What is "Know Before You Owe"?
The President's recent Executive Order to protect student veterans from predatory colleges and universities includes a requirement for schools to require "Know Before You Owe" documentation, even if the student veteran does not apply for federal student aid. So, what is "Know Before You Owe"?
The Consumer Financial Protection Bureau started its “Know Before You Owe” initiative to make mortgage forms easy to understand and comparable. The need for clear information on how much debt they’ll be taking on in order to go to college has never been greater. The CFPB is now is working with the Department of Education to create a financial aid version of the "Know Before You Owe" for students.
The CFPB kicked off the Know Before You Owe student loan project last October by working with the Department of Education on a draft Financial Aid Shopping Sheet that higher education institutions could use to present families with a uniform, easy-to-understand explanation of the total cost of post-secondary education and their options for financing it. The Financial Aid Comparison Shopper builds on that by helping students to compare the information across schools.
The CFPB launched the next phase of its Know Before You Owe student loan project in April 2011 by releasing a beta version of the Financial Aid Comparison Shopper, an interactive, online tool designed to help families plan for the costs of post-secondary education.
The beta version of the Financial Aid Comparison Shopper has more than 7,500 schools and institutions in its database, including vocational schools and community, state, and private colleges. It draws information from publicly available data provided by government statistical agencies. With the prototype, students and their families can compare the following across multiple financial aid offers:
- Estimated monthly student loan payment after graduation.
- Grant and scholarship offers.
- School-specific metrics such as graduation, retention, and federal student loan default rates.
- Estimated debt level at graduation in relationship to the average starting salary
The Financial Aid Comparison Shopper also includes a “Military Benefit Calculator” that can estimate education benefits for Service members, veterans, and their families. The calculator includes military tuition assistance and Post-9/11 GI Bill benefits.
The goal is to give students and their families an easy-to-understand view of how their decisions today impact your debt burden after graduation. Equally important, though, is that users can use the tool effectively. You can to adjust the loan amounts, savings, scholarship offers, and more, in order to reflect your individual financial situations.
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