Four bills would provide better financial transparency for students

Four bipartisan bills were introduced in Congress last week and all aim to increase the transparency of the information students receive about the cost and payment of college education throughout their post-secondary education – a change that experts say and defenders, would be useful but still would not be. solve the student debt crisis.

Senators Chuck Grassley and Joni Ernst, both Republicans from Iowa, alongside Senator Tina Smith, Democrat from Minnesota, introduced three bills on April 29 – the Net Price Calculator Improvement Act, the Understanding the real cost of the college law and the Know Before You Need Federal Student Loans Act.

A day earlier, the Student Loan Disclosure Modernization Act was reintroduced by Representatives Emanuel Cleaver, a Democrat from Missouri, and Jim Banks, a Republican from Indiana, as well as Senators Tim Scott, a Republican from South Carolina, and Joe Manchin, the Democrat from West Virginia.

The bills would provide students with clearer information about college finances, starting with their research for potential schools and continuing until they graduate. Congress has already eased part of the financial aid process by passing legislation in December that will simplify the free federal student aid application for 108 questions to 36 questions.

“All of this is critically important to getting clear information to students at different points in their financial aid trajectory through their post-secondary experience,” said Laura Keane, director of policy at uAspire, a non-profit organization. who advises about 10,000 students a year on how to pay for college.

It starts with the Net Price Calculator Improvement Act, which would make online net price calculators more user-friendly and accessible, allowing students to understand the net price of attending different colleges before deciding where to apply.

Institutions would be required to place their calculators on web pages where potential students would be most likely to search for cost information and make the net price the most visible figure on the results screen. Currently, they only need to be on the site somewhere. The bill also authorizes the Department of Education to create a universal calculator that would allow students to answer a range of financial and academic questions and receive a list of net price estimates for several colleges.

Once students are accepted into college and receive financial aid, the Understanding the True Cost of College Act would clarify the price of their college education and standardize this information so that it can be compared between institutions.

“When you buy a car, you walk over to a car and you see a window sticker that has common terms and common definitions presented in a common way,” Keane said. But that’s not how it works for higher education, where the lack of federal regulation means that certain terms of financial aid – like net cost – can have different definitions and calculations at different institutions.

“It’s really hard for students to make this comparison without doing a lot of research, figuring out the terms and calling the financial aid office,” said Michele Streeter, senior policy analyst at the Institute for College Access and Success.

The Federal Student Aid Office recommendations issued in April 2019 for colleges to help them make their financial aid offers clearer to students. The Understanding the True Cost of College Act would go much further by requiring institutions to use a uniform financial aid offer form with basic minimum information that must be included on the first page, including tuition fees, grants and the net amount that a student is responsible for paying after the grant is subtracted, among others.

Standardization would be particularly beneficial for low-income students, primarily students of color, who do not make academic decisions based on their letters of acceptance but their offers of financial aid.

“Making sure the offer of financial assistance is as clear and clear as an offer of acceptance – which is a little simpler, of course – is really essential,” Keane said.

Then, if students have to take out loans to pay for their college education, the other two bills are meant to provide clearer information about the process and outcomes throughout their schooling. The Know Before You Owe Federal Student Loan Act would make loan counseling an annual requirement before each new loan disbursement, rather than for first-time borrowers. The bill would also add mandatory information that colleges must share with their students during loan counseling, including the student’s estimated monthly payment after graduation, loan reduction options, and a statement that the student should only borrow the minimum amount necessary to cover expenses and that they do not have to accept the full amount of loans offered.

Students would be required to manually enter the exact amount of federal funding they wish to borrow to ensure that “students make a conscious decision on how much to borrow rather than simply accepting the full amount of loans they are borrowing.” are eligible, ”said a summary. of legislation.

The Student Loan Disclosure Modernization Act would help student borrowers better understand the terms and conditions of a loan agreement before signing it. This would simplify the Ministry of Education’s plain language disclosure form and require it to be tested by the consumer, with more emphasis on the material terms of the loan such as finance charges, percentage rate annual and estimated monthly repayment. Borrowers should sign the form each time they take out a new loan.

“By giving those looking for higher education more tools to see what their student loan really means, we can remove some of the uncertainty they face after graduation,” Scott said. .

And while the legislation can go a long way in improving financial transparency for students, Streeter and Cody Hounanian, program director at Student Debt Crisis, said the bills still do not address the root of the problem. student debt.

“These are some of our best and brightest among us and yet they are still struggling to fully understand their options and navigate the student loan system,” Hounanian said. “It goes far beyond the simple lack of information. This is a fundamental problem related to the complexity and the frankness of certain elements of our student loan system. “

Streeter noted that many students and families will still have to take out loans and get into debt, whether or not they understand the information.

“For so many students, it’s just the choice of going to college or not,” she says.


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Joan Ferguson

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