As the Supreme Court prepares to consider two legal challenges to the Biden administration’s nearly $1 trillion student loan cancelation plan, Sens. Chuck Grassley (R-Iowa) and Tina Smith (D-Minn.) today reintroduced three bipartisan bills to help students and families make informed decisions about borrowing for college. The bills ensure that students get the full picture when choosing a college and taking out loans. From the initial college search, to the acceptance of financial aid, to counseling once in college, the bills would help college students avoid sticker shock, find the best college for their budget and avoid taking out ill-advised and oversized loans.
“I often hear from Iowa families who are frustrated and confused by the complex student loan borrowing process. So much of the student debt conversation focuses on repaying debt. We ought to fix the process on the front-end before students get in over their head. The federal government should be offering commonsense resources to better prepare borrowers,” Grassley said. “These bills would provide additional counseling, resources and clarity to the student loan process so that America’s next generation of leaders can pursue higher education opportunities without breaking the bank.”
“We need to equip students and their families with better information about the costs of college from the initial college search to when they receive financial aid offers. My bipartisan bills with Sens. Grassley and Ernst would help fix these problems,” Smith said. “That includes improved net price calculators so students and families have estimates of college costs after taking into account scholarships and grants. We’ve got a plan to create a universal financial aid offer so students can easily compare financial aid packages between schools, which is important because time and again students are met with inconsistent and incomplete information. And we’ve introduced a bill to improve loan counseling. These reforms will help students make one of the biggest financial decisions of their lives—how to pay for college.”
The Net Price Calculator Improvement Act would improve the effectiveness of and access to net price calculators. Net price calculators provide students with early, individualized estimates of higher education costs and financial aid figures before they decide where to apply. Rep. Brett Guthrie (R-Ky.) introduced companion legislation in the U.S. House of Representatives. A summary of the Net Price Calculator Improvement Act is available HERE.
The Understanding the True Cost of College Act would create a universal financial aid offer form and standardize terms used to describe financial aid to allow students to more easily compare financial aid packages between schools. This aims to prevent troubling findings by the GAO that over 90% of college financial aid offer letters currently understate the price students would pay. Sen. Joni Ernst (R-Iowa) is an original cosponsor of the bill and Rep. Young Kim (R-Calif.) introduced companion legislation in the U.S. House of Representatives. A summary of the Understanding the True Cost of College Act is available HERE.
The Know Before You Owe Federal Student Loan Act would strengthen the Higher Education Act to enhance the current loan counseling requirements for institutions of higher education. The bill would make loan counseling an annual requirement before new loans are disbursed, rather than a one-time requirement for first-time borrowers. The legislation would also allow students to decide exactly how much they would like to borrow, rather than offering the maximum possible loan amount as the default option. Rep. Mariannette Miller-Meeks (R-Iowa) introduced companion legislation in the U.S. House of Representatives. A summary of the Know Before You Owe Federal Student Loan Act is available HERE.
Grassley has long warned of the fiscal danger posed by blanket cancelation after the fact, and is an advocate for increased transparency to empower prospective and current students. Earlier this month, he joined Sen. Joni Ernst (R-Iowa) in introducing the Student Transparency for Understanding Decisions in Education Net Terms (STUDENT) Act to provide student loan applicants with an estimate of the total amount of interest they would pay prior to accepting a loan.
“These proposed bills will help give students and their families a more comprehensive understanding of the total cost to finance postsecondary education. When deciding on a postsecondary pathway, this information allows students to better compare the financial impact of each option and make the most fiscally sound investment in their future,” said Dr. Mark Wiederspan, Executive Director of Iowa College Aid.
“At Iowa Student Loan, we talk to some borrowers who regret their college outcome and the amount they owe. Senator Grassley’s Know Before You Owe Federal Student Loan Act will provide the information that students need to avoid these regrets,” said Steve McCullough, CEO of the Iowa Student Loan Liquidity Corporation.
“The Understanding the True Cost of College Act is the signature legislation that will make financial aid offers more transparent and student-friendly. It will enable students and families to make apples-to-apples comparisons among colleges and universities, empowering them to make financially-informed postsecondary decisions. We applaud Senators Grassley, Smith, and Ernst for centering students and families in this bill,” said Rachel Fishman, Acting Director of the higher education program at New America.
“We applaud Sens. Grassley, Smith, and Ernst for leading the Understanding the True Cost of College Act. Paying for college is one of the biggest financial decisions facing many American families. Yet, too many colleges are still providing families with unclear and misleading information about their costs. This bill would make common-sense reforms to ensure that colleges provide students with clear, transparent, and comparable information about college costs and the financial aid options available to cover them,” said Michele Shepard, Senior Director of College Affordability at The Institute for College Access & Success.
“uAspire advises students on finding an affordable path to college, so we see first-hand how financial aid offers often leave students uncertain about college costs. Financial aid offers need to unquestionably identify loans, grants, and work-study as different types of financial aid and provide students with clear information on how much they need to pay to attend college. We thank Senators Grassley, Smith, and Ernst for leading the Understanding the True Cost of College Act, which would add critical clarity and transparency to financial aid offers,” said Anika Van Eaton, Vice President of Policy at uAspire.
“Understanding the full scope of college costs should not leave students perplexed at best or uninformed at worst. Instead, as students seek to upskill by investing their time and resources in a college education, they deserve clear and complete information about how much that investment will cost. IHEP applauds the Net Price Calculator Improvement Actand the Understanding the True Cost of College Act introduced by Sens. Grassley and Smith. Both will help shine much needed light on college costs and, in turn, help students and families make informed decisions about where to enroll. Cost transparency is critical for all students, especially students from low-income backgrounds as they pursue economic mobility and security through a college education,” said Mamie Voight, President of the Institute for Higher Education Policy (IHEP).
“EFC proudly endorses the Know Before You Owe Federal Student Loan Act and its common-sense reforms to federal student loan counseling requirements,” said Gail daMota, President of the Education Finance Council (EFC).