Know Before You Owe Federal Student Loan Act of 2019

This bill expands lender disclosure requirements and modifies loan counseling requirements.

A lender must provide a quarterly statement to a Federal Family Education Loan or Direct Loan borrower during a period when loan payments are not required, including specified information on the loan and interest amounts. The statement must also explain the option to pay accrued interest while a student is in deferment or forbearance.

The bill requires an institution of higher education (IHE) that participates in federal student aid programs to provide pre-loan counseling to a student borrower of a federal student loan upon or prior to the first disbursement of each new loan. Currently, an IHE must provide one-time entrance counseling to a student who is a first-time federal student loan borrower.

The bill also revises and expands required elements of pre-loan counseling to include an estimate of the borrower's monthly payment amount compared to the borrower's estimated monthly income after taxes and other expenses, a statement to borrow the minimum necessary amount, a warning that a high debt-to-income ratio makes repayment more difficult, options to reduce borrowing, and an explanation of the importance of on-time graduation.

Prior to certifying a Federal Direct Loan disbursement to a student, an IHE must ensure that the student manually enters the exact dollar amount of the loan.