Two bills were heard this week requiring private lending institutions to make various disclosures before issuing loans, and include some adjustments to how lenders handle loans after they are issued. Students using private loans often pay higher interest rates compared to federal borrowing rates and have fewer options in terms of delaying and repayment schedule options.
S.F. 418 seeks to help ensure borrowers are aware of the major differences between federal and private loans, as well as the specifics of their loans. The legislation outlines several disclosure requirements for private lenders in an effort to provide more transparent terms to student borrowers.
S.F. 697 similarly seeks to increase transparency for students of loan options and terms, but it does not instruct servicers how to handle loan payments, potential loan defaults, and other circumstances after the initial disclosure.
Both pieces of legislation were heard in the Higher Education and Workforce Development committee this week and the topic may come up again later this session as the Senate revisits the topic of student loan refinancing. (S.F. 418/S.F. 697)