan programs from specific requirements associated with preferred lender arrangements. The exact regulatory framework being referenced would be clarified in the broader statutory context, but the aim is to ensure state programs are not bound by federal preferred lender arrangements that might otherwise apply to private lenders in the student loan market.

Who or What Would Be Affected

  • Affects: State-based education loan programs that are run by state agencies, state authorities, or non-profit organizations, which operate independently of federal backing.
  • Excluded From: Certain federal requirements related to preferred lender arrangements (the bill specifies exclusion, though it does not modify other federal loan provisions for private lenders outside this context).
  • Students/Borrowers: Ensures borrowers are informed about federal loan options before pursuing private education loans through State-based programs, reinforcing awareness and comparison with Direct PLUS loans and other federal options.

Procedural and Timeline Aspects

  • Introduced: March 16, 2026, by Senator Murkowski, with co-sponsors including Senators Lankford, Shaheen, Cassidy, Cassidy, Sullivan.
  • Referral: Referred to the Senate Committee on Health, Education, Labor, and Pensions.
  • Action History: Committee hearings held on March 19, 2026.
  • Effective Date / Implementation: The bill text does not specify an effective date; as with most HEA amendments, implementation would occur upon enactment and subsequent regulatory guidance aligning federal rules with the new definitions and exclusions.

Notes for Readers

  • The core change is definitional and exemption-based: it explicitly tallies State-based education loan programs as outside certain federal “preferred lender” requirements and adds a borrower-awareness condition tied to federal loan alternatives.
  • The policy rationale appears to balance state program autonomy with consumer information, ensuring borrowers are aware of federal options before private, state-backed loans are pursued.
  • The bill aligns with Truth in Lending Act standards to ensure comparability of interest rates and fees with federal Direct PLUS loans.

If you’d like, I can provide a side-by-side comparison with current federal “preferred lender” rules to illustrate the practical impact on existing state programs.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.