Cedar Education Lending endorses the Know Before You Owe legislation introduced March 29 by Senators Dick Durbin (D-Ill.) and Tom Harkin (D-Iowa). According to Durbin, “two-thirds of students with private loans are unaware of the dramatic difference between Federal student loans and risky, higher-interest, private student loans.” The senators are particularly concerned that students apply for and exhaust all efforts to receive Federal aid before they apply for private student loans.
The Know Before You Owe Act of 2012 would empower students to exhaust their Federal financial aid options, which are more reasonable than the terms of private loans. Federal student loans have fixed interest rates and offer an array of consumer protections and favorable terms, including deferment and forbearance in times of economic hardship, manageable repayment options such as the income-Based Repayment and Public Service Loan Forgiveness programs.
The Act would specifically require private lenders to: certify with the school that the student is enrolled and the amount the student is eligible to borrow in Federal loans; provide the borrower with quarterly updates on their loans, including accrued but unpaid interest and capitalized interest; and, report information to the Consumer Financial Protection Bureau about their student loans. In addition, institutions of higher education would have to inform students about their Federal financial aid availability and their ability to select a private lender of their choice, as well as inform them about the terms and conditions of Federal and private student loans.
“Cedar Education Lending is ahead of the curve on this legislation,” says Harvey Berkey, COO. Unfortunately, the Federal government doesn’t have sufficient funds to supply necessary financial aid and support to all needy students. Students often require private loans to supplement their Federal aid. Cedar Ed supplies Private Student Loans and, after graduation, Private Student Loan Consolidationw to enable students to completely fund their education.
From inception, Cedar Ed has been completely transparent with regard to its lender policies, terms and provisions. Students are clearly cautioned to review all Federal aid prior to seeking a Cedar Ed private loan. All terms related to potential Cedar Ed loans are made clear to the student in advance. Cedar Ed already makes sure its lender certifies with the borrower’s school that the student is enrolled and provides the loan funds to the student through the school, not directly to the student. The student receives timely reports providing information including accrued but unpaid interest and capitalized interest.
“We feel we have already been complying with this legislation and we endorse it completely,” added Mr. Berkey.