Energy & Environment

What prospective college students need to know before they go — or owe

Getty Images

A college degree is more often a required credential for landing a good job and building a secure financial future. Unfortunately, too many college hopefuls don’t have the information they need to be sure they can complete the journey to graduation. Today, two-thirds of federal defaults are for less than $10,000, an indication that the student started and did not complete their degree. If we want to meaningfully reduce student loan defaults, it is essential that young Americans receive information about the total cost of education and value of their education before they arrive on campus.

A recent report showed that 73 percent of the 11.6 million U.S. jobs created since 2009 were filled by postsecondary graduates. And, economic research has shown that the average American with a bachelor’s degree earns $1 million more over a lifetime than their peers with just a high school education.

{mosads}These benefits have driven more Americans to our colleges and universities. More than a third of American adults have a bachelor’s degree or higher, the highest level ever recorded by the U.S. Census Bureau. The availability of student loans has allowed more students to access those benefits. However, too many students don’t understand the full cost of earning a degree.


Research from Navient and EverFi shows just 41 percent of high school seniors expect to borrow to pay for their degree. However, 61 percent of college freshman expect to borrow at some point during their college career. There is a stark gap between expectations and reality.

Students have the need for more information with approximately three-quarters interested in or open to receiving personalized advice based on their financial aid forms.

The good news is there has been progress in improving information flow to potential college students. The U.S. Department of Education and the Consumer Financial Protection Bureau have developed tools to help students assess the costs of college and the impact of student loans.

Families can more easily compare financial aid award offers, thanks to the thousands of colleges that have adopted the model Financial Aid Shopping Sheet. Members of Congress, including U.S. Senators Joe Donnelly (D-Ind.), and Tim Scott (R-S.C.), and Representative Luke Messer (R-Ind.), have called for legislation to boost financial literacy skills and provide more transparency on borrowing costs.

Although these are steps in the right direction, our research shows more needs to be done. There is an opportunity to take a holistic, origination-to-repayment approach to student loans that provides borrowers better information sooner to empower their decision-making about college and borrowing. We recommend three main actions for policymakers.

First, invest more time and resources in a robust financial counseling program that provides customized information with a special focus on at-risk students. The program would be aligned to key dates in the college admissions schedule — so students and their families have a better opportunity to understand the consequences of borrowing before deciding on a school, major or the current semester’s financing plan.

Second, reform the award letter process to be more transparent about the full costs of a chosen degree. Instead of the long-used annual award letter that covers a single year, prospective students should receive award letters that address the full cost of the chosen degree, family resources that will be needed to cover the costs of the degree, and the amount and impact of borrowing.

A degree-based financial aid award letter would empower students and families to make more informed decisions when choosing a school and degree program. A bachelor’s degree can cost as much or more than the cost of a home, yet no one would agree to buy a house after receiving a price for the foundation only.

Third, implement clear loan disclosures like Truth in Lending standards for federal loan borrowers. Such disclosures are used by mortgage, private student loan and credit card lenders. This kind of transparency will enable students and their families to more fully understand the total cost of a loan, including how deferring payments while in school adds to the amount they borrowed and the monthly payment that will be expected of them after college.

There is no question the availability of student loans has enabled millions of Americans to access a higher education. However, students and their families should also have access to information that will help them make informed decisions about their degree program and borrowing.

Policymakers looking to improve the student loan system should consider these recommendations to ensure students have better information prior to starting on their higher education journey and making decisions about borrowing.

Jack Remondi is president and CEO of Navient, an asset management and business processing solutions company that helps millions of people achieve financial success.

The views of contributors are their own and are not the views of The Hill.

Tags Joe Donnelly Tim Scott

Most Popular

Load more


See all Video