The Department of Education has released a new tool it says will help consumers understand the costs of higher education before making the choice of whether, and where, to enroll.
Dubbed the “Shopping Sheet,” the Obama administration introduced today nationally standardized financial aid award letters they say will lay out all costs associated with a particular school, while tailored to the individual student. Loan interest rates, scholarship options, housing rent, food, books, and veterans benefits will all be displayed on this single form, serving as a calculator.
The design is aesthetically similar to the costs sheet displayed in new vehicle windows at auto dealerships, and would be distributed by colleges in their financial aid packages.
Colleges and universities already make all of this information available to potential students, but some schools have been criticized for confusing language in awards letters and the difficulty in piecing together the numbers scattered across an abundance of school-related correspondence.
In a conference call with reporters, Education Secretary Arne Duncan said the lack of uniformity in how schools provide the information “makes comparison shopping, which we think is important, almost impossible.”
“These letters all look different, contain different information, and often do a poor job of making clear how much a student will receive in aid, in grants, in scholarships, and how much they will have to take out in the form of student loans,” he said.
Participation in the program by colleges and universities is voluntary, but the government hopes schools will view it as a way to bring in students who may otherwise fail to understand what options are within their reach.
This fall, millions of students will begin freshman classes at colleges around the country. But between rising tuition rates and calculating student loan interests more Americans are coming to believe those costs aren’t worth the payoff. The federal government reports the average cost of public education rose 15 percent between 2008 and 2010, with two thirds of students owing more than $26,000 in loans upon graduation.
“Too many students I meet across the country tell me the first time they really understood how much debt they were in was when the first bill arrived,” Duncan said. “And clearly, that’s far too late and is simply not fair.”
Richard Cordray of the Consumer Financial Protection Bureau joined Duncan on the call.
“There are now more than $8.1 billion in defaulted private loans, and even more are in delinquency,” he said. “The bottom line is that no consumer should take on a large amount of debt without understanding the costs and the risks up front.”
At least one center of learning has already pledged to adopt the system: Mount Holyoke College. In a written statement, president Lynn Pasquerella said she hoped it would prompt other institutions to be more transparent with prospective students.
“In the absence of an understanding of the true costs of higher education, all students, but especially first-generation college students, are placed at risk,” she wrote.
A Department of Education official said the eventual goal of the program will be to make this information publicly available online, so various college cost calculators can factor the data automatically into their programs.
Duncan says to make the program mandatory for all schools using federal aid would require an act of Congress. Sen. Ron Wyden, D-Ore., introduced legislation for a similar program in Congress earlier this year, but it has not materialized for a vote.