WH Proposes to Lighten Student Debt Woes with Transparent Fin Aid Packaging
Student debt surpassed credit-card debt and continues to ratchet past the $1 trillion mark--making it this generations most pressing issue. Even the most slightest of legislative decisions on educational loans, like the impending interest rate hike on Stafford loan's that is set to trigger July 1 if Congress does not to act, can have disastrous affects on millions of young Americans who are grappling with rising tuition costs.
But even before students can worry about their Stafford loan interest rates doubling to 6.8 percent, they first have to wade through murky financial aid packages
Earlier this month Vice President Biden, along with Secretary of Education Arne Duncan, Consumer Financial Protection Bureau Director Richard Cordray, Domestic Policy Council Director Cecilia Munoz and other administration officials sat down with leaders from 10 colleges and universities to discuss increasing transparency in financial aid packages.
Their aim is to create a comprehensive, easy to navigate section on financial aid packages that will highlight the true cost of college by differentiating grants from scholarships, taking into consideration various aid options, and displaying estimated monthly loan payments young students can expect to repay post graduation-- all by the 2013-2014 school year.
Some universities are skeptical of such transparent measures because they can potentially shine negative light on their financial aid procedures and policies, but other institutions that were present at the sit-down, like Arizona State University, Syracuse University, and Vassar College, are committed to providing greater accountability and helping more students access and afford higher education.
Nancy Zimpher, Chancellor of the State University System of New York (SUNY), which is comprised of 64 colleges, universities, and community colleges, calls for the implementation of a "financial aid shopping sheet,” along with increased tax credits, and streamlined FAFSA forms to help more students get to college.
In November, Campus Progress wrote about the Consumer Financial Protection Bureau’s example of what a simplified financial aid letter could look like. The sample has minimal text, and instead uses an infographic–like approach to provide a clear breakdown and comparison of college costs. For the past eight months the ‘Know Before You Owe’ shopping sheet has been making improvements based on feedback and suggestions. In April, the Bureau launched a beta version of a tool that would help synthesize debt and tuition information to help students make better informed decisions.
The need for more affordable college is apparent, as America strives to improve its graduation rate to stay competitive in a more globally connected economy. One step towards achieving that goal is combating the mountain of student debt, and demystifying students’ financial aid packages. Often times, students don’t fully understand the complexities of the loans they’re taking on, or the lasting impact it can have on their financial situation.
At the meeting, Biden talked about the impact that financial aid had in his own life. His father made $12,100, an amount that was too high to qualify for some loans. As a Senator, one of Biden's first missions was to raise the eligibility amount to $18,000. In the White House, he has worked to redirect $60 million in funds from banks to student aid thereby increasing the number of Pell Grant recipients from 6 million to 9 million.
“It's not just about getting your child qualified, to get opportunity, to get an education," Biden said. "Some of you are like Arne and me and others, you come from circumstances where you know full well that you will not have had any chance, any chance at all at your positions you now have, were it not for the fact there was somebody there to give you some college assistance, advice, loans, grants, scholarships."
Amisha Sisodiya is an online communications intern with Campus Progress.
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