Federal

Understanding the True Cost of College Act of 2023

Source: Congress.gov · 4,248 words in original text

What This Bill Does

This bill requires colleges to use a standard, easy-to-understand form when telling students about their financial aid packages. The form must clearly show costs, grants, scholarships, loans, and the net price (the amount students would owe after aid). All colleges that receive federal money must use this same form and the same terms when talking about financial aid.

Who It Affects

- Students who apply for financial aid at colleges - College financial aid offices - All institutions of higher education (community colleges, four-year public colleges, four-year private nonprofits, and for-profit colleges) - Families of students - The U.S. Secretary of Education and the Department of Education - The Consumer Financial Protection Bureau - The Secretary of Veterans Affairs - The Secretary of Defense

Key Provisions

- The Secretary of Education must create a standard financial aid offer form that shows costs first, then grants and scholarships, then loans, all clearly separated with different sections. (Sec. 2(b)(1)-(4)) - The form must display the total cost of attendance, including tuition, fees, housing, food, books, supplies, transportation, and personal expenses. (Sec. 2(b)(1)) - The form must show the net price, which equals the cost of attendance minus the grants and scholarships the student receives. (Sec. 2(b)(3)) - Colleges must explain that loans must be repaid and clearly label which loans are subsidized (where the government pays interest while the student is in school) and which are unsubsidized (where the student pays all interest). (Sec. 2(b)(4)) - Colleges must provide information about work-study employment opportunities and explain that this aid is earned over time as the student works. (Sec. 2(c)(3)) - Every college receiving federal money must use this standard form and standard terms for all financial aid communications. (Sec. 3(a)) - For dependent students (those under parents' financial control), the form must include information about Federal Direct PLUS Loans that parents can borrow and explain that students may borrow more federal loans if parents cannot qualify for PLUS loans. (Sec. 2(d)(8))

What Changes

If this bill becomes law, colleges must stop using their own unique financial aid offer forms and must use one standard government form. All financial aid communications from colleges must use the same terminology. The form must always show costs before aid and keep different types of aid visibly separate so students can easily compare what they owe versus what aid they receive.

Important Definitions

- **Net price**: The estimated amount a student or family would pay for college for one year, calculated by taking the cost of attendance and subtracting grants and scholarships. - **Subsidized loans**: Federal loans where the government pays the interest while a student is in school. - **Unsubsidized loans**: Federal loans where students are responsible for paying all interest. - **Grants and scholarships**: Money for college that students do not have to repay. - **Cost of attendance**: All expenses for one year including tuition, fees, room, board, books, supplies, transportation, and personal expenses.

Effective Date

The law takes effect at the start of the first award year after the Secretary of Education finishes creating the standard terminology and form. (Sec. 3(b))

