In the state of Texas, State Senator Kel Seliger introduced a series of legislation on February 14 empowering student borrowers to make informed decisions about college debt.
If passed, Texas Senate Bill 887 would require colleges and universities to provide borrowers with a debt disclosure statement each year. The disclosure would include an estimate of how much the student borrowed, the final cost of the loan, and a monthly payment calculation.
Two other bills were introduced by Seliger the same month. SB 885 and SB 886 aim to expand the number of students who can access the state’s grant programs. The bill calls for the Toward Excellence, Access, and Success (TEXAS) Grant Program and the Texas Educational Opportunity Grants (TEOG) program to be used only for tuition, fees and books.
Students who are eligible for the Texas Educational Opportunity Grant can receive a maximum of $5,486 a year at public state colleges, $2,832 for public community colleges, and $4,756 for public technical colleges. Maximum annual awards for the TEXAS Grant include $8,722 at state public universities and colleges, $2,832 at public community colleges, and $4,572 at public technical colleges.
Acknowledging that student loan debt is a necessary evil for many, Seliger said when announcing his legislation, “it is my hope that this bill will help students better understand what their financial state and responsibilities will be upon graduation.”
A “better understanding” is an understatement. In 2016, LendEDU polled 477 college students and found that only 7.9% of students knew their current interest rate while just 6.1% knew the terms of their loans.
Many college students forget about their deferred obligations until they are shell shocked when the first student loan bill comes in the mail. It may partly be the reason the national student loan default rate is around 12%.
Author: Donna Fuscaldo
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