Leslie Carbone had an excellent article earlier this week in the Sun Sentinel on the Student Loan Sunshine Act. As I’ve reported here on Inkwell, the proposed law has a massive loophole for the government. While the law requires disclosure and transparency for private lenders, it does not require disclosure and transparency for the Federal Direct Loan Program. As Carbone points out, there are many negative consequences of such a loophole. For starters, it “creates two sets of rules – one for the government and one for everybody else.” It also limits student choices:
“Ironically, the chief complaint about private lenders is that the perks they offer financial aid officers are intended to steer business their way – and keep students in the dark about other lender options. But sanctioning just one program – the government’s – would restrict students’ loan choices much further.
“Competition and accountability are vital to protecting the interests of students, families, and taxpayers. And that’s why the federal government should step into the same light it’s shining on others.”
A similar version of this bill just passed through committee in the Senate, and it too had a loophole for federal loans. The bill should hit the floor for a vote sometime in July.