As millions of high school students receive college acceptance letters inviting them to embark on one of the most expensive journeys of their lives, the Consumer Financial Protection Bureau is making one part of the process just a bit easier.
On Wednesday, the CFPB, a government agency tasked with regulating consumer issues, launched the Financial Aid Comparison Shopper, a tool to help families decipher how much a college degree will actually cost.
"Now more than ever, students and their families need to know before they owe," CFPB Director Richard Cordray said in a prepared statement.
The cost comparison worksheet allows you to enter the names of three institutions that you'd like to compare. The tool then computes the actual cost of the three chosen schools, comparing sticker price, estimated post-school debt and overall debt burden.
The three schools we plugged in were SUNY at Albany, University of Phoenix-Online and Yale University. The tool showed us that the cheapest deal was SUNY at Albany, where the sticker price for an in-state student would total $20,762 per year. To pay back all student debt loans, an Albany graduate would have to pay $769 per month for 10 years, much less than that which would have to be paid to University of Phoenix-Online, where all financial aid comes in the form of loans, not grants and scholarships. Yale, on the other hand, might have the highest sticker price of the three schools, but it also offers the most in terms of grants and scholarships, making estimated post-graduation debt much lower than that obtained at University of Phoenix-Online.
The tool is clean and easy enough to read, but would benefit from a more information on expected student salaries, which will influence your ability to pay down debt. We also would have liked to see a better breakdown between public and private loans. That's because private lenders tend to charge higher interest rates than the government does. They're also less forgiving when you come upon financial hardship.
To pay for a four-year college -- which costs approximately $42,224 at a private college and $21,447 at a public one -- students borrowed over $117 billion last year alone in federal loans. This figure is a sliver of the $1 trillion mountain of debt that Americans owe in student loans, a figure so high it now threatens the nation's economy on the whole.
The CFPB is taking steps to make the student loan process more transparent. The agency is now welcoming complaints about financial aid.