In his State of the Union speech this week, President Obama vowed to continue working to rein in the skyrocketing costs of college and help consumers get better information about the costs of attendance. To aid in that effort, the White House has launched a College Scorecard website that allows users to retrieve the net cost — not the full “sticker price” — of attending a particular college, along with data on student loan repayment and the loan default and graduation rates. This comes on the heels of the Consumer Financial Protection Bureau’s recently-launched interactive tools for comparing college costs and learning more about student loans.
Making an apples-to-apples cost comparison between different colleges is really important, because the choice you make for a school – and any loans you take out to pay for it – could have a huge impact on your pocketbook later on. In the current weak job market, more than 1 in 10 borrowers have defaulted on their loans in the past three years. In response, a new report by Campus Progress has called on the government to allow borrowers to refinance their student loan debt – just as you would for a mortgage – to lower interest rates for qualified borrowers and ease their debt burdens. The most common federal loans have interest rates stuck above 6 percent, despite record low rates on government debt (just under 2 percent).
We’ll see where that proposal goes, but in the meantime it’s crucial to remember that choosing a college is a financial decision as much as an educational one. The loans you take out, and the interest that piles on top of it, could come back to haunt you if you take on too much debt.
For more practical tips on how to graduate with less debt, click here.