An independent federal agency is calling on Congress to help prevent college students from taking on an unaffordable amount of student debt.
Congress should require colleges to give students an accurate price for the cost of attendance, the Government Accountability Office said in a recent report that found that most colleges fail to provide all the financial information students need.
Prospective college students usually receive a financial aid letter from schools once they are accepted. The letter lists costs as well as grant awards and federal loans for which the student is eligible.
But these letters are far from straightforward and have long been criticized as being unnecessarily complicated.
According to the government’s best practices, colleges should estimate the net price – how much a student will pay to attend a particular school – by deducting only grants and scholarships from all costs like tuition, books, housing and meals. But about 91% of colleges understate or don’t include the net price at all in their letters.
“Federal law doesn’t require colleges to include clear, standard information in all of their financial aid offers. Congress should consider mandating that colleges do so,” the GAO said.
Currently, the Department of Education encourages colleges to follow some best practices – but adoption has been limited, according to the report.
One of the big problems with many financial aid letters is that they subtract federal loans (money students will have to pay back with interest) from the total cost, making the price look lower than it is – and lumping the loans together with financial aid a student doesn’t have to pay back, like grants. Some letters also subtract potential earnings from federal work-study – which is not guaranteed since students must apply for those jobs – from the total cost.
Another big problem is that some letters don’t include indirect costs, like housing and food, which can sometimes be more expensive than tuition.
North Carolina Rep. Virginia Foxx, a Republican, had asked the GAO to do the review and called the results “egregious and unacceptable.”
Foxx and Rep. Lisa McClain, a Republican from Michigan, introduced legislation last week that would establish certain requirements for college financial aid offers.
The bill is one of many legislative efforts that aim to provide students and their families better information about the cost of college. Many of these bills, like the Understanding the True Cost of College Act, have bipartisan support but have so far failed to pass Congress.
Foxx, GOP leader of the House Education and Labor Committee, has been critical of Biden’s proposed student loan forgiveness program – which, she argues will do nothing to address college costs while shifting the $400 billion cost of debt relief to taxpayers. The Supreme Court is expected to rule by June on whether the program is legal.
Biden has proposed making community college free, but he can’t do that on his own and legislation to fund the initiative failed to pass Congress when it came up for a vote last year. But lawmakers did approve a $400 increase to the maximum federal Pell grant for low-income students, raising it to $6,895 a year.
The Biden administration has made it easier for certain borrowers to get debt relief. Officials have expanded the Public Service Loan Forgiveness program and streamlined the process for students who were defrauded by their for-profit college or are permanently disabled to receive student loan relief for which they have long been eligible.
In addition, last month, the Department of Justice released new guidance that aims to make it easier to have federal student loan debt discharged in bankruptcy – a particularly difficult legal process under the previous policy.