Legislation recently introduced in the U.S. House of Representatives would help aspiring college students understand the full cost of student loans.
The Student Transparency for Understanding Decisions in Education Net Terms (STUDENT) Act would include on student loan applicants an estimate of the amount of interest an applicant would pay on a standard 10-year repayment plan. The estimate would be required prior to during or accepting a loan.
The disclosure of total interest a potential applicant would pay is not required under current law, and many applicants are not aware of the actual amount they will pay over the life of a loan.
“Whether it’s community college or a four-year university, students need to fully understand the cost of taking out student loans, especially the amount of their interest payments,” U.S. Rep. Randy Feenstra (R-IA), who introduced the bill, said. “That’s why I introduced legislation to provide students with an estimate of how much they would pay in interest over the term of their loan. This fix will help keep students out of mountains of unsustainable debt while ensuring that the next generation can chase their dreams and pursue fulfilling educational opportunities.”
U.S. Sens. Joni Ernst (R-IA) and Chuck Grassley (R-IA) introduced companion legislation in the U.S. Senate.