CFPB Announces “Know Before You Owe” for Student Loans

By: Kathryn Baugher

The CFPB is expanding its “Know Before You Owe” initiative to cover student loans. Since “Know Before You Owe” began last May, the CFPB has asked the public for input on a variety of draft mortgage disclosure forms. Now the CFPB is working with the Department of Education to gather feedback on a sample financial aid offer form. The Department of Education, as required by the Higher Education Opportunity Act, plans to publish a model form that schools can use to communicate financial aid offers to students.On September 13, the Department of Education held a public meeting for interested parties to discuss how to improve financial aid offer forms. Then, on October 26, the CFPB published a sample form, referred to as a “Financial Aid Shopping Sheet,” on its web site. The CFPB calls the shopping sheet a “thought starter,” not an official proposal.

The CFPB web site asks the public to submit comments on what they like and dislike about the form. It also asks the public to rank certain types of information in terms of usefulness for evaluating a financial aid offer (e.g., estimated debt at graduation, whether students at the school have been able to repay their loans). You can view the sample form and provide input
here.

The model form is only one piece of the CFPB’s work with regard to student loans. In the coming weeks, the CFPB plans to release a Notice and Request for Information asking the public, including the student loan industry, to provide information about the private student loan market. The CFPB will use this information to prioritize its consumer education and policy efforts. The CFPB and the Department of Education will also take the information into account when preparing a report to Congress on private student loans, which they are required to complete by July 2012.