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Congresswoman Rosa DeLauro

Representing the 3rd District of Connecticut

DeLauro Introduces Student Loan Borrower Protection Bill

July 26, 2018
Press Release

WASHINGTON, DCCongresswoman Rosa DeLauro (CT-03) today released the following statement after introducing the Transparency in Student Loan Consultation Act, requiring institutions of higher education to provide complete and accurate information to student borrowers. This bill addresses a key gap in federal higher education law, namely that institutions and consultants are currently able to use misleading and incomplete information to push borrowers into forbearance on their loans. Students in forbearance end up paying more for their loans and are subsequently more likely to default on their loans.

“I am proud to introduce the Transparency in Student Loan Consultation Act in order to ensure higher education institutions and management consultants are working with borrowers, not against them,” said DeLauro. “Institutions need to be legally obligated to tell the truth and make sure borrowers know all of their loan repayment options. Colleges and their consultants should not be allowed to manipulate the truth or force borrowers to make bad decisions in order to avoid public accountability. This bill will take that step to keep institutions and their consultants honest.”

In March 2016, DeLauro requested a Government Accountability Office (GAO) study regarding concerns that some colleges were artificially inflating their reported number of graduates repaying their student loans by hiring private consultants to spread misinformation to borrowers about their repayment options. If colleges’ numbers fall below a certain threshold, the Department of Education withholds federal aid. The GAO investigation confirmed this behavior and detailed the bad advice and pressure tactics consultants use. For instance, consultants pressure borrowers to enter into forbearance—an option that, while allowing borrows to temporally postpone payment to avoid default, eventually saddles borrowers with increased debt over time. The report also detailed instances in which consultants would threaten, falsely, that borrowers would lose access to nutrition assistance or Supplemental Security Income benefits if they defaulted on their loans.  

DeLauro is the lead Democrat on the Appropriations Subcommittee responsible for funding the Departments of Education, Labor, and Health and Human Services.

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