S. 2764: Student Transparency for Understanding Decisions in Education Net Terms Act

This bill, known as the Student Transparency for Understanding Decisions in Education Net Terms Act (or the STUDENT Act), aims to enhance the transparency of federal student loans by requiring specific disclosures regarding loan interest. Here’s a breakdown of what the bill entails:

Key Provisions

• The bill amends existing regulations within the Higher Education Act of 1965.
• It specifically modifies the language governing how loan information is presented to borrowers.
• One of the main requirements of the bill is that federal student loan disclosures must now include:
  • The total amount of interest that a borrower will pay over the life of the loan.
  • The estimate must be based on the standard repayment plan that corresponds to the total outstanding principal of all loans held by the borrower.

Purpose

The intent behind this legislation is to provide borrowers with clearer information about the financial obligations associated with their student loans. By knowing the total interest they will be required to pay, students can make more informed decisions when considering loans and managing their educational expenses.

Impact on Borrowers

The bill aims to benefit borrowers by:

• Improving financial literacy related to student loans.
• Helping borrowers understand the long-term costs of their loans.
• Potentially empowering them to choose loan products that are more favorable or to seek alternatives that might have lower overall costs.

Implementation

The changes stipulated by this bill will need to be implemented by educational institutions and financial institutions that provide federal student loans. This may involve updates to the information provided during the loan application process as well as changes to documentation that borrowers receive after taking out loans.

Relevant Companies

None found.