With U.S. Senator Chuck Grassley
Q: What do you tell Iowans who worry about student debt?
A: Paying for college ranks high among the concerns of Iowa families, no doubt about it. I tell college-bound students and their parents to start saving as early as possible and to start their college search with their eyes wide open. In other words, do your homework. Compare not only college tuition for prospective schools, but also compare projected earnings for prospective fields of study. While colleges typically charge the same for every major, career pay-scales for different courses of study can vary dramatically. The average student debt for Iowa college graduates is nearly $30,000. It’s possible to avert sticker shock and insurmountable student debt with good planning and good judgment. Leave plenty of time to do comparison-shopping, apply for scholarships and grants and investigate options. Federal Pell Grants are awarded to students based on financial need and federal loans are available to help just about any student obtain a higher education. However, over-borrowing is a significant problem that students can take steps to avoid. That’s why I’m working to empower student borrowers with new tools to help avoid the stress and pitfalls of borrowing more than needed to earn an advanced degree. Graduates who borrow beyond what they need will accrue more interest and shoulder a bigger repayment burden. I’m working to enact bipartisan reforms that give student borrowers a clear-eyed understanding with better transparency tools. My Net Price Calculator Improvement Act would improve access to individualized estimates of higher education costs and financial aid figures before students apply to colleges. Creating a “universal calculator” would allow students to answer a standard set of financial and academic questions to get cost estimates from many different schools. Another tool to improve financial literacy among student borrowers is my bipartisan bill called the Understanding the True Cost of College Act. It would create a standardized, universal financial aid award letter so students can compare apples to apples when they open up financial aid offer letters from different colleges. Iowa families have told me they are bewildered by the entire application process. By creating standard terms and definitions for different types of financial aid, we can make the situation less daunting and avoid misunderstandings between grant aid – which does not need to be repaid – and student loans – which do need to be repaid. Both of these tools would make it easier for students to find the best value college for their hard earned money, which will make colleges more accountable for controlling costs.
Q: How else are you working to address college affordability?
A: In addition to my efforts to help make our student scholars smarter borrowers, I also work to keep more money in students’ pockets with the federal tax deductibility of qualified tuition expenses and to strengthen savings tools so students won’t need to borrow as much to pay for college. As former chairman of the Senate Finance Committee, I secured the permanent extension of the student loan interest deduction and led the way to foster participation in and expand the usefulness of 529 college savings plans for qualified education expenses. Saving for college instead of borrowing can cut the cost of college in half. And that’s good for borrowers and taxpayers. As it stands, taxpayers already have a big stake in higher education through federal student aid and various vehicles in the federal tax code. In fact, federal student loans that are offered to nearly everyone who applies will cost taxpayers about $170 billion over the next 10 years, according to what the Congressional Budget Office says is the most accurate estimate. As of Oct. 1, families may now fill out the federal Free Application for Federal Student Aid (FAFSA). This is three months earlier than previous years. Along with another reform allowing students to use tax information from the year before, this will give families a head start in the financial aid process. The FAFSA determines a student’s college financial aid eligibility for Pell Grants for low-income students and for subsidized and unsubsidized Stafford Loans. What’s more, most colleges use FAFSA to determine eligibility for their own need-based grants and scholarships. Obtaining a post-secondary education can open doors of economic opportunity and prosperity for the next generation. But students need to be smart about it. I want to make sure our children and grandchildren aren’t saddled with burdensome debt that makes it harder for them to get ahead and stay ahead. To that end, I’m also advancing what I call The Know Before You Owe Federal Student Loan Act. This legislation would empower students to become smarter borrowers. It would improve student loan counseling services and require colleges to ask students how much they would like to borrow, instead of automatically listing the maximum amount available. And it would improve resources for students to calculate their debt to earnings ratio so they start out on the right foot and keep strong footing after graduation. Helping college-bound students become good stewards of their money and smarter borrowers will brighten their futures and America’s prosperity at the same time.