Key GOP senators propose law mandating disclosure of total interest on student loans
Currently, law does not require disclosing the total interest amount that a student loan applicant pays in the applicable repayment plan.
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College students would learn the estimated total interest they would pay on a education loan before they take it out if a law proposed by Iowa’s U.S. senators becomes law.
U.S. Sen. Joni Ernst, R-Iowa, and Sen. Chuck Grassley, R-Iowa, joined Sen. Ron Johnson, R-Wisconsin, in proposing the measure to address student loan debt.
Currently, law does not require disclosing the total interest amount that a student loan applicant pays in the applicable repayment plan, leaving many students unaware of the actual amount they will have to pay over the life of a loan, a news release from Ernst’s office said.
The bill, the Student Transparency for Understanding Decisions in Education Net Terms, or STUDENT, Act, would provide student loan applicants with an estimate of the total amount of interest they would pay, based on a standard 10-year repayment plan, during or prior to taking out a loan, the release said.
“Students and their families should have a clear picture about the true costs associated with their loans so they can fully understand how they’ll impact their future,” Ernst said. “Providing them with the tools to know what the real deal is with their federal student loans is commonsense and will help them make informed decisions.”
Grassley said in the release that he frequently hears from Iowa students that they are surprised by the amount they owe and are concerned about paying back their loans.
“Our STUDENT Act, along with several other bills I’ve introduced like the Know Before You Owe Student Loan Act, would help shine a light on the true costs students and their families face before they begin borrowing money,” he said. “This transparency would also help students shop around and fully factor in the cost of college, letting the free market bring down the price of higher education. I’ll continue working with my colleagues on making higher education loans more transparent to empower our students to succeed.”
Iowa College Aid and the Iowa Student Loan Liquidity Corporation support the bill.
“As college costs increase, it is even more important that students fully understand the cost associated with their loans, and the importance of borrowing as little as possible,” Iowa Student Loan Liquidity Corporation CEO Steve McCullough said in the release.
He and Iowa College Aid Executive Director Dr. Mark Wiederspan said in the release that the bill would help students make better college financing decisions.
Ernst and Grassley have also proposed the Net Price Calculator Improvement Act, The Understanding the True Cost of College Act, and The Know Before You Owe Federal Student Loan Act.
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