ST. GEORGE — Rep. Chris Stewart has joined forces with Rep. Ben McAdams to cosponsor a bill aiming to help students better understand loan disclosures to help prevent them from going into debt.
The bill, known as the Student Loan Disclosure Transparency Act of 2019, is sponsored by Florida Rep. Donna Shalala, D-Florida.
The bill would require more disclosure for students who receive federal college loans. Other supporters who have also signed the legislation include Rep. Jaime Herrera Beutler, R-Washington, and Rep. Abigail Spanberger, D-Virginia.
If passed, the bill would require more transparency for the entirety of the loan, including while students remain in school. The bipartisan bill has strong support from both Republicans and Democrats.
If passed, the bill would make it so that students would receive separate, simple and easy-to-read monthly loan disclosure statements with information on projected payments, accrued interest and cost of attendance. Shalala said she and other backers of the proposal believe it will help lower student debts.
“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,” Shalala said in a statement. “The goal is to give student borrowers the necessary tools and information they need to manage financial aid and personal finances while in school.”
The current total amount of student loan debt is approximately $1.6 trillion. During the 2018-2019 school year, the average college senior who borrowed money, graduated with more than $30,000 in loans, McAdams said in a press release.
“Students borrow to invest in their education and improve their economic future, not to end up with crushing debt. We can do a better job of helping students understand what they are taking on over the life of the loan, not just when they receive the money or start repaying it,” McAdams, who announced his support of the bill Friday, said in the release.
The legislation seeks to correct concerns about current student loan disclosures that are unnecessarily long, difficult to read and fail to accurately inform borrowers of the amount they’ll have to pay.
“This commonsense legislation requires transparency and empowers students and prospective students to better understand the full cost of college. I am proud to work with Congresswoman Shalala on this important legislation to help those pursuing further education,” Rep. Stewart said in a statement.
The Student Loan Disclosure Transparency Act includes the following requirements:
- Simplified disclosures in easy and understandable terms. Two-thirds of borrowers express some misunderstanding or surprise about their student loan disclosures.
- Regular monthly disclosures during the life of a loan. Under current law, a borrower is only required to receive a disclosure at three points: Disbursement, at or prior to repayment, and during repayment status.
- Projected payments based on the amount borrowed. Included in the monthly disclosures would be projected monthly payments based on how much a student has borrowed with an option to pay any interest that accrues while a borrower is still in school.
The bill also has support from the Association of American Colleges and Universities. President Lynn Pasquerella said in a letter to lawmakers that a college education is one of the most important investments many students and families make.
“The Student Loan Disclosure Transparency Act seeks to help borrowers understand the financial commitment of taking out student loans by requiring the full disclosure of the loan terms as well as the financial risks associated with not finishing their education. Passage of this bipartisan act would be an important step forward in addressing the student debt crisis,” Pasquerella said in the letter.
Anyone who receives federal loans for school is currently mandated by law to receive student loan counseling.
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