The Consumer Financial Protection Bureau has launched the next phase of its ‘Know Before You Owe’ student loan project with an online interactive financial aid comparison tool. The project was made public in October with the release of a financial aid shopping sheet; essentially a standardized form that universities could present to parents as a uniform user-friendly way of explaining the total cost of the education and options for financing it. The online tool in beta phase and includes more than 7,500 schools in its database. The information is sourced from publicly available data and will allow students to compare the following across multiple offers:
- Estimated monthly student loan payment after graduation;
- Grant and scholarship offers;
- School-specific metrics such as graduation, retention, and federal student loan default rates; and
- Estimated debt level at graduation in relationship to the average starting salary.
The database includes information from community, state and private schools.
With the Dodd-Frank Wall Street Reform and Consumer Protection Act supervisory control of nonbank providers of private student loans has been given to the CFPB, who have been working hard to address the challenges faced by students. In November they published a Notice in the Federal Register that asked students, lenders, school and the general public to share their experiences with private student loan market. The resulting thousands of comments will be analyzed and the findings released later this year as part of a report to Congress.
Student loan debt recently made headlines for surpassing credit card debt as the leading source of US household debt, excepting mortgages. The CFPB and Congress are keen to make sure that this figure isn’t overinflated by lack of knowledge on the part of students paying more than they need to be.
“Student loan debt has crossed the $1 trillion mark and tuition continues to climb,” said CFPB Director Richard Cordray. “Now more than ever, students and their families need to know before they owe. Our Financial Aid Comparison Shopper helps students make apples to apples comparisons of their offers and pick the one that works best for their financial future.”