When excited students tear into college acceptance packets next spring, many will find something new inside: information that tries to make it easier to understand the costs.
The federal government and more than 300 colleges and universities want to make sure students “know before they owe” what could be bills for thousands of dollars awaiting them down the road.
That’s what Richard Cordray, the director of the Consumer Financial Protection Bureau, said this summer when his office introduced its college costs “shopping sheet.”
“Students need to know how much their loans are ultimately going to cost, when all the interest and fees and other costs are factored into the equation,” he said.
The push by Cordray’s agency and the Department of Education for clearer college-cost information comes as tuition and student debt have been rising and household income has been falling. With 7,000 schools across the country using different forms to show costs, scholarships, and loans, it can be hard to compare.
It’s also all too easy for many high school students to glide over what loan repayments could mean later. The default rate might be evidence of that. In the past three years, it’s climbed to 13.4 percent.
Student loans are in default when a borrower with a monthly payment is delinquent for 270 days. The consequences are serious and can include garnisheed wages, collection agency costs, and many years of a bad credit rating.
“Too often, students are left without a clear explanation of what the costs mean or how they compare to other colleges they are considering, and as a result, many students leave college with debt that they didn’t fully understand at the time they entered school,” Education Secretary Arne Duncan said last month in a blog post.
Duncan wrote to all the nation’s college and university presidents in July, asking them to use the college shopping sheet. Two months later, 316 schools representing 10 percent of the nation’s undergraduates had agreed to do so.