Introducing the CFPB’s Newest Tool: The Financial Aid Comparison Shopper
For millions of high school students, receiving acceptance letters from colleges can mark the beginning of a new exciting venture in academia, peppered with the prospect of meeting new and interesting people, and the chance to gain skills that will hopefully provide a shot at upward mobility and independence.
But those acceptance letters can also be a more foreboding sign of what’s to come—often, a unhealthy load of student loan debt.
To help students and their families assess which colleges may be the most financially feasible, the new federal Consumer Financial Protection Bureau unleashed a new tool, the Financial Aid Comparison Shopper, as part of its "Know Before You Owe" project.
“Student loan debt has crossed the $1 trillion mark and tuition continues to climb,” CFPB Director Richard Cordray said in a statement. “Now more than ever, students and their families need to know before they owe. Our Financial Aid Comparison Shopper helps students make apples to apples comparisons of their offers and pick the one that works best for their financial future.”
The interactive, online tool is clean and easy to use and allows students to compare the estimated cost for up to three universities. The tool factors in the costs by calculating the average grant and scholarships a typical student might receive, and also allows users to plug-in their exact financial aid package to see a more precise estimate. It also estimates the debt level upon graduation in relationship to the average starting salary for a recent graduate, and it figures out what the user would likely pay per month on a 10-year repayment plan.
The calculation isn't perfect, as there are several assumptions about how users are going to pay (through unsubsidized Stafford loans, and then through private loans), how long they're going to take before graduating (four years), and how much tuition and other college costs could to rise (the sheet assumes they won’t).
For servicemembers, veterans, and their families, the Financial Aid Comparison Shopper also includes a “Military Benefit Calculator” that can estimate educational benefits. The calculator includes military tuition assistance and Post-9/11 GI Bill benefits.
Student loan debt crossed the $1 trillion mark earlier this year, surpassing credit cards as the leading source of U.S. household debt outside of mortgages.
The new agency, which was formed in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, has also started taking complaints from private student loan borrowers about their debt, launched a Student Debt Repayment Assistant, a Financial Aid Shopping Sheet, and solicited comments from experts through a notice on private lending industry practices.
Naima Ramos-Chapman is an associate editor at Campus Progress.
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