Wyoming Senators Lummis and Barrasso Push for Transparent Student Loan Process

Wyoming Senators Cynthia Lummis and John Barrasso yesterday introduced the Transparency in Student Lending Act, which would force the Department of Education to disclose to borrowers of federal student loans information about the loan amounts, their annual percentage rates, standard terms, and any fees or additional costs associated with the loan.

“When young people across Wyoming apply for student loans, they should have a clear understanding of the financial obligations they are assuming,” said Senator Lummis. “Senator Barrasso and I are partnering to bring transparency to the student loan process to ensure borrowers understand the true cost of their loans and empower them to make informed decisions.”

This legislation was previously introduced by Wyoming Senator Mike Enzi in the 116th Congress. Senator Barrasso was a cosponsor.

As of 2024, the national student debt is over a trillion dollars. And according to a Lending Tree survey, nearly 1 out of 10 borrowers are under the false impression that you don't need to repay your loans if you can't find a job after college.

52% of borrowers think interest doesn't accrue while they're in school.

The survey shows that borrowers are confused in general about student loans.

Despite President Joe Biden's efforts in student loan forgiveness, student debt remains a big issue in the social and economic spheres of the United States.

Some colleges are sneaking federal loans into financial aid packages, misrepresenting how much students pay for their education and how their debt will amass long term.

An OpEd for the Brown Daily Herald shouts for greater financial literacy on the rules and terms of all types of student loans that "should be introduced to students before they have to take them out, and preferably before their senior year, when they already have enough to worry about. An overall understanding of how loans work can not only help students well beyond college, but it is necessary for anyone who plans to have a secure financial future."

The counterargument is that students and families need to think critically before borrowing money.

It's easy to balk at students who took out student loans and claim they didn't know what they were getting themselves into. When a person takes out student loans the Department of Education requires Student Loan Entrance Counseling, but is it lacking?

It provides basic information about what an origination fee is, the maximum amount a student can take out and what the school will cost. It's reduced to a simple 20-minute PowerPoint presentation. And it is only required once, when a student takes out their first loan.

"A click of a mouse, and the money keeps flowing" writes one borrower -- now a tax consultant -- who came to the conclusion that he needed a professional with experience to fully understand the terms of a loan agreement.

“Students face an overwhelming amount of information and financial decisions when trying to plan and pay for higher education. Those trying to plan for college and their future deserve to know the true cost of their loans,” said Senator Barrasso. “This important bill will provide students and families the transparency they need to feel confident about their financial aid decisions and avoid unexpected costs.”

You can see the full text of the legislation here.