Today, U.S. Sens. Al Franken (D-Minn.), Tom Harkin (D-Iowa), and Barbara Mikulski (D-Md.) introduced the Smarter Borrowing Act to protect and empower student loan borrowers with effective loan counseling.
Last year, student loan debt topped $1 trillion, surpassing credit card debt for the first time. By improving the timing and quality of loan counseling, this bill will ensure that students are better prepared to avoid taking on burdensome debt and will help them manage repayment once they're out of school.
"Keeping Minnesota graduates educated about their loans will help make sure they know exactly what they are expected to pay back," Sen. Franken said. "Requiring a universal financial aid form will help students get a picture of how much college will cost before they attend and proper entrance and exit counseling will give students details on how to pay back their loans. This legislation will help clarify information through counseling up front to make students better managers of their loans after graduation."
"College degrees are becoming increasingly important for Americans to compete in the global economy, but their cost is burdening workers far beyond their college years," Sen. Harkin, chairman of the Senate Education Committee, said. "In Iowa and around the country I hear from college students and parents with unmanageable debt who wished that they had better information about their options before taking out student loans. Too much student loan debt forces young people to delay important investments in their future, like buying a home, saving for retirement, or building a college fund for their kids-and only in extremely rare cases can this debt be discharged through bankruptcy. Our bill will help students navigate the student loan process, from beginning to end, so there are no surprises after graduation."
"I believe in America's opportunity ladder, and higher education is an important rung on that ladder," Senator Mikulski said. "This bill will make sure that our students have the help and counseling they need to manage their student loans. College is part of the American dream, it shouldn't be part of the American financial nightmare."
The legislation strengthens and reforms the current mandatory entrance and exit loan counseling requirements for federal student loans and notifies students annually of their cumulative debt, including their remaining eligibility for loans and grants. The bill also offers additional consumer protections and requires high-risk institutions to provide in additional counseling.
Sen. Franken has advocated strongly on behalf of educating students on the costs of college. In 2012, Sen. Franken introduced the Understanding the True Cost of College Act, which would create a universal financial aid award letter so that students can 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 can 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.
The Smarter Borrowing Act is led by Sens. Harkin and Mikulski, and cosponsored by Sens. Patty Murray (D-Wash.), Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), Bernie Sanders (I-Vt.), Jay Rockefeller (D-W.Va.), Dick Durbin (D-Ill.), Frank Lautenberg (D-N.J.), and Chris Murphy (D-Conn.).