I 118TH CONGRESS 1ST SESSION H. R. 1198 To require a standard financial aid offer form, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 27, 2023 Mrs. KIM of California (for herself, Mr. KRISHNAMOORTHI, and Mr. GOTTHEIMER) introduced the following bill; which was referred to the Committee on Education and the Workforce A BILL To require a standard financial aid offer form, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Understanding the 4 True Cost of College Act of 2023’’. 5 SEC. 2. INSTITUTION FINANCIAL AID OFFER FORM. 6 Section 484 of the Higher Education Opportunity 7 Act (20 U.S.C. 1092 note) is amended to read as follows: 8 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 1198 IH ‘‘SEC. 484. INSTITUTION FINANCIAL AID OFFER FORM. 1 ‘‘(a) STANDARD FORMAT AND TERMINOLOGY.—The 2 Secretary of Education, in consultation with the heads of 3 relevant Federal agencies, shall develop standard termi- 4 nology and a standard format for financial aid offer forms 5 based on recommendations from representatives of stu- 6 dents, veterans, servicemembers, students’ families, insti- 7 tutions of higher education (including community colleges, 8 for-profit institutions, four-year public institutions, and 9 four-year private nonprofit institutions), financial aid ex- 10 perts, secondary school and postsecondary counselors, 11 nonprofit organizations, and consumer groups. 12 ‘‘(b) KEY REQUIRED CONTENTS FOR OFFER 13 FORM.—The standard format developed under subsection 14 (a) shall include, in a consumer-friendly manner that is 15 simple and understandable, a form titled ‘Financial Aid 16 Offer’, which shall include the following items, with costs 17 listed first followed by grants and scholarships, clearly 18 separated from each other with separate headings: 19 ‘‘(1) COST INFORMATION.— 20 ‘‘(A) Information on the student’s esti- 21 mated cost of attendance, including the fol- 22 lowing: 23 ‘‘(i) Total direct costs, including the 24 component totals each for— 25 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 1198 IH ‘‘(I) tuition and fees, as deter- 1 mined under section 472 of the High- 2 er Education Act of 1965 (20 U.S.C. 3 1087ll); and 4 ‘‘(II) college-sponsored housing 5 and food costs (as determined based 6 on the costs for room and board 7 under such section). 8 ‘‘(ii) Total estimated other expenses, 9 including— 10 ‘‘(I) the component totals each 11 for housing and food costs for stu- 12 dents who reside off-campus; and 13 ‘‘(II) for all students, books, sup- 14 plies, transportation, and miscella- 15 neous personal expenses (which may 16 include costs of health insurance and 17 dependent care), as determined under 18 section 472 of the Higher Education 19 Act of 1965 (20 U.S.C. 1087ll). 20 ‘‘(B) An indication of the academic period 21 covered by the financial aid offer, and an expla- 22 nation that the financial aid offered may 23 change for academic periods not covered by the 24 aid offer or by program. 25 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 1198 IH ‘‘(C) An indication of whether cost and aid 1 estimates are based on full-time or part-time 2 enrollment. 3 ‘‘(D) An indication, as applicable, about 4 whether the tuition and fees are estimated 5 based on the previous year, or are set, for the 6 academic period indicated in accordance with 7 subparagraph (B). 8 ‘‘(2) GRANTS AND SCHOLARSHIPS.—The aggre- 9 gate amount of grants and scholarships by source 10 that the student does not have to repay, such as 11 grant aid offered under title IV of the Higher Edu- 12 cation Act of 1965 (20 U.S.C. 1070 et seq.) and 13 grant aid offered through other Federal programs, 14 grant aid offered by the institution, grant aid of- 15 fered by the State, and, if known, grant aid from an 16 outside source to the student for such academic pe- 17 riod, including— 18 ‘‘(A) a disclosure that the grants and 19 scholarships do not have to be repaid; and 20 ‘‘(B) if institutional aid is included— 21 ‘‘(i) the conditions under which the 22 student can expect to receive similar 23 amounts of such financial aid for each aca- 24 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 1198 IH demic period the student is enrolled at the 1 institution; and 2 ‘‘(ii) whether the institutional aid 3 offer may change if grants or scholarships 4 from outside sources are applied after the 5 student receives the offer form, and, if ap- 6 plicable, how that aid will change. 7 ‘‘(3) NET PRICE.