Washington, D.C. – Tuesday, U.S. Senators Lisa Murkowski (R-AK), Jack Reed (D-RI), Bill Cassidy (R-LA), and Jeanne Shaheen (D-NH) introduced legislation to help young people pursuing higher education afford college. The State-Based Education Loan Awareness Act would make it easier for higher education institutions to inform students of financial aid opportunities offered by non-profit, state agency lenders.

“Paying for college is already complicated and expensive for students and their families,” said Senator Murkowski. “Our goal should be to make sure they have clear, complete information about the most affordable options available to them. State-based lenders often offer competitive, low-cost loans, and this legislation restores transparency so students can access the option that works best for them.”

“The reality of paying for college is tough and it’s important for students and families to understand the costs and have accurate and complete information about their financial options,” said Senator Reed. “Far too many students are unaware about additional resources state agencies can provide. This bill will help to shine a light on additional low-cost options to help pay for college.”

“Students should be able to pay for college without taking on insurmountable debt,” said Dr. Cassidy. “This legislation connects families with low-cost student loan options to ensure they don’t have to pay a dollar more than they need to.”

“With the cost of secondary education rising across the board, it’s critical that students have access to all the resources available to help them to save money and afford tuition,” said Senator Shaheen. “In New Hampshire, we have one of the highest student loan burdens in the country so it’s critical for colleges and universities to be able to offer the full range of options and the best information to help students pay for their education and achieve the skills needed to find success – and that’s what our bipartisan bill would accomplish.”

“We applaud Sen. Murkowski for her ongoing efforts to help students and families afford college,” said Gail daMota, President of the Education Finance Council (EFC). “For students who’ve exhausted their federal loan, grant and scholarship options but still have a gap to fill, their most affordable option may be a nonprofit and state-based education loan. The State Based Education Loan Awareness Act will ensure students have the information they need to make informed borrowing decisions about their postsecondary pursuits. On behalf of EFC member organizations, our hope is for them to both achieve their academic goals and position themselves for financial success.”

“Senator Murkowski’s leadership in Washington, DC will mean more students and families in Alaska will benefit from the services offered by the Alaska Commission on Postsecondary Education (ACPE),” said Kerry Thomas, Executive Director of Alaska Commission on Postsecondary Education. “The State Based Education Loan Awareness Act removes federal barriers that currently inhibit the flow of information about lower cost loans to students who are making important financial decisions about their postsecondary goals. By enabling colleges and universities in Alaska to showcase how mission-driven organizations like ACPE are helping students afford college with competitive interest rates and strong borrower protections, this legislation will go a long way to making students more aware of responsible borrowing options. Being able to access clear information about all their options puts students in a better position to make the right financial decisions for their future.”

Background

When the Higher Education Act (HEA) was last reauthorized in 2008, new provisions were included to prevent institutions of higher education (IHE) from steering students toward private lenders through the use of “preferred lender lists” in exchange for benefits to the institution. While this helped put an end to a system that benefited lenders and institutions over students, state agency lenders were included in the definition of “private lender,” which prevented families from learning about all the low-cost student loan options available to them.

The State Based Education Loan Awareness Act would allow IHEs to inform families about state agency loan options if:

• The loans are authorized, established, or chartered under State law or otherwise approved by the State;
• The state agency lender offers one or more loans with interest rates and fees that are at least as favorable as those of the federal Direct PLUS Loan;
• The information is made available only to borrowers who have been advised by the IHE:
• That they should exhaust all federal education loans before accepting a state agency lender’s loan; and
• Of the interest rates, fees, and benefits of federal education loans, including income-driven repayment options, opportunities for loan forgiveness, forbearance and deferment options, interest subsidies, and tax benefits.

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