WYOMING – US Senator Mike Enzi, R-Wyo., and US Representative John Curtis, R-Utah, introduced legislation yesterday that would improve the information provided to students and families taking on federal loans to finance higher education. The bill was also cosponsored by US Senators John Barrasso, R-Wyo., Joni Ernst, R-Iowa, and US Representatives Ted Budd, R-N.C., and Bill Posey, R-Fla.
The Transparency in Student Lending Act would require disclosure of the annual percentage rate (APR) for federal student loans. The APR assists borrowers by showing the true cost of a loan, helping students and their families make more informed financial decisions. Currently, borrowers of private student loans receive this information, but borrowers of loans issued by the Department of Education do not.
For Enzi, borrowing for higher education and the debt trap it can sometimes become, has long been high on his list of concerns.
“Borrowers of federal student loans need transparent information when considering loan options and federal student loans should have to be upfront about their true costs,” Enzi said. “This bill would provide more transparency so families can be better informed about their financing options.”
Barrasso added, “Students face many challenges in trying to plan and pay for college. When making these important financial decisions, they shouldn’t have to struggle to understand the true cost of their federal student loans. Our bill will provide much needed transparency to the federal loan process and give students and their families more certainty when it comes to financial planning.”
Ernst said the issue is a government one.
“Over 90% of student loans are originated and guaranteed by the federal government,” Ernst said. “It’s critical that prospective students and their families have access to necessary information about these loans when considering their lending options, and that’s exactly what this bill does.”
The APR is expressed as a single percentage number that represents the actual yearly costs of funds over the term of the loan and takes into account the stated interest rate of the loan and any fees or additional costs associated with the loan.
The Consumer Banker Association, Education Finance Council and Utah Higher Education Assistance Authority have all voiced support for the legislation.
