Attorney General Bob Ferguson’s bipartisan legislation to provide more transparency to students regarding their borrowing passed the Washington State Legislature on Thursday with a unanimous vote of the Senate.
Ferguson’s Student Loan Transparency Act, Senate Bill 5022, is sponsored by Sen. Barbara Bailey, R-Oak Harbor. Rep. Tina Orwall, D-Des Moines, sponsored its companion, House Bill 1057.
The legislation is part of the Attorney General’s larger focus on protecting student borrowers. These borrowers are often confounded by confusing or difficult to find information — but there is no shortage of scammers out to take advantage of them.
As part of a broad initiative, Ferguson proposed the agency-request legislation to mandate clear debt information for student borrowers in Washington.
“Student borrowers deserve clear and accurate information to navigate an often confusing process that often leaves them indebted for decades,” Ferguson said in a media release. “This legislation helps address these challenges.”
Modeled after legislation in Indiana, Wisconsin and Nebraska, Ferguson’s proposed Student Loan Transparency Act requires colleges and other institutions of higher education to provide notices to students detailing their loan balances and estimated monthly payments each time a financial aid package that includes a new or revised student loan is offered. The notice must also include information about how to access available resources for student borrowers.
The Indiana Legislature passed its law after the demonstrated success of transparency efforts in that state. During the 2012-13 academic year, Indiana University sent annual loan statements to students. In the wake of this and other financial literacy initiatives, the school saw undergraduate borrowing decline by almost 16 percent over two years.
“There are serious long-term effects of student debt,” Bailey said in the release. “The more information that our college students have about their financing options the better. The Student Loan Transparency Act will help students make better decisions about their educational-financing needs.”
“Having spoken to many students struggling with student loan debt, it became clear that many had not understood the extent of their loans until it was time to start paying them back,” Orwall said in the release. “This legislation will give students the basic information and tools necessary to make informed choices to better plan for their future. This could mark the difference between graduates with manageable debt and those who are buried by their loans.”
Ferguson is committed to standing up for students and loan co-signers by cracking down on predatory for-profit colleges, ensuring loan-servicing and debt-adjusting companies play by the rules, and promoting legislation to protect consumers. More information on the office’s student loan work, including the Attorney General’s Student Loan Survival Guide, is available here.