Sens. Chuck Grassley of Iowa and Tina Smith of Minnesota along with Sen. Joni Ernst of Iowa today introduced three bills that would empower students and their families with better information about the costs of college from the initial college search, through the application process, to accepting financial aid. The Net Price Calculator Improvement Act, Understanding the True Cost of College Act and Know Before You Owe Federal Student Loan Act would help college students avoid sticker shock, compare colleges to find the best value and increase the amount of information students receive about federal student loans before they sign up for tens of thousands of dollars in debt.
“A college education generally remains a good investment. But students are flying blind when it comes to making one of the most expensive decisions of their lives,” Grassley said. “It’s almost impossible for students to compare college costs until they have applied and received their financial aid award. And when the financial aid offer they receive from one school differs from another school, students have a very hard time determining which school is the most economical choice. Students often face hardships after graduation because they borrowed more from the federal government than they can afford to repay with the degree they earned. These bills would help take the mystery out of college costs and ensure that students know what they’re getting themselves into before they get in over their heads.”
“When prospective students and families sit down to figure out the cost of college they are often met with inconsistent and incomplete information,” Smith said. “There is limited information early in the process, and too often comparing award letters does not mean an apples-to-apples comparison. These bills would bring greater clarity and transparency to net price calculators and financial aid award letters, improve loan counseling, and help students make one of the biggest financial decisions of their lives—how to pay for college.”
“There are few things more important to Iowa families than providing kids with a quality education and opportunities to succeed. Iowa students need to have the necessary tools and resources when considering college,” Ernst said. “Our bipartisan bills will make it easier for families and students to compare costs and choices for higher education, enabling them to find the opportunities best suited for their future success.”
The Net Price Calculator Improvement Act would improve the effectiveness of and access to net price calculators, the tools that provide students with early, individualized estimates of higher education costs and financial aid figures before they decide where to apply. The bill would require schools to put their calculators on webpages where students and families are likely to look for cost and admissions information. The Net Price Calculator Improvement Act would also authorize the Department of Education to develop a “universal calculator” that lets students answer a standard set of financial and academic questions to get cost estimates from many schools so they could better compare costs across institutions.
The Understanding the True Cost of College Act would create a universal financial aid award letter so that students could easily compare financial aid packages between schools. It would clarify what financial aid families will receive from a school and create standard terms for the aid offered so that students could accurately compare offers from different schools. Right now, schools do not use standard definitions or names for different types of aid, so students and families often report having difficulty figuring out the differences between grant aid — which does not need to be repaid — and student loans, which do need to be repaid.
The Know Before You Owe Federal Student Loan Act would strengthen the current loan counseling requirements for institutions of higher education in the Higher Education Act by making the counseling an annual requirement before new loans are disbursed rather than just for first-time borrowers and lets students to decide exactly how much to borrow rather than having the maximum possible amount be the default. The bill then adds several key components to the information institutions of higher education are required to share with students as part of loan counseling so that students know not to borrow more than they are likely to be able to repay.
A summary of the Net Price Calculator Improvement Act is available here.
A summary of the Understanding the True Cost of College Act is available here.
A summary of the Know Before You Owe Federal Student Loan Act is available here.