U.S. Representatives John Carney (D-DE-At-large), Randy Hultgren (R-IL-14), David Scott (D-GA-13), and Luke Messer (R-IN-6) today introduced legislation to improve the information provided to students and families of federal student loans by requiring the annual percentage rate (APR) to be disclosed. The APR helps borrowers understand the true cost of a loan so they can make good financial decisions. Currently, borrowers of private student loans receive this information, but borrowers of loans issued by the Department of Education do not.
“It’s crucial that we provide students with the facts about their student loans,” said Congressman John Carney. “This legislation helps ensure students 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.”
Background
• In 1969, the Truth in Lending Act passed Congress with the intention "to provide the American consumer with truth-in-lending and truth-in-advertising” when pursuing loans.
• In 2008, Truth in Lending Act disclosure requirements were applied to private, but not federal, student loans.
The Transparency in Student Lending Act aims to provide more information to consumers by requiring the disclosure of the annual percentage rate at the time of application for a federal student loan. APR is expressed as a single percentage number that represents the actual yearly costs of funds over the term of the loan and takes into account the stated interest rate of the loan and any fees or additional costs associated with the loan.
