Earlier this year, the Federal Reserve Bank of New York estimated that Americans have student about $840 million in student-loan debt. In March, the Consumer Protection Finance Bureau (CPFB) announced at a banking conference in Austin, TX that the reserve bank’s report underestimated the actual amount and added another 16 percent. As of late 2011, student-loan debt exceeds $1 trillion, according to the CFPB. The CFPB Financial Aid Comparison Shopper was developed by the agency in response to a survey of private lenders to help students and their families compare student loans.
The CFPB based it numbers on a survey of private lenders. The Federal Reserve Bank of New York compiled its report from a sampling of data contained in consumer credit reports.
The CFPB says factors that contribute to the acceleration in student-loan debt include:
- More American returning to school because of a soft job market or the need to learn new skills
- Increases in tuition, coupled with cuts in states’ funding for education require students to take out larger loans
- Interest rates increases on older student loans
Student-loan debt moved pass credit cards as the number one source of household debt for Americans. The average student has over $25,000 in student-loan debt. Types of federal student loans include Direct loans, Perkins loans Stafford loans, and PLUS loans.
CFPB Launches Know Before You Owe Project
The CFPB and the Department of Education work jointly on a project called “First Know Before You Owe,” which focuses on developing tools to simplify the financial aid process and make the student loan process easier for consumers to understand. The CFPB released a draft version of a “financial aid shopping sheet,” designed to make sense of financial aid offer letters and enhance consumers’ comprehension of the documents.
To assist students and their families chart the cost and expenses associated with a college education, the CFPB releases a Web-based interactive tool, which calculates various scenarios for the user. The Financial Aid Comparison Shopper, “helps students to make apples to apples comparisons of their offers and pick one that works best for their financial future,” say Consumer Protection Finance Bureau Director Richard Cordray.
The beta version of the tool contains more than 7,500 vocational schools community colleges state and private institutions in the database. Families can compare factors, which include:
- Grant and scholarship
- Estimated monthly loan payment after graduation
- Statistics for specific institutions – retention rate, graduation rate and federal student loan default rates
- Student’s estimated student-loan debt upon graduating compared to average starting salary
The Financial Aid Comparison Shopper calculator also has a Military Benefit Calculator, which veterans, active service members and their families can use to determine educational benefits.
Other Student-Loan Debt Sources
In addition to the CFPB Financial Aid Comparison Shopper, consumers who want to find out more information on their student loans can go to National Student Loan Database System for Students. Click on the “Financial Aid Review” tab for a list of your student loans. Individuals looking to explore student loan payment options can use the Student Debt Repayment Assistant interactive tool. Individuals who s who have complaints regarding, payment issues, billing disagreements, debt collection problems or other student-loan debt complaints, can go to the CFPB website to file grievances.