News: Federal Policy & Advocacy

Senators Introduce Legislation Aimed at Making College Costs More Transparent

Thursday, May 2, 2019  
Posted by: Jack Porter, Advocacy Associate
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Last month, Sens. Chuck Grassley (R-IA), Tina Smith (D-MN), and Joni Ernst (R-IA) introduced a series of three bills with the overarching goal of making the cost of college more transparent. Each of the measures have the right intentions in this regard.

“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,” Sen. Grassley (pictured right) said in a press release. “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.”

Understanding the True Cost of College Act (S. 888)

NCAN members know all too well that financial aid offers are often confusing at best and misleading at worst. The Understanding the True Cost of College Act aims to ensure that students and families have an easier time understanding how much a college education will cost and that the options available for financing are clear. Under S. 888, colleges would be required to include the following items on the first page of what would be called a “financial aid offer” (as opposed to an “award” or “letter”):

  • Cost of attendance (COA), broken out by direct costs such as tuition, fees, housing, and food; and indirect costs such as books, transportation, and health insurance.
  • An indication that the financial aid offer could change in the next academic period.
  • Descriptions and disclosures for each of the aid types being offered, e.g. that grants do not have to be paid back, and loans must be paid back with interest.
  • The net price that the student is estimated to pay for the academic period outlined in the offer, as calculated by determining the difference between COA and the grant aid offered to the student.
  • The process by which a student can accept the financial aid package and the next steps they need to take.

Also included in the bill are requirements that institutions use standard terminology based on suggestions from stakeholders, and that those terms be placed on a standardized form. And while consistent definitions will provide students and families with more clarity as to what is being presented to them, a standardized form will likely leave colleges and universities with questions as to how to display unique types of institutional aid.

Full S. 888 bill text
S. 888 bill summary from Sen. Grassley’s office

Know Before You Owe Federal Student Loan Act (S. 887)

Improved loan counseling is a concept that has proven popular with lawmakers in the recent past, as the House passed a bill at the end of last year that would have implemented new counseling requirements by a vote of 406-4. And as NCAN has cited in its correspondence with policymakers, improving loan counseling is a worthy goal that will help borrowers from traditionally underserved backgrounds.

S. 887, or the Know Before You Owe Federal Student Loan Act, would increase the number of disclosures made to students by lenders, including the federal government, before they become a borrower in what would be called “pre-loan counseling” and mandate that borrowers receive periodic reminders concerning their loan.

Pre-loan counseling disclosures would include:

  • An estimated monthly payment amount.
  • A projection for a student’s starting wage after completing their current program.
  • A statement that the student should borrow as little as possible.
  • A warning of the difficulties of repaying a high balance.

In quarterly statements, borrowers would be provided with:

  • An updated loan balance.
  • An emphasis of the importance of on-time completion.
  • Options to minimize debt, e.g. scholarships and work opportunities.
  • The amount paid down so far.

Were S. 887 to become law, students would have to manually input the amount they wish to borrow in order to accept the loan before any disbursement would be made. Students would then get regular reminders that they have the option of paying down interest while enrolled. The bill does not designate any additional administrative capacity for the lenders to field questions from students that come as a result of the quarterly notices.

Full S. 887 bill text
S. 887 bill summary from Sen. Grassley’s office

Net Price Calculator Improvement Act (S. 889)

Before students are given a financial aid offer, they are largely left on their own to determine just how much each institution they are considering will cost them. The Net Price Calculator Improvement Act aims to make it easier for prospective students to shop around.

Among other things, S. 889 would allow the U.S. Department of Education (ED) to create a universal calculator and require ED to increase awareness of all net price calculators and submit a report to Congress on its progress. Moreover, the bill includes extremely specific prescriptions for where the net price calculator should be located on an institution’s website and how it should appear on the page – presumably a response to evidence that some colleges and universities bury the tool on their website, or do not comply with existing statute altogether.

Full S. 889 bill text
S. 889 bill summary from Sen. Grassley’s office

Although it is highly unlikely that any of these measures will move on their own before a comprehensive Higher Education Act reauthorization, ED released new guidance on financial aid offers just a couple of weeks ago. Notably, the guidance does not call for a standard aid offer form. NCAN will keep members apprised of any additional developments regarding financial aid offer reform, and welcomes any feedback on these issues that are especially important to our students.