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Know Before You Owe: Let’s tackle student loans


We started Know Before You Owe several months ago to make mortgage disclosure forms easy to understand and easy to compare. The idea was and is that people should see the basic facts about the loan they’re applying for right up front.

But this idea holds true in areas far beyond mortgages. That’s why today, we are beginning a project with the Department of Education to apply this same idea to student loans. Right up front, before they commit, students should see the basic facts about what they’re going to pay for school.

We’re calling this initiative Know Before You Owe for student loans. Let us know what you think, or read on for more detail about this project.

For generations, a college degree has helped Americans from all walks of life achieve a better future. But the increasing cost of higher education and a tough economy mean that more students will rely on student loans to pay for tuition and make ends meet while they’re in school.

Before students borrow, they should understand the costs and risks of the loans they will use to help pay for the school of their choice. We think this is a common sense idea.

The school financial aid offer is one of the most important ways students receive this information. To give you a sense of what’s out there now, here are a couple financial aid letters currently in use: (example 1, example 2).

Last month, the Department of Education held a public meeting with community groups, higher education professionals, trade groups, and others. Most participants agreed on two things. First, offers need to be easier to understand. Second, they need to be comparable with other school offers.

The Department of Education plans to publish a model format that schools can use to communicate financial aid offers. We are helping them gather feedback as they work to improve how schools communicate financial aid offers.

We worked with the Department to sketch out a sample form as a thought-starter, not as a formal proposal. We hope you’ll take a few moments to check it out and tell us what you think.

And because this is a thought-starter, we’ve decided to think outside the box. On the same page, we’ve assembled a list of some elements that might go into a form like this. Some of them are on this sample, and some aren’t. We want you to order them from most useful to least useful so we can get a better sense of your preferences.

This is a starting point, but we hope it’s useful and thought-provoking. Give us your thoughts, and then ask your friends to weigh in. Student lending is a huge and growing part of the economy. It affects all of us, and it’s going to have a huge impact on our future.

Rohit Chopra serves as the CFPB’s Student Loan Ombudsman.

  • guest

    I did not see the part where parents must pay?

  • guest

    This disclosure project is great – exactly the kind of intelligent, free-market solution to America’s student loan crisis that we need. Competitive markets require transparent information, and this disclosure form would help eliminate the information asymmetries that interfere with a free and thus fair market for student loans. Keep up the great work!

  • Guest


  • Carmen Monrovia

    It’s true that due to the changes of economy some students are having a hard time going to college so they find ways to pay for their tuition fee such as working part time and/or applying for student loans.

  • Loans

    know term that you should carry on and be on , take the part where ideas comes from knowing what is good for you to have ,.good post.

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