The “Understanding the True Cost of College” Act Will Ensure Families Know Exact Cost of College When Deciding Which School to Attend
WASHINGTON, D.C. — Senator Tom Harkin (D-IA) today joined Senator Al Franken (D-Minn.) and a bipartisan group of Senators in introducing legislation so that families and students will gain a more accurate picture of exactly how much college will cost them before deciding which school to attend. Harkin is Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee. In addition to Harkin, the legislation was cosponsored by Senators Chuck Grassley (R-Iowa), Richard Blumenthal (D-Conn.), Chuck Schumer (D-N.Y.), Barbara Mikulski (D-Md.), Tim Johnson (D-S. Dak.), Ron Wyden (D-Ore.), and Ben Cardin (D-Md.).
Sen. Franken’s "Understanding the True Cost of College Act,” would create a universal financial aid award letter so that students can 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 can 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.
“This commonsense legislation helps empower students and families with necessary information to make an informed choice about college,” said Sen. Harkin. “Faced with soaring tuition and mounting debt, students lack the consistent, clear and useful financial aid information they need to compare their options and make the decision that is right for them. As Congress grapples with the pressing and complex issue of college affordability, this bipartisan legislation addresses a key piece of the puzzle and will help millions navigate the maze of financial aid information thrown their way through a standardized, comprehensive, consumer-friendly form. This is not about more information, but about the right information that students need when making such an important decision about their future.”
“The amount of debt students in Minnesota graduate with has skyrocketed, and part of the problem is that students often don’t have a clear picture of how much their education is going to actually cost them,” said Sen. Franken. “My legislation will require schools to use a universal financial aid letter so students and their families will know exactly how much college will cost, and will help them compare apples to apples when deciding what school a student will attend.”
“This initiative will empower students and parents with the information they need to make the best financial decision for their families and to avoid taking on more debt than they will be able to repay,” said Sen. Grassley. “This is one way to address the problem of student debt on the front end rather than after the fact. Also, the more we can help students and parents become savvy shoppers, the more colleges will be forced to rein in rising costs to compete for students.”
“I am proud to help lead the Understanding the True Cost of College Act, which would mandate fairer and more accurate disclosure in financial aid offers to students,” said Sen. Blumenthal. “It would provide for clearer terminology and definitions colleges use in their financial aid letters. Students would better understand the differences in the financial aid packages they receive from each institution, and make more informed decisions in choosing college.”
“College affordability must be a top priority for the federal government so that millions of students and future students at America’s colleges and universities can graduate with a diploma and not a pile of debt,” said Sen. Schumer. “I am proud to have partnered with Senator Franken to create a requirement that all higher education programs inform consumers about their financial aid options in a uniform manner, which allows them to make apples-to-apples comparisons when considering a college’s price tag. This proposal will help ensure that students receive a top-notch education that is as affordable for families and students as possible.”
“I believe in America’s opportunity ladder, and higher education is an important rung on that ladder,” said Sen. Mikulski. “This legislation will help families who are stressed and stretched to make an informed financial decision by requiring all colleges to provide basic information on the costs of enrolling at the school of their choice. Higher education is part of the American dream – it shouldn’t be a financial nightmare.”
“Not all student aid is created equal and students deserve to know exactly what kind of debt they are taking on and how much they will have to pay back,” said Sen. Wyden. “Student aid packages vary from school to school and are often difficult to compare with each other. The difference between a $20,000 grant and a $20,000 high interest loan can mean the difference between an affordable and an unaffordable education for many students, yet often times this distinction may not be readily apparent. Students deserve to know as simply and clearly as possible what they are taking on and the choices they have.”
“Students today have enough obstacles keeping them from a quality education, deciphering the paperwork shouldn’t be one of them. We need to make it easier to understand the options for financial aid and exactly what the full cost will be,” said Sen. Cardin. “I am proud to be a cosponsor of legislation that requires uniform, consumer-tested financial aid award letters with standard definitions. This will go a long way toward helping students fully understand their funding options and commitments.”
The "Understanding the True Cost of College Act" would:
• Require institutions of higher education to use a uniform financial aid award letter.
• Call on the Department of Education to work with colleges, consumer groups, students, and school guidance counselors to develop standard definitions of various financial aid terms for use in the uniform financial aid award letters.
• Establish basic minimums of information that must be included in the uniform financial aid award letters, such as: cost of attendance; grant aid; the net amount a student is responsible for paying after subtracting grant aid; work study assistance; eligible amounts of federal student loans; expected federal loan monthly repayment amounts; and disclosures including disclosures related to private loans, treatment of scholarships, and the terms and conditions of federal financial aid.
• Require the Department of Education to establish a process to consumer test the uniform financial aid award letter and use the results from the consumer testing in the final development of the uniform financial aid award letter.