WASHINGTON [2.27.23] – Today, Senators Tina Smith (D-Minn.) and Chuck Grassley (R-Iowa) 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. In December 2022, the Government Accountability Office issued an alarming report, finding that colleges are misleading students, understating costs and leaving out critical details regarding federal student aid.
“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,” said Smith. “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.”
“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,” said Grassley. “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.”
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 strengthen 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.