U.S. Senator Ron Johnson, a Wisconsin Republican, joined Democratic Sens. Amy Klobuchar of Minnesota and Joe Donnelly of Indiana to introduce legislation Wednesday aiming to help students understand the financial implications of their student loan debt.
The Empowering Student Borrowers Act would require colleges to send a letter to students every year detailing each student’s total loan debt, projected monthly repayment amounts, and the estimated interest rate for each loan. The bill would also require the Department of Education to develop best practices for colleges and universities to teach financial literacy skills and provide information on student borrowing.
“Students borrowing to pay for college should be fully aware of the financial obligations they are taking on. Making student loan information more transparent is an important step in the right direction toward helping students make responsible borrowing decisions,” Johnson said.
Derek Kindle, director of the Office of Student Financial Aid at UW-Madison said of the legislation: “We know that having better informed students makes for more responsible borrowers. Annual information to students on their borrowing, repayment and loan limits is always important."
The Republican majority Wisconsin legislature passed a similar bi-partisan bill in March, to take effect in the 2017-2018 academic year, but rejected a proposal to remove the cap on the state's tax deduction for student loan interest. Republicans have also refused to advance Democratic legislation to allow for refinancing of student debt, the so-called Higher Education, Lower Debt Act.
The bill proposed by Johnson would amend the wide-ranging federal Higher Education Act, now up for reauthorization. A Republican version of a House reauthorization bill would increase student loan costs by removing a subsidy on student loan interest, higher education advocates said.
Johnson in 2014 joined Senate Republicans in voting against a bill allowing student loan refinancing.