— 8 ‘‘(A) The net price that the student, or the 9 student’s family on behalf of the student, is es- 10 timated to have to pay for the student to attend 11 the institution for such academic period, equal 12 to— 13 ‘‘(i) the cost of attendance as de- 14 scribed in paragraph (1)(A) for the stu- 15 dent for the period indicated in paragraph 16 (1)(B); minus 17 ‘‘(ii) the amount of grant aid de- 18 scribed in paragraph (2) that is included in 19 the financial aid offer form. 20 ‘‘(B) A disclosure that the net price is an 21 estimate of the total expenses for the year and 22 not equivalent to the amount the student will 23 owe directly to the institution. 24 ‘‘(4) LOANS.— 25 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 1198 IH ‘‘(A) Information on any loan under part 1 D or part E of title IV of the Higher Education 2 Act of 1965 (20 U.S.C. 1087a et seq.; 20 3 U.S.C. 1087aa et seq.) (except a Federal Direct 4 PLUS Loan under part D of that Act) that the 5 institution recommends for the student for the 6 academic period covered by the offer, which 7 shall be made— 8 ‘‘(i) with clear use of the word ‘loan’ 9 to describe the recommended loan 10 amounts; and 11 ‘‘(ii) with clear labeling of subsidized 12 and unsubsidized loans. 13 ‘‘(B) A disclosure that such loans have to 14 be repaid and a disclosure that the student can 15 borrow a lesser or, if applicable, greater amount 16 than the recommended loan amount. 17 ‘‘(C) A disclosure that the interest rates 18 and fees on such loans are set annually and af- 19 fect total cost over time, and a link to a De- 20 partment of Education website that includes 21 current information on interest rates and fees. 22 ‘‘(D) A link to the Department of Edu- 23 cation’s repayment calculator website for stu- 24 dents with instruction that this website contains 25 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 1198 IH customizable estimates of expected repayment 1 costs under different loan repayment plans. 2 ‘‘(5) PROCESS FOR ACCEPTING OR DECLINING 3 AID AND NEXT STEPS.— 4 ‘‘(A) The deadlines and a summary of the 5 process (including the next steps) for— 6 ‘‘(i) accepting the financial aid offered 7 in the financial aid offer form; 8 ‘‘(ii) requesting higher loan amounts 9 if recommended loan amounts were in- 10 cluded; and 11 ‘‘(iii) declining aid offered in the 12 form. 13 ‘‘(B) Information on when and how direct 14 costs to the institution must be paid. 15 ‘‘(C) A disclosure that verification of finan- 16 cial circumstances may require the student to 17 submit further documentation. 18 ‘‘(D) Information about where a student or 19 the student’s family can seek additional infor- 20 mation regarding the financial aid offered, in- 21 cluding contact information for the institution’s 22 financial aid office and the Department of Edu- 23 cation’s website on financial aid. 24 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 1198 IH ‘‘(6) ADDITIONAL INFORMATION.—Any other 1 information the Secretary of Education, in consulta- 2 tion with the heads of relevant Federal agencies, in- 3 cluding the Secretary of the Treasury and the Direc- 4 tor of the Bureau of Consumer Financial Protection, 5 determines necessary (based on the results of the 6 consumer testing under paragraph (g)(2)) so that 7 students and parents can make informed loan bor- 8 rowing decisions, which may include— 9 ‘‘(A) the most recent cohort default rate, 10 as defined in section 435(m) of the Higher 11 Education Act of 1965 (20 U.S.C. 1085(m)) 12 with respect to an institution where more than 13 30 percent of enrolled students borrow loans to 14 pay for their education, and a comparison to 15 the national average cohort default rate; 16 ‘‘(B) the percentage of students at the in- 17 stitution who borrow student loans; 18 ‘‘(C) the median loan debt at graduation 19 for students at the institution (clearly marked 20 as including only Federal loans if private loan 21 data are not available to be included); and 22 ‘‘(D) any additional calculations deter- 23 mined necessary for ensuring that students un- 24 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 1198 IH derstand full college costs, financial aid gaps, 1 and options for covering those gaps. 2 ‘‘(c) OTHER REQUIRED CONTENTS FOR THE OFFER 3 FORM.