Alex Urevick-Ackelsberg of Future Majority recently posted on how some student loan lenders vary their loan rates in accordance with how many students default at their college. Quite simply, students are being given rates based not on who they are, but who all of the students at their university are. The practice is known as red-lining and it makes it harder for students to get the best terms on their loans from lenders.
Senator Dodd's Private Student Loan Transparency and Improvement Act would make private lenders report who they are loaning to and what rates, transparency that will help make practices like red-lining a thing of the past. The Act would also require lenders to provide more accurate and timely information to their customers about the interest rates, terms and conditions of their products, thereby helping students better understand their financial options and obligations.
