Director of the Consumer Financial Protection Bureau
White House Press Briefing on Student Loan Transparency
June 5, 2012
Higher education is a critical part of the American dream. But for many students today, this dream can only be realized through borrowing. Figuring out how to pay for college can be daunting. It is often the first major financial decision a student will make – one that will affect her for the rest of her life.
Unfortunately, for many families, the process is often complex and confusing. It’s hard for students to clearly see and compare college costs, evaluate financial aid options, and figure out how much debt they can afford.
We have heard from thousands of student loan borrowers who say that they simply didn’t understand what they signed up for. Many of them chose private loans before exhausting their cheaper federal loan options, which protect them when they run into trouble. Some resorted to credit cards and other high-priced loans. And all too often, borrowers got in way over their heads.
Recently, we announced that outstanding student loan debt had crossed the $1 trillion mark. Student loans have eclipsed credit cards as the leading source of U.S. household debt outside of mortgages.
The stakes have never been higher for families to clearly understand the costs and risks of student debt. We are still recovering from the worst financial crisis since the Great Depression. While a college education can be a gateway to better job prospects, taking on too much student debt can have real consequences. Students need to know before they owe.
The Consumer Bureau’s goal across consumer markets is to give people the confidence and peace of mind that the financial world is not full of tricks and traps that will ruin their lives. We want information to be clear and easy to understand so that consumers can make wise financial decisions for themselves and their families.
Today’s announcement is an important step toward that goal. We’re grateful to Secretary Duncan for being a strong partner in our Know Before You Owe initiative to develop a financial aid shopping sheet that enables students to clearly see their aid options so they can pick the package that works best for them.
And we’re pleased to receive support from college presidents representing some of the largest universities in America, who are committing to ensure that their students understand their financial aid and student loans. We look forward to continue working with them to create a system where students can climb the economic ladder and live their American dream.