Earlier today, the Senate unanimously concurred with the House of Representatives to pass a bipartisan measure that will help students better understand what they’re getting into when they take out a loan.
The legislation, known as the Student Loan Transparency Act, was requested by Attorney General Bob Ferguson to mandate clear debt information for student borrowers. The new law will protect student borrowers who, in many cases, struggle with confusing information and often end up taken advantage of by scammers.
“Student borrowers deserve clear and accurate information to navigate an often confusing process that often leaves them indebted for decades. This legislation helps address these challenges,” Ferguson said.
The Student Loan Transparency Act requires colleges and other institutions of higher education to provide notices to students detailing their loan balances and estimated monthly payments each time a financial aid package, that includes a new or revised student loan, is offered. The notice must also include information about how to access available resources for student borrowers.
“Having spoken to many students struggling with student loan debt, it became clear that many had not understood the extent of their loans until it was time to start paying them back,” said Rep. Tina Orwall (D-Des Moines), who sponsored the companion bill in the House. “This legislation will give students the basic information and tools necessary to make informed choices to better plan for their future. This could mark the difference between graduates with manageable debt and those who are buried by their loans.”
The bill was modeled after legislation in Nebraska and Wisconsin, as well as Indiana where, during the 2012-13 academic year, Indiana University sent annual loan statements to students. In the wake of this and other financial literacy initiatives, the school saw undergraduate borrowing decline by almost 16 percent over two years.
“There are serious long-term effects of student debt,” said Sen. Barbara Bailey (R-Oak Harbor), sponsor of the Senate version, which is headed to Governor Inslee’s desk. “The more information that our college students have about their financing options the better. The Student Loan Transparency Act will help students make better decisions about their educational-financing needs.”
Attorney General Ferguson is committed to standing up for students and loan co-signers by cracking down on predatory for-profit colleges, ensuring loan-servicing and debt-adjusting companies play by the rules, and promoting legislation to protect consumers. More information on the office’s student loan work, including the Attorney General’s Student Loan Survival Guide, is available here.