The Consumer Financial Protection Bureau is shining its spotlight on student loans.
Last week, it announced that it would accept complaints about federal and private student loans. Last year, it published a model financial aid award letter to help consumers compare college offers.
"It's time we created a student loan market where costs and risks are clear," Raj Date, deputy director of the bureau, wrote in a statement.
First, award letters.
Now, Date wrote, "comparing one award to another becomes a difficult code-breaking challenge."
The bureau drew up a standard form and asked for feedback. It includes a college's total price, then subtracts grants and scholarships a student would not have to pay back, creating a total cost. Loans are clearly separated. Cost is compared with averages. Default rates are noted. Graduation rates are included. At the bottom, a box of "How much will you owe?" would have an estimated monthly payment.
Money expert Ruth Hayden agreed that it can be tough to compare award letters. Families encounter a similar problem with cost calculators, she said, which colleges are required to post online. In getting to a "net price," some subtract loans. Others don't.
"It's important to make sure you're comparing apples to apples," said Hayden, a financial consultant and author. "How much of it is free money? How much of it is earned money? How much of it is debt -- and is it public or private?"
Which brings us to the bureau's new complaint system, which gives families with either federal and private loans one place to turn. Have an issue with billing? Confusing terms? Collections? File a complaint at www.consumerfinance.gov. Or call 1-855-411-2372.
Hayden called that "a first step" in giving families more leverage with loans that, except in rare circumstances, cannot be cleared through bankruptcy.
"So we have a place to complain," she said. "Is there a procedure for then resolving these complaints?"
Jenna Ross • 612-673-7168
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