Congressmen Cleaver and Messer Introduce Bill Aimed at Helping Student Loan Borrowers

(Washington, D.C.) – Congressman Emanuel Cleaver, II (D-MO) and Congressman Luke Messer (R-IN) introduced The Student Loan Disclosure Modernization Act, H.R. 4119, today. This new bill would modernize the Department of Education's (ED) "Plain Language Disclosure Form" to make it easier for students to read and understand.

Currently, ED is required to disclose to student borrowers a long list of terms and conditions to help educate them about the loan obligations they are incurring. Unfortunately, these standardized forms are lengthy and difficult to understand. The "Plain Language Disclosure Form" that students are given before they take out a federal loan is typed in small print, 6 pages long, and contains over 6,000 words. The form, often laced with legal jargon, is not serving students well and should be improved.

"For way too long, student borrowers have been kept in the dark, trying to understand the terms and conditions of their loans while pursuing higher education. This bill ensures that borrowers are given the right tools to make a sound financial decision before they commit to signing a student loan. This is the first clear step to providing transparency in the lending process," said Congressman Cleaver.

"This is a simple bill to make sure college students have full information about the loans they're getting to finance their education," Congressman Messer said. "Too often, students don't understand the terms of their loans and don't have a clear picture of how these loans will be paid back. Our goal with this is to empower students with information so they can make the best decisions about their education, finances and future." Messer continued.

Congressman Cleaver has been actively pursuing the issue of student loan debt. This past summer, he held a town hall in Kansas City, Missouri solely on the student loan debt crisis. An article on the town hall can be found here. Congressman Cleaver listened to the problems his constituents were facing and vowed to take those issues back to Congress for a solution.

Every year millions of students take out thousands of dollars in student loans to help them pay for college. Total student loan debt exceeded credit card debt in 2010, auto loan debt in 2011, and now stands at over $1.3 trillion. Many college students are unprepared for the reality of student loan debt. According to a 2016 Consumer Report Survey, 62% of Americans with student loan debt did not attend any financial aid information sessions prior to enrolling in college.

"We must ensure that people across the country are able to stay in the classroom. They should not be burdened with how they are going to survive after graduation due to overwhelming student loans," said Congressman Cleaver.

The Student Loan Disclosure Modernization Act would also require the "Plain Language Disclosure Form" be consumer tested. The bill places extra emphasis on key terms of the loan; such as the finance charges and the estimated monthly repayment. The bill also 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. Very frequently student borrowers underestimate the amount of their loans because they may only sign one Master Promissory Note. Signing this form with each loan will improve their understanding of their debt obligations.

For more information, please contact Heather Frierson at 816-842-4545 or Heather.Frierson@mail.house.gov.

Emanuel Cleaver, II is the U.S. Representative for Missouri's Fifth Congressional District, which includes Kansas City, Independence, Lee's Summit, Raytown, Grandview, Sugar Creek, Blue Springs, Grain Valley, Oak Grove, North Kansas City, Gladstone, Claycomo, and all of Ray, Lafayette, and Saline Counties. He is a member of the exclusive House Financial Services Committee, the Ranking Member of the Subcommittee on Housing and Insurance, and also a Senior Whip of the Democratic Caucus.