Wyoming’s U.S. Senator Mike Enzi has introduced legislation to address his concerns about the information college students receive when deciding to borrow federal loans.
The Transparency in Student Lending Act would require disclosure of the annual percentage rate -- or APR -- for federal student loans. The APR is something that lenders of private student loans already provide. The APR helps borrowers grasp the total cost of obtaining a loan by simplifying it down to one number that includes the interest rate as well as additional fees and costs.
Enzi’s press secretary, Max D’Onofrio, says the Department of Education is not currently required to provide this information but they should. "If the federal government is going to be in the business of this it seems like they should have to rely on the same laws and requirements they put on the private sector."
While an APR is not provided for federal loans, there are policies in place to ensure schools inform students about the cost of both private and federal loans.
Kathy Bobbitt, Director of Student Financial Aid Office at the University of Wyoming, said that federal loans are different from private loans because they have a fixed interest rate for the life of the loan. Right now the school is required to inform students when a loan disbursement is made that they have 14 days to cancel all or part of the loan.
