CFPB Releases Standardized “Shopping Sheet” for College Comparisons
The Consumer Financial Protection Bureau partnered with the Obama administration to release the model for a universal financial aid award letter or a college “shopping sheet.” The form would provide certain statistics about a college in a standardized format that would allow students to compare the shopping sheets of different colleges more easily.
Students would be able to see on the sheet how much one year of education costs, their total grant and loan award, and the net cost of attendance. In addition, they would be able to look at the data on default and graduation rates of students at each university as well as those students’ median debt load.
In a conference call with reporters, Secretary of Education Arne Duncan noted that under the current confusing student loan process, students may not know what they’re getting themselves into until their first student loan bill arrives. The shopping sheet would give students a chance to see an estimate of what their monthly payments would be before enrolling. “This is what I call a triumph of common sense,” said Duncan.
The Consumer Financial Protection Bureau worked on the college shopping sheet for months, receiving more than 1,000 comments from the public. This is in addition to thousands of public comments the bureau received earlier this year about the private loan industry, many of which were full of confusion and surprise about loan terms and monthly repayment heft.
“We have heard from so many student-loan borrowers who say that they simply did not understand what they signed up for,” said CFPB Director Richard Cordray in a press release. “The Financial Aid Shopping Sheet gives students real numbers and a clear format that makes sense of a huge financial undertaking that too often is complex and confusing.”
Right now, adopting the shopping sheet is voluntary for colleges and universities. Secretary Duncan believes many will immediately start using the sheet out of self-interest, noting that students and their families may be skeptical of universities that don’t adopt it. When asked whether the administration could take executive action to mandate the shopping sheet, Duncan responded that it would take Congressional action to do so.
Senator Al Franken (D-Minn.) introduced legislation in May that would require all institutions of higher education to use the letter — Chuck Grassley (R-Iowa), and Tom Harkin (D-Iowa) were the original co-sponsors. On Tuesday, all three commended the administration for creating the shopping sheet and renewed their call to make it mandatory.
“Unless a universal financial aid award form is made mandatory, colleges will still be able to use whatever form they want, and families won’t be able to compare apples to apples when evaluating financial aid offers,” said Franken in a joint press release.
“A better understanding of financial aid is one way to address the problem of student debt on the front end rather than after the fact,” Grassley added.
The shopping sheet isn’t the only reform the CFPB has been pushing on student loans recently. Last week, the CFPB and Department of Education released a joint report on the private student loan market that recommended several reforms.
The report recommended that lenders work with school financial aid counselors and that borrowers receive better information about loans. It compared the private student loan market to the subprime lending market in the run-up to the financial crisis, where lenders took advantage of borrowers and maintained loose standards for issuing loans to homeowners. The CFPB and DOE recommended that lenders raise their underwriting standards and that Congress allow student loans to be discharged through bankruptcy.
Eric Murphy is a journalism intern with Campus Progress.
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