Thanks to a bill passed by the House on Feb. 7, applying for and receiving financial aid could become a reality for more college students.
The bill, the College Opportunity and Affordability Act, which seeks to remedy questionable student loan industry motives, frighteningly long financial aid applications and even the high cost of textbooks, is a step in the right direction toward easing the many financial pitfalls students can face.
Colleges currently offer students a preferred lender list of loan programs when they seek out financial aid, but companies often earn their spot on these lists by offering college administrators incentives and gifts for the recommendation.
“The largest ten lenders have pretty much captured about 50% of the whole student loan industry,” Ivan Nalibotsky, a financial planner who specializes in college finance, said. “We have found out later that in some cases, the head of the departments were getting incentives from these larger companies with more aggressive marketing.”
If passed by the Senate, the bill would force institutions to closely monitor their relationship with lenders.
According to Scott Fleming, University Assistant to the President on Federal Relations, Georgetown already boasts an extremely transparent loan system and supports the bill’s provision that will require students to tell the financial aid office about any private loans they accept.
Despite Nalibotsky’s claims that Free Application for Federal Student Aid has been simplified in recent years, Phil Pine, founder of the college preparation company Capital Educators, said that some students are so confused by the FAFSA and federal loan forms that they hire someone to do the work to try to save them thousands—a concept, which is unnecessary and contrary to the whole purpose of financial aid.
“There’s a lot of misinformation out there and a lot of people don’t recognize they’re eligible for as much financial aid in the college process as they are,” Pine said.
“There’s this idea that you basically have to be lower-lower middle class to qualify,” he added.
One of the bill’s more minor provisions would require a published list of the nation’s most expensive colleges for students to make tuition comparisons.
No doubt with its $35,000 tuition, Georgetown will be included. But expensive schools often offer handsome financial aid packages. A beneficial addition to the bill would be a comparison list of lower-priced colleges who might not be able to afford lavish financial aid. We all know who is the most expensive, but who can offer the best education at the most competitive price?
The bill passed with resounding support (a 354-58 vote) in the House—clearly, legislators are aware of the current weaknesses in the system.
Although the bill does not address reducing tuition, it at least makes the student loan and financial aid processes more transparent. Finally, paying for college will become a less intimidating venture.
