State-Based Education Loan Awareness Act

The State-Based Education Loan Awareness Act would modify federal regulations governing how colleges recommend student loans to their students. Currently, colleges that receive federal funding must follow strict rules when recommending loans from specific lenders, known as preferred lender arrangements. This bill would exempt state-based education loan programs and loans from nonprofit lenders from those requirements, as long as the loans offer interest rates and fees equal to or lower than federal Grad PLUS loans. The practical effect would allow colleges to more easily partner with state agencies and nonprofits to offer students lower-cost borrowing options without navigating complex federal disclosure requirements.

Under this bill, colleges could recommend these lower-interest loans directly to students, making it simpler for institutions to highlight affordable alternatives to federal loans. However, students would retain the freedom to seek other loan options if they find better terms elsewhere. The bill is currently under consideration by the Senate Committee on Health, Education, Labor, and Pensions, following hearings held in March 2026. If enacted, it could help make private student loans more accessible to borrowers pursuing higher education, particularly for graduate and professional programs where federal loan limits may be insufficient.