U.S. Senator Mike Enzi, R-Wyo., introduced legislation today that would improve the information provided to students and families taking on federal loans to finance higher education.
The Transparency in Student Lending Act would require disclosure of the annual percentage rate (APR) for federal student loans. The APR assists borrowers by showing the true cost of a loan, helping students and their families make more informed financial decisions. Currently, borrowers of private student loans receive this information, but borrowers of loans issued by the Department of Education do not.
“Borrowers of federal student loans need transparent information when considering loan options and federal student loans should have to be upfront about their true costs,” Enzi said. “This bill would provide more transparency so families can be better informed about their financing options.”
The 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.