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CU and CSU experts praise Polis’s Know Before You Owe bill to protect students from predatory lenders
Rep. Jared Polis, D-Colo., introduced the Know Before You Owe Act today, alongside Sen. Dick Durbin, D-Ill., obtaining praise from the University of Colorado Boulder and Colorado State University. The bill helps protect students from predatory private student loan lenders, at a time when student loan debt has skyrocketed to $1.5 trillion nationwide.
The volume of private student loan debt has grown by $4 billion from 2010 to 2017, according to the Institute for College Access and Success.
“Over the years, many Coloradans have contacted my office asking for help managing student loan debt - and over 42 million Americans can relate to their struggle," said Polis. “It’s abundantly clear that we must better protect students from private lenders who prey on their ambitions. Students who are trying to attain a degree, should never be met with greed. We can save students from years and years of debilitating debt by starting their education before classes even begin. The Know Before You Owe Act would go a long way toward teaching students what to look out for before they sign up for a loan and how to access financial aid resources.”
The Know Before You Owe Act of 2018 would require schools to counsel students before they sign on to expensive, often unnecessary, private education loan debt and inform them of any unused federal student aid eligibility. It would also require the prospective borrower’s school to confirm the student’s enrollment status, cost of attendance, and estimated federal financial aid assistance before the private student loan can be made.
Student financial aid and loan experts at CU and CSU have said that the bill would significantly help student borrowers.
“Many of the first generation and limited income adults I work with everyday are not aware of the type of federal aid that is available to them much less understand the long-term financial and economic consequences of securing private loans. Congressman Polis’ legislation will protect the adults I work with and many other people from financial debt and ruin by making sure that private lenders and schools are held accountable and that they will be required to know more about a student’s situation before a loan is issued. The legislation will also make sure that students are provided the information they need to fully understand what it means to get either a federal or private student loan and how to better manage and monitor their loans,” said Jan Barela-Smith, Educational Opportunity Center, Colorado State University.
“We are pleased that Congressman Polis is reintroducing the Know Before You Go Private Education Loan Act. CU Boulder strongly supports policies that will help our students make informed decisions about how to finance their education. At CU Boulder, we are committed to maintaining affordability, a critical piece of which is providing planning tools such as financial aid estimates and cost calculators to help new students understand the cost of attending our university and the resources that are available,” said Ofelia Morales, Director of Financial Aid, University of Colorado Boulder.
There are several stark differences between private education loans and federal student loans. Federal student loans have fixed interest rates and offer an array of consumer protections and favorable terms, including deferment and forbearance in times of economic hardship, as well as manageable repayment options, such as the Income-Based Repayment and Public Service Loan Forgiveness programs.
In contrast, private education loans often resemble credit cards rather than financial aid with uncapped variable interest rates (which spiked as high as 18 percent in recent years) and few, if any, consumer protections. These loans are ineligible for federal forgiveness, cancellation, or repayment programs.
The bill is supported by the National Association of Student Financial Aid Administrators, the National Association of College Admissions Counseling, the National Association of Consumer Advocates, the American Federation of Teachers, the National Consumer Law Center (on behalf of its low-income clients), the Consumers Union, The Institute for College Access and Success, the American Association of University Women, and the Center for Responsible Lending.
Polis serves on the Committee on Education and the Workforce. He is the top-Democrat on the Early Childhood, Elementary, and Secondary Education Subcommittee and a member of the Higher Education and Workforce Development Subcommittee. Polis has introduced several bipartisan higher education bills addressing access and affordability through open source textbooks and dual enrollment, among other proposals.
Polis is the former chair of the Colorado State Board of Education, and the founder and former superintendent of The New America School - a network of charter schools in several states serving new immigrants and English-language learners - as well as the Academy for Urban Learning for homeless and at-risk youth. The district he represents today includes Colorado State University and University of Colorado.
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