Ms. SCHWARTZ. As August begins, millions of young people across the country are preparing to head off to college. Fall brings not only a return to course selection and roommates and football games but also to high college tuition bills. In my home State of Pennsylvania, the average cost of tuition and fees tops $12,000 for a public 4-year school and $32,000 a year for a private university. These high costs force 70 percent of Pennsylvania college students to take out student loans.
One of the biggest decisions facing students and college graduates is not just the amounts they borrow but who their lenders will be and whether they will be private lenders or Federal loans. Federal loans are simply a better deal. They offer lower, fixed interest rates, consumer protections and manageable repayment options. Private student loans, on the other hand, typically have uncapped, variable rates, hefty fees and few consumer protections. From 2001 to 2008, the private student loan market exploded, increasing from $5 billion to $20 billion. Lenders loosened underwriting standards and often cut school financial aid offices out of the process.
While students may need private loans, they should know the differences between private lenders and Federal loans and be fully informed of the differences in cost and obligation. Unfortunately, right now, a majority of student loan borrowers who are turning to more expensive student loan programs of private options do so without fully exhausting all of the Federal student loan options available to them. This means that student borrowers unnecessarily take on increased costs.
That's why I've joined with my colleagues, Representatives Jared Polis and Tim Bishop, to introduce the Know Before You Owe Act in order to make sure that students and their families have access to vital information regarding their student loan programs. The legislation requires schools to counsel students on the financial aid options available to them, and it requires private lenders to adopt commonsense steps to protect student borrowers. The Know Before You Owe Act will empower students and their families to make informed decisions about financing their educations.
Access to higher education is a top priority for middle class families. They know that higher education is one of the keys to being able to succeed in a competitive 21st-century marketplace. They are willing to invest in their futures by taking out student loans in order to afford college. We need to ensure that students have full and complete information about the most affordable student loan options available to them in order to fight back against those who might take unscrupulous advantage of families facing tough financial decisions.
I urge my colleagues to join with me in supporting this important legislation and to better ensure that millions of Americans can afford college without taking unnecessary long-term financial hardship and risk.