Disclosure and Added Transparency

As student debt burdens continue to increase, more attention is being focused on potentially predatory practices that may take advantage of students. One effort to address this issue would increase disclosure requirements for colleges and universities around students who graduate. It is hoped that by requiring information around things like graduation rates and post-graduation job placement, more students will understand which options are best suited for them.

Several pieces of legislation are being considered this session to increase these disclosure requirements.

Truth in Advertising

With this legislation, an advertisement sent out by a public postsecondary institution would be required to make several disclosures. The disclosures would be:

  • The program rate of graduation for full-time students of the most recent graduating class for the program listed in the advertisement;
  • The graduation rate of full-time students for the program’s most recent graduating class for the public postsecondary institution;
  • The percentage of graduates from all degree programs at the institution who graduate with student loan debt and the median amount of the loan debt for those with debt;
  • Job placement rate related to the student’s degree for the most recent calendar year for students in a degree program listed in the advertisement.

This legislation would help students be better consumers of advertisements they receive from colleges and universities by ensuring they understand the costs and benefits of various fields. It also helps them better understand student loans, and what the investment in education costs them for their specific major and the likelihood of getting a job in their field.

STATUS: The bill was laid over for possible inclusion in the omnibus bill. (S.F. 329)

Private Student Loan Lenders Disclosure

Another disclosure bill would require private student loan lenders to provide a written disclosure statement that requires the following information:

  • A listing of the schedules a borrower may use to repay a student loan, including the estimated monthly payments based on the amount of the loan;
  • Interest rate, and whether it is fixed or variable;
  • Total amount of interest paid over life of the loan for each repayment schedule;
  • Options for altering repayment schedule if desired;
  • Example calculations of the repayment costs of the loan, as a percentage of potential salaries that might be reasonably expected upon graduation.

This legislation can highlight the additional costs students take on with private student loans, which can have high interest rates. This will allow students to see the difference in dollars between the different payment schedules.

STATUS: The bill was laid over for possible inclusion in the omnibus bill. (S.F. 418)

Attorney General Disclosure Bills

Another bill approaching issues around disclosure for students comes at the behest of the State’s Attorney General’s office. This bill would require private for-profit schools to disclose various information in the interest of potential students.

First, the bill requires these institutions to always act in the best interest of the student. In recommending a student to a program offered at a for-profit private postsecondary institution, the school must have reasonable grounds for making a recommendation and must take into account the totality of the student’s circumstance, including:

  • Likelihood a student will find employment in the field of study, including a program’s accreditation by trade and professional organizations.
  • Likelihood the program will provide sufficient income to meet loan obligations.

Within 180 days of the calendar year’s end, the school must prepare program graduate job placement rates, graduation rates, withdrawal rates, and school graduate job placement rates. The institution must also state clearly before enrollment that credits are unlikely to be transferable, that a degree may not transfer, and then specifically spell out which schools accept the credits and degrees earned at the private for-profit school.

The private for-profit school will also state clearly whether or not the school is accredited and what effect any lack of accreditation may have for the student and must also clearly state the program graduation rate, program withdrawal rate, school, and program job placement rate.

STATUS: The bill was laid over for possible inclusion in the omnibus bill. (S.F. 696)

Private Lending Institution Disclosure

A second piece of legislation at the behest of the Attorney General’s office would require more disclosure around private lending institutions. After a loan is dispersed, a private lender must inform the borrower and any cosigner about the status of the loan at least every 90 days. The information ranges from interest rates to a breakdown of principal, interest accrued, and more.

Lenders must disclose at least 30 days, but no more than 90 days, prior to when the first payment is due. The servicer shall disclose various loan information about the repayment plans including: the APR, maximum loan rates, loan terms, and more.

  • This information must be available within 14 days of a request by the borrower or cosigner.
  • When a loan is 45 days delinquent, the servicer shall notify the borrower about when the loan may go to collections, what the minimum payment is to avoid collections, and any loan modification options available.
  • The servicer must review the request in a timely manner.

The bill also instructs servicers on how to apply payments, and instructs them on what to do if student loans are transferred or sold to another servicer.

STATUS: The bill is in the Higher Education Committee. (S.F. 697)

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