Tackle student loan debt’s underlying causes
Sen. Chuck Grassley of Iowa
Over the next few weeks, young people in Iowa and throughout the nation will head off to college for the first time. For these students, their years in college will prove to be some of the most formative of their lives. Earning a college degree is an accomplishment, and a diploma can open doors that were previously closed. Unfortunately, many of these students will also graduate with overwhelming debt.
The student debt problem in America is serious. In total, Americans owe nearly $1.6 trillion dollars in student loans, with the average borrower owing close to $29,000 upon graduation. In my home state of Iowa, the average debt at graduation is approximately $30,000. This kind of debt puts young people at a significant disadvantage as they begin their lives. They are often forced to delay important milestones, such as purchasing a home and starting a family.
There are a lot of contributing factors to this growing problem. First, college is simply too expensive. Students entering public, four-year universities can expect to pay about $10,000 per year in tuition alone. For those attending private schools, annual tuition is even higher. Of course, tuition isn’t the only expense for students. The price of room and board, books, and other essentials quickly add up. Combined with tuition, these extra costs make it difficult for many students to understand the true cost of college and make price comparisons. It becomes even more challenging when they need to compare scholarships and financial aid packages between colleges. This often leads to many students being unable to discern the lowest cost option and borrowing more money than they need.
Some politicians in Washington propose eliminating student debt obligations. This is not the answer. It doesn’t solve the underlying problems causing skyrocketing tuitions and debt, and would only encourage bad decisions in the future by both colleges and prospective students. If we want to help lower tuition costs and dig our young people out of debt, we need to take steps to prevent the problem in the first place. I’ve introduced several pieces of legislation focused on helping students make more informed decisions to reduce student loan debt at every stage. They emphasize the value of smart spending and fiscal discipline, values I learned growing up in Iowa.
The Net Price Calculator Improvement Act would help students understand how much their education will ultimately cost when shopping for colleges. It would require academic institutions to place net cost calculators in high-traffic areas of their site to ensure that students are easily able to calculate the cost of college. The bill would also encourage the Department of Education to develop a “universal calculator” which would allow students to compare the cost of multiple academic institutions at the same time after answering a single set of questions. These changes would help students be smart consumers of education by giving them the ability to compare the cost of different schools. Colleges would then be forced to consider cost more as they compete for students, driving down tuition and fees across the board.
The True Cost of College Act would make a universal, uniform financial aid offer that clearly provides information on the cost of the college, the amount of grant money the student would receive, and the amount the student would ultimately be responsible for paying, including loans. This would increase transparency and equip students with the information they need to make the best decision for them.
The Know Before You Owe Federal Student Loan Act would improve the student loan counseling process by asking students annually how much they need to borrow rather than defaulting to the maximum amount. Also, it would change the process by providing students with information on how their likely monthly income would compare to their likely monthly student loan payment. This measure would give students the ability to conceptualize their future in real-world dollars so they can make informed borrowing decisions.
Determining how much an education will cost is difficult. The opaque and confusing federal financial aid process often results in students making unwise decisions about their future. My commonsense reforms would empower our young people with tools to help them make cost-conscious decisions and avoid getting in over their heads in debt. These bills would also help ensure college degrees remain an asset for the future, not a detriment.