The Consumer Bankers Association (CBA) has forwarded correspondence to a pair of lawmakers in support of the Transparency in Student Lending Act.
Sen. Mike Enzi (R-Wyo.) and Rep. John Curtis (R-Utah) said the legislation would require the disclosure on the total cost of federal student loans in the form of an annual percentage rate (APR). Clear disclosure would help borrowers compare federal and private student loans on equal terms.
“The Transparency in Student Lending Act will empower federal student loan borrowers with the information necessary to make informed decisions about higher education financing,” CBA President and CEO Richard Hunt wrote. “CBA strongly believes better disclosure of federal student loan costs will promote informed decision-making and discourage the over borrowing that is fueling the high cost of college. We commend you for introducing legislation to demand the same level of transparency from the federal government as our member banks provide in the private student loan market.”
Clear disclosure would help borrowers compare federal and private student loans on equal terms. Currently, federal loans do not factor in origination fees, which can range between 1.1 to 4.26 percent in interest rate disclosures.
It is estimated the federal government originates 90 percent of federal loans, but officials acknowledge the loans do not have disclosure forms tailored to each borrower and have double-digit delinquency or default rates.