A bipartisan group of US senators recently introduced three bills designed to make it easier for families to get financial aid and student loans to pay for college.
Bills, introduced in late April and drafted by Minnesota Democrat Tina Smith and Iowa Republicans Chuck Grassley and Joni Ernst, include the College True Cost Understanding Law of 2021, the Net Price Calculator Improvement Act, and the Federal Know Before you must ”Student Loan Law.
While standardized and clear language alone will not make college more accessible or put more money into students’ pockets, it is still important for students and their families to have clear, timely, and actionable information about college costs and student loan debt… And with rising costs outstripping income growth, more students than ever need financial assistance, including loans, to pay for college tuition.
After a student has been admitted to college, he or she receives an offer of financial aid, commonly referred to as award letter, which indicates the total tuition fees for the first academic year and the type of assistance. While these sentences are intended to convey important information, including about student loans, they are all too often confusing, unclear, or misleading.
Colleges are not required to adhere to any standard format or terminology when informing applicants about their financial assistance offers, which often makes it difficult for families to get a complete picture of how tuition will be paid and how to compare offers from different institutions.
New Understanding the Actual Cost of College Tuition seeks to remedy this by requiring the Minister of Education to develop a standardized format and terms that colleges will use to convey key messages, including a clear distinction between non-refundable grants and loans.
The bill requires the secretary to work with a range of stakeholders, including students and their families, military personnel and veterans, financial aid experts, nonprofit and consumer groups, and school counselors, to develop this improved format.
In a standardized format — what schools would now call “financial aid proposals” —colleges would have to clearly indicate cost information at the beginning of the proposal. They will then need to include a separate and distinct section list. grants as well as scholarshipsfollowed by a statement of the estimated net price the student will have to pay, in turn, accompanied by details of the school’s recommended non-PLUS loans – all stated “in a consumer-friendly, simple and straightforward manner,” according to proposed legislation.
The bill also requires specific language regarding student loans, including “clear use of the word ‘loan’; clear designation of federal subsidized and unsubsidized loans; disclosure of various information, including the possibilities of borrowing in less or more than recommended; as well as a link to the Department of Education Loan Repayment Calculator Simulator and explanations to it.
And, if justified by consumer testing results, the secretary of education may also direct colleges to include information such as school statistics on the percentage of students who borrow money, as well as the average student loan debt of recent graduates and the default rate. …
Meanwhile Know Before You Should Federal Student Loan Law will improve advising on federal student loans. Every student who borrows federal student loans, which accounts for more than 90% of US student loan debt at the latest, must complete introductory counseling, a series of online modules designed to educate students on borrowing and repayment.
The proposed law would, among other things, amend the Higher Education Act 1965 to update conditions, including replacing introductory counseling with “pre-trial counseling” so that borrowers have a clearer idea of what debt they are taking on and what the consequences are. factors such as interest rates and repayment options.
Research shows that while students are hungry for information on how to fund their education and manage their federal student loans, the current counseling format is somewhat ineffective. This law aims to provide students with better and more frequent counseling, including new information such as an estimate of their total expected debt at graduation, how to complete their studies on time to reduce costs, and the expected debt-to-income ratio based on their current program. study.
Third Senators Bill, Net Price Calculator Improvement Act, will also amend the Higher Education Act and improve another key information tool for student loan borrowers: net price calculators.
The net price is the amount a student is required to pay for the school after accounting for any non-refundable financial aid such as grants, scholarships, or tuition cancellations.
For example, if the annual sticker for a school is $ 40,000 and the student receives $ 30,000 in the above aid, the difference in the student’s net cost is $ 10,000. This is the amount that the student must cover, which is usually made from sources such as earnings, savings, loans, or a combination of these.
By looking at the net price rather than the price tag, many students may find that schools they felt were too expensive might be within reach.
Net Price Calculators allow prospective students to go beyond college prices to get early personalized grades college expenses and financial assistance. Although the Department of Education requires colleges to post a net price calculator on their websites, it can be difficult to find and use the tool.
To address this issue, the new bill will allow the Secretary of Education to create a “universal net price calculator” – a centralized tool that will allow users to obtain comparable net price estimates for multiple colleges without having to re-enter their information on different websites. Among other things, the law also permits anonymity and guarantees the confidentiality of the information provided about users.
Along with other new efforts to make college more accessible and reduce student loan needs, these bipartisan bills will give students access to better information as they come. decide where to go to college and how to pay for it. While it is difficult to predict what Congress will do, lawmakers may well decide to pass these bipartisan bills and help students and families across the country make informed choices about tuition costs and the potential role of student loans.