Transparency in Student Lending Act

The Transparency in Student Lending Act (S 4686) requires colleges and student loan contractors to clearly explain the true cost of loans to borrowers before funds are disbursed. Specifically, it mandates written disclosure of the loan's Annual Percentage Rate (APR), which must factor in the loan amount, interest rate, standard term, fees, and how interest is capitalized. This disclosure must be provided in a format the borrower can keep, making loan terms more transparent. The bill directly affects all institutions participating in federal student loan programs under the Higher Education Act. It aims to help students understand total borrowing costs before taking out a loan.