Rep. Cleaver Joins Bipartisan Call For Student Loan Transparency
(Washington, D.C.) – Today, U.S. Representatives Emanuel Cleaver, II (D-MO) and Jim Banks (R-IN), along with Senators Joe Manchin (D-WV) and Tim Scott (R-SC), called for Secretary of Education Miguel Cardona to direct the U.S. Department of Education to disclose the material terms of Direct Loans to borrowers prior to disbursement. Currently, the Department of Education does not inform borrowers of consequential financial information like interest rates and origination fees before taking out a Direct Loan.
"Student Loan debt has proven to be a significant burden to millions of Americans, which hampers our economy and hinders economic growth," said Congressman Cleaver. "While this is a complex challenge, one way to protect the financial future of students is to ensure federal student loan forms are clear and easily understandable so that individuals know full well the terms of the loans they agree to. While it is important for Congress to take action—which is why I was proud to co-introduce the Student Loan Disclosure Modernization Act with Congressman Banks—the administration can take common sense steps to support students immediately, and that's what we would like to see."
"Many Americans are saddled with debt for decades because of loans they took out in their late teens. Taking out a student loan is a momentous decision. The Department of Education should ensure borrowers are well informed before they make that decision by disclosing the relevant financial information in a clear and readable format. That's the standard practice for private loans, and federal loans should be no different. I'd like to thank Congressman Cleaver and Senators Scott and Manchin for their willingness to bring attention to an impactful problem and its common-sense solution," said Rep. Banks.
"Student loan disclosure forms are essential in helping students and families understand the costs and terms of their student loan options. Right now, these forms are complicated, lengthy and filled with unhelpful legal jargon. Our bipartisan bill would increase transparency for students and families by simplifying the forms—which just makes sense. But the Department of Education can make these commonsense changes now by simplifying the forms. We urge Secretary Cardona to streamline and modernize the student loan disclosure forms to help empoewr applicants to be responsible borrowers," said Senator Manchin.
"Given two thirds of college graduates enter the workforce with student debt, it is important that we equip young people with the tools to make informed decisions about borrowing. Our bill would simplify and personalize the information borrowers receive, which helps them plan for their future. The Department of Education should act now to implement these commonsense proposals that will have a huge impact on the next generation of students," said Senator Scott
In April, Reps. Cleaver and Banks, along with Sens. Scott and Manchin, reintroduced the Student Loan Disclosure Modernization Act to simplify the Department of Education's Plain Language Disclosure Form to place a greater emphasis on the material terms of federal loans. Congressman Cleaver initially introduced the legislation in 2017 to address the increasingly troublesome problem of student loan debt in America. Cleaver has also called on the largest student loan companies to address consumer complaints about inadequate servicing and steering borrowers into costly repayment plans. In addition, Cleaver previously called on the U.S. Government Accountability Office (GAO) to investigate the Department of Education's student loan services and industry practices.
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. A 2019 poll found that 90% of respondents felt student loan borrowers should receive detailed disclosures before taking out the loan.
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; Chairman of the House Subcommittee on Housing, Community Development, and Insurance; member of the Select Committee on the Modernization of Congress; member of the Committee on Homeland Security; and a Senior Whip of the Democratic Caucus. A high-resolution photo of Congressman Cleaver is available here.