—The standard form developed under subsection 4 (a) shall include, in addition to the information described 5 in subsection (b), the following information to be included 6 on the financial aid offer form in a concise format deter- 7 mined by the Secretary of Education, in consultation with 8 the heads of relevant Federal agencies: 9 ‘‘(1) At the institution’s discretion— 10 ‘‘(A) additional options and potential re- 11 sources for paying for the amount listed in sub- 12 section (b)(3), such as tuition payment plans; 13 and 14 ‘‘(B) a disclosure that Federal Direct 15 PLUS Loans or private education loans may be 16 available to cover remaining need, except that 17 the institution may not include an amount for 18 Federal Direct PLUS Loans or private edu- 19 cation loans and must include a disclosure for 20 Federal Direct PLUS Loans that such loans 21 are subject to an additional application process, 22 and a disclosure that both types of loans have 23 to be repaid by the borrower, and may not be 24 eligible for all the benefits available for Federal 25 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 1198 IH Direct Stafford Loans or Federal Direct Un- 1 subsidized Stafford Loans. 2 ‘‘(2) The following information relating to pri- 3 vate student loans: 4 ‘‘(A) A statement that students consid- 5 ering borrowing to cover the cost of attendance 6 should consider available Federal student loans 7 prior to applying for private education loans, in- 8 cluding an explanation that Federal student 9 loans offer generally more favorable terms and 10 beneficial repayment options than private loans. 11 ‘‘(B) The impact of a proposed private 12 education loan on the student’s potential eligi- 13 bility for other financial assistance, including 14 Federal financial assistance under title IV of 15 the Higher Education Act of 1965 (20 U.S.C. 16 1070 et seq.). 17 ‘‘(C) A statement explaining the student’s 18 ability to select a private educational lender of 19 the student’s choice. 20 ‘‘(3) Information on work-study employment 21 opportunities, offered in accordance with part C of 22 title IV of the Higher Education Act of 1965 (20 23 U.S.C. 1087–51 et seq.) including a disclosure that 24 the work-study aid offered is subject to the avail- 25 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 1198 IH ability of qualified employment opportunities and is 1 disbursed over time as earned by the student. Work- 2 study employment opportunities (or a student’s po- 3 tential income based on those opportunities) shall 4 not be included in the category of financial aid de- 5 scribed under subsection (b)(2). 6 ‘‘(d) ADDITIONAL REQUIREMENTS FOR FINANCIAL 7 AID OFFER FORM.—The financial aid offer form shall 8 meet the following requirements: 9 ‘‘(1) Include, in addition to the requirements 10 described in subsections (b) and (c), a concise sum- 11 mary, in plain language, of— 12 ‘‘(A) the terms and conditions of financial 13 aid recommended under paragraphs (2) and (4) 14 of subsection (b) and subsection (c)(3), and a 15 method to provide students with additional in- 16 formation about such terms and conditions, 17 such as links to the supplementary information; 18 and 19 ‘‘(B) Federal, State, or institutional condi- 20 tions required to receive and renew financial aid 21 and a method to provide students with addi- 22 tional information about these conditions, such 23 as links to the supplementary information. 24 VerDate Sep 11 2014 01:52 Mar 14, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1198.IH H1198 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 1198 IH ‘‘(2) Clearly distinguish between the aid offered 1 under paragraphs (2) and (4) of subsection (b) and 2 subsection (c)(3), by including a subtotal for the aid 3 offered in each of such paragraphs and by refraining 4 from commingling the different types of aid de- 5 scribed in such paragraphs. 6 ‘‘(3) Use standard terminology and definitions, 7 as described in subsection (e)(1) and use plain lan- 8 guage where possible. 9 ‘‘(4) If an institution’s recommended Federal 10 student loan aid offered in subsection (b)(4) is less 11 than the Federal maximum available to the student, 12 the institution shall provide additional information 13 on Federal student loans, including the types and 14 amounts for which the student is eligible in an at- 15 tached document or webpage. 16 ‘‘(5) Use the standard offer form described in 17 subsection (e)(2). 18 ‘‘(6) Include the standardized statement regard- 19 ing the possible availability of Federal education 20 benefits, as established by the Secretary in accord- 21 ance with subsection (e)(3). 22 ‘‘(7) Include a delivery confirmation for elec- 23 tronic financial aid offer forms, except that receipt 24 of the financial aid offer form shall not be [Text truncated for display. Full text available on Congress.gov.]

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