An online application from the new federal consumer watchdog designed to help young adults better understand their true costs for attending college, and therefore recognize how much they might need in student loans, has come under fire.
The federal Consumer Financial Protection Bureau's online Financial Aid Comparison Shopper tool was designed to help prospective college students compare up to three universities at the same time and calculate the amount of student loans they will need to obtain to attend each for a set number of years, according to a report from the Georgetown University student newspaper, the Hoya. This calculation is based on the cost of attendance at these schools, and also subtracts any scholarships and grants a student might have coming to them. In general it is designed to simply give young adults a clear picture of what they can expect to borrow to finance their higher education.
But now some critics say that the numbers being generated by the online tool are not wholly accurate, the report said. For instance, the application shows that the site estimates students will have to take out about $27,000 in loans for every year they attend Georgetown, and will take about 10 years of $1,637 in monthly payments to pay off in full. But officials at the school say the average student loan debt carried by students in the graduating class of 2011 was about $12,000, and the school's Office of Student Financial Services limits student loans to $17,500 for all four years when making a student aid package. The online tool estimates that it will cost Georgetown students six times that amount, over the course of a four-year period.
"I've talked to several of the associations of higher education institutions that we belong to and I think it is pretty broadly felt … that the data is confusing," Scott Fleming, associate vice president for federal relations at Georgetown, told the newspaper, adding, " We think it's really distorted, and quite frankly that's frustrating. [Prospective students] may look at this test site and get a very distorted sense of what it's going to cost to go somewhere to college. That's worrisome."
Kinks may still be worked
However, even critics say that it's entirely possible the system will be improved in the near future, as the current tool is only in beta testing mode, the report said. Currently, the CFPB does not reveal how it arrives at the costs it comes up with, but is working with the U.S. Department of Education to provide accurate and up-to-date data on more than 7,500 colleges and universities across the country.
Consumers who do not get enough student loan coverage from federal funds may have to seek private student loans, and may therefore want to check their credit reports before applying to make sure their standing is as it should be. Occasionally, unfair markings on these documents can have an adverse effect on borrowers' credit ratings.