GAO Report Prompts Push for Bipartisan Student Loan Reform Bill

In response to a recent Government Accountability Office (GAO) report, a bipartisan effort to require greater transparency from schools to help prospective students understand the true cost of higher education is underway.

GAO Report Findings

The GAO analyzed financial aid letters from hundreds of colleges across the country. The information in these letters was compared to 10 best practices designed to help students make better comparisons when deciding which school to attend.

As it turns out, none of the studied schools followed all of the best practices, and some of the other findings indicate that colleges might be trying to attract more students by misrepresenting their sticker price. Some of the specific findings of the analysis include the following:

• 91% of colleges underreport their total costs of attendance
• 65% leave out important details when explaining financial aid packages
• 31% label student loans as grants

The last point is especially egregious, as grants don't need to be repaid, but student loans do. As a result, some students believe they're accepting grants to attend college, when in reality they're taking on student loan debt.

Students trying to decide between colleges are typically making decisions based at least partially on the total cost. These financial aid letters muddy the waters and make a true comparison infeasible.

The Bipartisan Push for Student Loan Transparency

In response to the GAO report, Senator Chuck Grassley (R-Iowa) released a bipartisan plan to increase the transparency of financial aid offers. He is joined by Senator Tina Smith (D-Minn.) and Representative Young Kim (R-Calif.).

This plan includes a renewed push for the Understanding the True Cost of College Act, which has already been introduced in the Senate. However, it was referred to a committee and hasn't been voted on.

The bill is designed to force colleges to provide information that is accurate, transparent, and comparable so students can make more informed decisions about where to attend school.

"Previous attempts to create voluntary standards have been unsuccessful, with students literally paying the price," Grassley said in a press release. "Congress needs to pass the Understanding the True Cost of College Act to ensure students are able to easily compare financial aid offers by creating a uniform, standard offer letter. It’s clear our bill is needed now more than ever."

This isn't the only effort that Grassley and Smith are making to address the transparency problems surrounding higher education costs. They have also introduced legislation designed to help families better understand the true cost of student loans and improve access to higher education cost planning tools.