Bill Introduced to Simplify Student Loan Disclosures
Bipartisan legislation introduced by six representatives would simplify student loan disclosures will allow borrowers to manage financial aid and personal finances while in school.
Introduced by Donna Shalala (FL-27), Matt Gaetz (FL-01), Chris Stewart (UT-02), Ben McAdams (UT-04), Jaime Herrera Beutler (WA-03) and Abigail Spanberger (VA-07), the Student Loan Disclosure Transparency Act of 2019 would set up a procedure through which student loan borrowers will receive a separate monthly loan disclosure statement from the Department of Education.
It will include information in easy and understandable terms on projected payments, accrued interest, the total cost of attendance, and other personalized details.
“The standards of disclosure that apply to other consumer loans should also apply to the very first consumer loan most people take—the student loan,” said Shalala. “We ought to encourage financially responsible practices among young people early on as they embark on their lives. Our current student loan disclosures are unnecessarily long, difficult to read, and fail to inform borrowers payoff their payment obligations upon graduation.”
Under the Higher Education Act (HEA), disclosures are required during the disbursement, at or prior to repayment, and during repayment. The new bill also encourages borrowers to pay interest fees and other costs before graduation.
“More transparency in the student loan process is crucial: it will improve financial literacy and will also help borrowers understand the financial commitments they are making,” Gaetz said.
In the past few months, many bills have been introduced to address the rising concern of student loan debts which has become a pressing issue for the majority of Americans. Last month, Representative Scott Perry introduced Student Loan Reform Act that seeks to amend the Higher Education Act of 1965 to allow schools to co-sign student loans with their student borrowers and keep the cost of attending college in check.
At the same time, others have been pushing for partial or full forgiveness of student loans held by nearly 45 million Americans. Senator Elizabeth Warren introduced a bill that would forgive loans of up to $50,000 for those whose household gross income is less than $100,000 by using already available data on household gross income and pending student loan debt.