CFPB Unveils Model Disclosures for Student Loans

American Banker
October 26, 2011
Davidson, Kate

The Consumer Financial Protection Bureau has introduced a student loan disclosure model meant to assist college students in comparing financial aid packages. Created by the CFPB and the Department of Education, the financial aid disclosure would make the costs and risk of student loans clear to the borrower while outlining a student's estimated debt and monthly loan payments after graduation. While student loans are considered a great resource to help students reach their goals, the actual risks need to be clear to parents and students, according to Raj Date, special adviser to the Treasury Secretary for the CFPB. "Having a simple, one-page financial aid shopping sheet would help students compare offers and choose the one that's right for them," he stated. The form will list the cost of attending college, tuition, fees, and other related expenses. Additionally, it includes clear distinctions between scholarships and loans. While the new agency has the authority to make significant changes to many financial practices, it cannot address all issues until it has a permanent director. The CFPB also released a student debt repayment assistance tool that provides information on income-based repayment, deferments, and alternative payment programs for borrowers who may be struggling to repay their student loans.
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