Scott, Manchin Introduce Student Loan Disclosure Modernization Act
WASHINGTON – Today, U.S. Senators Tim Scott (R-SC) and Joe Manchin (D-WV) introduced the Student Loan Disclosure Modernization Act, which seeks to increase transparency for those looking to acquire student loans on a federal level. The goal is to provide applicants with a clear and succinct disclosure form to avoid leading prospective borrowers astray. The disclosure form, which clearly outlines the costs and terms of potential loans, strives to empower loan applicants to be responsible borrowers.
“Loan transparency and financial literacy is a bipartisan issue – in South Carolina alone, 60% of graduates face student debt after finishing their degree,” said Senator Scott. “By giving those seeking higher education more tools to see what their student borrowing really means, we can remove some of the uncertainty that they face after graduation.”
“I’m proud to join Senator Scott in introducing this important legislation to simplify and increase transparency for all federal student loans. Right now, our country has more than 44 million borrowers who collectively owe $1.6 trillion in student loan debt partly because students and their families often times don’t understand the current loan disclosure form, which is complicated and lengthy. The current disclosure form is 6 pages of legal jargon, and that is just ridiculous,” said Senator Manchin. “Our bill will increase transparency so students and families know exactly how much money they are borrowing, the percent of interest that goes along with that money, and will even be given an estimated monthly payment upon graduation. Higher education is essential for most of the jobs of the future and we must make sure our students have access to it without drowning them in debt they will never be able to pay off.”
As Co-Chair of the Financial Literacy Caucus, the movement towards a more financially aware public is one of Sen. Scott’s primary legislative efforts. Supported by the Consumer Bankers Association and the Bipartisan Policy Center, the proposed disclosures will hold federal loan programs to the same standard as private lenders. By replacing the current federal disclosure form which lacks information about the total loan cost and monthly payments, the disparity between private and federal loans would be reduced by requiring plain-language disclosures similar to the rules already applied to private lenders.
Click here to view full bill text.