Education

House bill pushes more transparency for student borrowers

Rep. Donna Shalala, a Florida Democrat and former university president, has spent much of her first year in Congress seeking tougher federal standards on for-profit colleges, an issue that has divided members of Congress along partisan lines.

Thursday, though, she released a bill along with one of President Trump’s favorite lawmakers, Florida Republican Rep. Matt Gaetz.

The bipartisan bill would push more regular disclosures to student borrowers during the lifetime of their loan, including when they are still in college. The legislation is the latest evidence that while Democrats and Republicans are split on many major higher ed issues, transparency still has broad bipartisan support.

The Shalala bill would require that students receive monthly notifications about projected payments after graduation as well as descriptions of costs like origination fees. It would also require that borrowers have the option to make payments toward their loans while in college.

“The goal is to give student borrowers the necessary tools and information they need to manage financial aid and personal finances while in school,” Shalala, a former president of the University of Miami and of Hunter College and a former chancellor of the University of Wisconsin-Madison, said in a statement.

Gaetz said more transparency on borrowers’ loan debt “will improve financial literacy and will also help borrowers understand the financial commitments they are making.”

The bill’s co-sponsors include Rep. Chris Stewart, a Utah Republican; Rep. Abigail Spanberger, a Virginia Democrat; Rep. Ben McAdams, a Utah Democrat; and Rep. Jaime Herrera Beutler, a Washington Republican.

The Department of Education’s Office of Federal Student Aid has undertaken its own student disclosure initiatives during the Trump administration. The FSA last year rolled out a student aid mobile app that would allow students to track their loan debt and see estimates of potential monthly payments after graduation. Students would also be able to complete the Free Application for Federal Student Aid on the app and compare financial aid offers from multiple colleges.

A. Wayne Johnson, FSA’s chief strategy and transformation officer, has said the app would make financial aid tools more accessible to borrowers beginning when their award is disbursed.

Democratic and GOP lawmakers have also pushed legislation for more transparency on college outcomes. The College Transparency Act, which would create a federal student data system tracking measures like graduation rates and loan repayment at the college and program level, is likely to figure into an overhaul of the Higher Education Act.

Lynn Pasquerella, president of the Association of American Colleges and Universities, said in a letter to lawmakers that passage of the Shalala bill would be “an important step forward in addressing the student debt crisis” by helping borrowers understand the financial commitment of student loan debt.

Advocates for college students, though, said more disclosures alone won’t move the needle for struggling borrowers seriously.

“It’s obvious to pretty much everyone that borrowers are confused by their loans — but unfortunately, monthly disclosures just aren’t a cure for the larger disease here, which is a complex, unnavigable, Byzantine repayment system,” said Clare McCann, deputy director for federal higher education policy at New America’s higher education initiative and a former Education Department official.

Colleen Campbell, director for postsecondary education at the Center for American Progress, said it’s critical for borrowers to have clear information about their debt, but disclosure won’t solve the problems with the federal student loan system.

“We need fundamental changes to the structure of these programs,” she said.

Source :insidehighered