Federal Update: Senator Franken and Senator Klobuchar introduce bills to combat the cost of higher education
Several bills have been introduced in the past few weeks that would help students with the high cost of education. Senator Al Franken, who is a member of the Senate Education Committee and Senator Amy Klobuchar have been at the forefront of pushing an agenda for college affordability at the federal level.
Senator Franken has reintroduced college affordability bills to help students and families avoid debt by giving them better information about the true cost of college. These bills are designed to help college students avoid sticker shock and insurmountable debt.
Net Price Calculator Improvement Act
The Net Price Calculator Improvement Act would improve the effectiveness of and access to net price calculators—tools that provide students with early, individualized estimates of higher education costs and financial aid figures before they decide where to apply. The bill would require schools to put their calculators on webpages where students and families are likely to look for cost and admissions information. The Net Price Calculator Improvement Act also would authorize the Department of Education to develop a “universal calculator” that lets students answer a standard set of financial and academic questions to get cost estimates from many schools so they can better compare costs across institutions.
Understanding the True Cost of College Act
The Understanding the True Cost of College Act would create a universal financial aid award letter so that students could easily compare financial aid packages between schools. It would clarify what financial aid families will receive from a school and create standard terms for the aid offered so that students could accurately compare offers from different schools. Right now, schools do not use standard definitions or names for different types of aid, so students and families often report having difficulty figuring out the differences between grant aid—which does not need to be repaid—and student loans, which do need to be repaid.
Fairness for Struggling Students Act
The Fairness for Struggling Students Act, was also introduced by Senator Franken and it would once again allow privately issued student loans to be discharged in bankruptcy, giving them the same treatment as nearly all other forms of private unsecured debt.
Outstanding student loan debt currently stands at $1.4 trillion – more than double what it was in 2008. Balances of student loans have surpassed both auto loans and credit cards, making student loan debt the nation’s largest form of consumer debt outside of mortgages. Private student loans have been particularly burdensome on students, as these loans often have higher interest rates and fewer consumer protections than federal student loans. A law Congress enacted in 2005 gave these private student loans protected status in bankruptcy, which means students struggling to repay these high-cost loans will be burdened with them for life.
Letter to Secretary DeVos
Members of Congress urged Secretary of Education Betsy DeVos to reverse a decision that will dismantle consumer protections for student loan borrowers in Minnesota and across the country.
Previously, Sec. DeVos announced a plan to rescind several federal guidelines that are intended to reform the student loan servicing process. The guidelines, issued by the Obama Administration, were released to better assist borrowers in managing their loans, hold loan servicers accountable, and set financial incentives that will best support the interest of students.
The Bank on Students Emergency Loan Refinancing Act
U.S. Sens. Al Franken (D-Minn.) and Amy Klobuchar (D-Minn.) helped introduce a proposal that would allow millions of Americans who are struggling to afford their student loan payments to refinance their college debt at a lower rate, potentially saving thousands of dollars over the life of a loan.
The Bank on Students Emergency Loan Refinancing Act, which was reintroduced by a broad group of Senate Democrats, would allow those with outstanding student loan debt to refinance at the lower interest rates offered to new federal borrowers in the 2016-2017 school year.
When the Bank on Students Act was originally introduced by Sens. Franken and Elizabeth Warren (D-Mass.) in 2014, student loan debt had already risen to the level of a national crisis. Since then, it’s grown by more than $200 billion. And now, more than one-in-four borrowers are in delinquency or in default on their student loans, one-in-seven borrowers defaults on federal student loans within three years of beginning repayment, and according to a recent analysis, a quarter of borrowers default over the life of their loans.
Pell Grant Restoration Act
Sen. Klobuchar and Sen. Franken are leaders in efforts to expand higher education opportunities and make college more affordable for all students. The Year-Round Pell Grant Restoration Act they cosponsored to improve the Federal Pell Grant program was signed into law by the President earlier this month. Last year, Sen. Klobuchar and Sen. Franken introduced the In the Reducing Education Debt (RED) Act, which would allow student loan borrowers to refinance their outstanding debt at lower interest rates, making college more affordable for millions of students. They have also been strong supporters of TRIO programs and Federal Pell Grants that continue to provide fundamental support to low-income and first-generation students across Minnesota. They co-sponsored the Keep Student Loans Affordable Act and the Student Loan Affordability Act to maintain the federal student loan interest rate of 3.4 percent, and worked to prevent the rate from immediately doubling.