WASHINGTON, Sept. 22 (UPI) -- Iowa Sen. Charles Grassley wants students to get more information before, during and after they take out student loans, including details about their ability to repay after graduation.
Grassley, a Republican, recently introduced the Know Before You Owe Federal Student Loan Act, a proposal that aims to ensure student loan borrowers get debt counseling every year before signing off on their loans, rather than the current standard of just the first year. Students would be told they don't have to take the full amount of loans offered, something most students don't know.
Also, he wants students to manually enter, either in writing or electronically, the exact dollar amount of funding they want. Colleges will have to give students a projected loan debt-to-income ratio based on the student's projected earnings and total student debt expected. Students would also be asked to review their other options for funding, including work-study programs and scholarships, to offset college costs.
"A college education generally remains a good investment," he said. "However, when students' academic dreams become a nightmare upon graduation because they borrowed more from the federal government than they can afford to repay with the degree they earned, they understandably feel that something is wrong."
The legislation is based on similar programs in Iowa, including a program at University of Northern Iowa that encourages borrowers to "live like a student." It includes workshops and classes that teach students to live within their means to avoid debt later. As a result of the program, the school has seen the average student debt drop from more than $26,000 to about $23,000, he said.
Grassley wants the legislation to be included in the reauthorization of the Higher Education Act, which is set to expire Sept. 30.
"There is room for a lot of innovation in higher education, and I don't pretend to have the total solution to the problem of college costs and student debt. What I am proposing is some simple, common sense first steps to empower students with the information they need to make sound financial decisions," he said.