Prepared Floor Remarks by Senator Chuck Grassley of Iowa
Federal Government Should Encourage Students to Borrow Only What They Need To Earn College Degree
Wednesday, June 21, 2023
VIDEO

Every person taking out a loan knows it must be repaid.  

Still, we’ve seen lots of talk about canceling student debt after the debt has been assumed.

But that doesn’t help students who are not in college yet, but are going to enter college.  

It’s closing the barn door after the horse has been stolen.

To lower the cost of college, we need to let students be able to compare the true costs between schools.

They can’t do that now. Because right now, schools that are upfront about their costs – meaning they give the students an exact figure on what they’re going to have to pay to get a college degree – these very schools are at a disadvantage to their competition that doesn’t play by honest rules and honest policies about what it actually costs to go to a particular school. 

The Government Accountability Office took a look at the financial aid letters that should show students how much they will pay. 

Unfortunately, according to the GAO, not a single college followed all ten best practices that had been suggested by that agency, the Government Accountability Office. 

A third of colleges confused loans and grants. How misleading! You think you’re getting a grant, and you find out later it’s a loan.

And, 91% of colleges understate their true costs. 

So, it’s quite obvious: the free market doesn’t work if students only find out how much they owe after they’ve already selected the college they will attend. 

That’s why my bill that I entitled the “Understanding the True Cost of College Act,” creates a standard, easy-to-read financial aid letter. 

Under my bill, students could take this letter they get from the various colleges they’ve been accepted to and see, side-by-side, what each school offered them.  

They could compare apples to apples – not apples to oranges, as is the very case today.

Another thing that doesn’t make any sense: Do you know that the current practice effectively encourages students to go into debt more than what it actually costs to get a college degree?

The paperwork offering student loans tends to default to the maximum eligible loan amount, whether that maximum is needed or not to get a college degree. Under this practice, students have to ask to go out of their way to borrow less money than what is offered.

But guess what? Most students do borrow the maximum. We have a federal policy that encourages students to take out more debt than they need to get their degree. We shouldn’t have the federal government encourage indebtedness that is not needed. The federal government, in other words, should help students borrow only what they need.

So, I have a bill that goes by the title “Know Before You Owe Act” that would show students their estimated monthly loan payment after graduating. 

They would see it compared to the average salary for graduates of their particular college major. 

It would also require borrowers to type in the amount they want to borrow, instead of clicking a box to take the maximum that is allowed. 

Each of these proposals puts students in the driver’s seat, where the students should be. 

Choosing a college is one of the largest purchases many Americans ever make. 

It should be a good investment for a bright future, not a one-way ticket to excessive debt.

Students should have all the information they need when making that decision of what college or university to attend.

All the ideas I’ve mentioned here are bipartisan, and I have been advocating for some of these issues for years.

It is not a Republican or Democratic idea to give students the information they need to make the right decision for them.

That’s why I was glad to see each of these two ideas I’m talking about now included in the Lowering Education Costs and Debt Act. 

My colleagues in the Senate are right to focus on the start of the process, when students choose a college and take out a loan. 

Dealing with debt only after it’s taken out does not lower the cost of a college education. 

Right now, a student can’t pick a college on a price even if they wanted to. 

I hope this is the start of a discussion to help students limit their borrowing on the front end and ultimately put pressure on institutions to bring down the cost of college. 

Whereas President Biden’s proposal to wipe out student debt would give colleges license to pump up tuition costs, these proposals would pump the brakes on soaring tuition costs by empowering students to make smart decisions on the front end.

I yield the floor.

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