Consumer Finance began offering advice on mortgages several months ago to make the process of applying easy to understand and easy to shop around. Today, Consumer Finance are beginning a project with the Department of Education to apply this same idea to student loans, writes Rohit Chopra at Consumer Finance.
They believe that right up front, before they commit, students should see the basic facts about what they’re going to pay for school. They’re calling this initiative Know Before You Owe for student loans.
The increasing cost of higher education in a tough economy has meant that more students are relying on student loans to pay for tuition and make ends meet while they’re in school. The collective debt that we, as a nation, have racked up to afford higher education has just now surpassed the debt of our nation’s credit cards.
Before students borrow, they should understand the costs and risks of the loans they will use to help pay for the school of their choice and last month, the Department of Education held a public meeting with community groups, higher education professionals, trade groups, and others. Most participants agreed on two things. First, offers need to be easier to understand. Second, they need to be comparable with other school offers.
The Department of Education plans to publish a model format that schools can use to communicate financial aid offers. Consumer Finance are now helping them gather feedback as they work to improve how schools communicate financial aid offers.
Consumer Finance has worked with the Department to sketch out a sample form as a thought-starter, not as a formal proposal. And they are inviting members of the public to check it out and tell them what you think.
This is a starting point, but they hope it’s useful and encourages discussion.
“Student lending is a huge and growing part of the economy. It affects all of us, and it’s going to have a huge impact on our future.”