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Implications of the Student Loan Scandals
Revelations about questionable relationships between some student loan companies, colleges, and college officials have been making headlines across the country. We will likely never know how much these conflicts of interest have cost students, but the scandals have certainly harmed both the real and perceived integrity of the financial aid process.
Most students and parents will still turn to college financial aid offices for information about borrowing for college. That is as it should be: financial aid professionals are experts on the options available in a complex marketplace, and most really do want their students to get a good deal. Our hope is that the recent revelations will put both colleges and lenders on notice that they must operate in a completely transparent manner to restore the public’s trust. That means colleges put students first and stop accepting anything from lenders that could be seen as a kickback, whether legal or not, and that lenders make the terms of their offerings clear, fair, and easy for families to compare.
As these scandals play out, students and families are making critical decisions about colleges and scrambling to find objective information about loans. Here are some tips for comparing common discounts on federal student loans and key questions for those considering private (nonfederal) student loans.
What We Think of the FAFSA4caster
The U.S. Department of Education recently launched the FAFSA4caster, an online tool intended to give students and families early estimates of financial aid eligibility. Unfortunately, it is a missed opportunity to make the financial aid process easier and less intimidating. It asks 96 of the 102 questions on the official FAFSA and requires applicants to fill out complex financial worksheets, track down tax documents, and transfer data from form to form. Letting applicants authorize the IRS to automatically answer 31 of the most important and error-prone questions would make the FAFSA4caster much shorter and encourage more students and parents to use the new tool. Read more about the FAFSA4caster.
Learn more about this approach to simplifying the FAFSA in our recent report, Going to the Source.
New home for the Institute
We have moved our Berkeley office. Please update the Institute’s California address and phone number to:
2054 University Ave, Suite 500
Berkeley, CA 94704
Staff email addresses and our fax number remain the same.