Bill targets student loan form modernization

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Reps. Emanuel Cleaver, II (D-MO) and Jim Banks (R-IN) with Sens. Tim Scott (R-SC) and Joe Manchin (D-WV) reintroduced the Student Loan Disclosure Modernization Act, which seeks to modernize and simplify the student loan securing process.

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The legislation would ensure student borrowers have a clearer understanding of terms and conditions before signing a loan agreement.

“I’m proud to once again join Congressman Banks to reintroduce this bipartisan, common-sense legislation to update and simplify the Plain Language Disclosure Form so that American students of all ages and backgrounds have a greater understanding of the long-term financial ramifications of these loan agreements,” Cleaver said. “Far too many students sign these forms without the legal or financial expertise necessary to fully comprehend what they are signing up for—only to realize once they leave school they owe much more than they thought.”

Cleaver said the bill is about serving students and ensuring they do not unknowingly enter into an agreement that will hamstring their financial future.

The legislation would require the Plain Language Disclosure Form to be simplified and consumer tested; places extra emphasis on material terms of the loan like the finance charge, annual percentage rate (APR), and estimated monthly repayment; and requires students to sign the form every time they take out a new loan, acknowledging that they have read the form and understand the terms of the loan.

“Right now, federal student loan disclosure forms are complicated, lengthy, and filled with unhelpful legal jargon,” Manchin said. “But these disclosure forms are vital because they outline the costs and terms of potential loans, which is critical in order for students and families to understand what they’re borrowing.”

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