Bipartisan legislation recently introduced by U.S. Rep. Randy Hultgren (R-IL) would require that more information be disclosed about federal student loans to borrowers.
The Transparency in Student Lending Act, H.R. 5838, which was introduced by Hultgren and U.S. Reps. John Carney (D-DE), Luke Messer (R-IN) and David Scott (D-GA), would require that the annual percentage rate (APR) of federal student loans be disclosed to borrowers.
“It makes no sense for the federal government to omit the annual percentage rate when presenting the cost of a loan to young borrowers and families, and it does 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 be obligated to provide the most transparent and helpful information to borrowers. 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.”
The Truth in Lending Act, which was approved by Congress in 1969, aimed to provide American consumers shopping for loans with “truth-in-lending and truth-in-advertising.”
The Truth in Lending Act was applied to private student loans by Congress in 2008, but not federal student loans. The Department of Education now originates more than 90 percent of student loans each year.
“It’s crucial that we provide students with the facts about their student loans,” Carney said. “This legislation helps ensure they have the full picture when making decisions that will impact their financial future. I’m proud to help introduce this common-sense bill to improve students’ access to information and bring more transparency to the student loan process.”