Transcript: Sen. Al Franken’s Q&A w/ Federal Student Aid COO James Runcie on strengthening the federal student loan program for borrowers

Partial transcript of Sen. Al Franken’s (D-Minnesota) Q&A with James W. Runcie, Chief Operating Officer of the Department of Education’s Federal Student Aid, on strengthening the federal student loan program for borrowers. The Senate Health, Education, Labor & Pensions Committee hearing was held on March 27, 2014:

Sen. Al Franken (D-Minnesota):
…I want to talk about a tool that students can use to early on in the process of looking at colleges – the net price calculator. I’m going to introduce some legislation on that and improve it.

The net price calculator allows kids to, before they are even deciding whether to apply to a college, can see how much it actually is going to cost.

Now, we have a free net price calculator available to colleges. Some put their own up. Some are better than others. You know, I think about – the College Board did a recent survey – more than half of the students ruled out schools based on sticker price without considering the full effect of financial aid, and it said many of them chose to attend less selective colleges than they were qualified for because they incorrectly believed they were priced out of the other schools.

I was wondering if you had any thoughts about the net calculator and what the Department of Education can do to incentivize colleges to make these calculators more user-friendly for students?

James W. Runcie, Chief Operating Officer, Federal Student Aid, Department of Education:
We’ve been very focused on financial literacy and outreach and making sure that students are in a good position from a due diligence and research standpoint to make good investment decisions. And there’ve been a number of items that we’ve put out like the financial aid shopping sheet that helps students compare student loan packages and financial aid packages across institutions. But your point is, even before that, students make decisions about colleges because they see the price tag and they don’t have a sense of what the net price is. We do have calculators but I think the promotion of those calculators is something that we could do better. We could more into promoting the calculators and we can work with institutions potentially to make the calculators a little bit more user-friendly and a little bit more transparent.

Sen. Al Franken (D-Minnesota):
Or just require that they – I mean, for example, if you’re filling out the FASA, that can’t be completed until Jan. 1st of the year in which the student seeks to enroll in a school. Now, by Jan. 1st, you’ve already done your applications, you’ve already – basically, it’s all over. This is an ability to see before your – as you’re considering, you can look at the school and if you have the right calculator there, it gives kids a real idea of the real net cost of the school is going to be, what the possible grants are, what the aid would cost, et cetera.

And when I go around round tables and talk about college affordability, the students very often I hear – “Gee, I wish I had applied to this school.” Or “I didn’t really realize how much this was going to cost.” And financial literacy is a tremendous part of – we need to have these students have their eyes wide open when they’re doing this. And I don’t want them foreclosing better options for themselves because they didn’t realize that some schools would give a full ride to students, and kids will say, “I’m not going to apply to Harvard because I couldn’t possibly pay for it. It’s so much”, and they don’t understand that Harvard gives a full ride there or Princeton does or other schools do this.

So I would like to see – I’d love to work with you on this to find a way to let kids know well beforehand, not let them know after they’ve already applied, after they’ve already been admitted or not, let them know beforehand what the net cost of their college is going to be.

James W. Runcie, Chief Operating Officer, Federal Student Aid, Department of Education:
Great, and I would love to work with you and look at your ideas and see how we can make it better.


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