In an effort to provide more helpful information to borrowers, the Department of Education would have to disclose the annual percentage rate (APR) of federal student loans at the time of application under bipartisan legislation reintroduced by U.S. Rep. Randy Hultgren (R-IL).
The Transparency in Student Lending Act, H.R. 1283, aims to bring more transparency to the student loan process and to help students and families better understand the actual costs of student loans upfront.
“The federal government omits the annual percentage rate when presenting the cost of a loan to young borrowers and families, doing them a gross disservice as they make plans for future payments,” Hultgren said. “The Department of Education is the largest consumer lender in the United States, and should provide the most transparent and helpful information to borrowers.”
Under a 2008 law, private banks must disclose the APR of a loan before a borrower signs. The Department of Education is not required to provide that information, however, for federal loans. Since that time, federal student loans issued by the Department of Education have grown to more than 90 percent of originations each year.
“Helping borrowers understand their debt obligations is an important first step to ensuring they are able to make their payments, and also helps prevent taxpayers from being on the hook for delinquent borrowers,” Hultgren said.
Hultgren reintroduced the Transparency in Student Lending Act with U.S. Reps. Luke Messer (R-IN) and David Scott (D-GA).