The Consumer Financial Protection Bureau and the Department of Education want to educate students about the financial implications of college.
The cost of college is up a whopping 439 percent since 1982, and the average student graduates with $25,000 in loans. Given that college graduates earn more than their high school peers, that might not seem like a bad investment, but if a graduate can't find a job that pays enough to meet the monthly student loan bill, that degree can start to feel like a burden. For current high school seniors pondering college acceptance letters, calculating how much they could owe in student loans after graduating from a particular school is a smart move to make.
As part of the recently launched Know Before You Owe project, the Consumer Financial Protection Bureau and the Department of Education have developed a new interactive cost comparison tool to help students evaluate the costs and risks involved in paying for school. The tool, which is still in beta, lets students enter up to three schools they're interested in and whether they're going for an associate's degree or a bachelor's degree.
Here's how it works: a prospective student enters the University of California at Berkeley as an in-state student, the University of Michigan as an out-of-state student, and private Northwestern University. The tool then gathers the average grant and scholarship awards information for her schools and tells her that based on Michigan's current sticker price, she'd come out owing about $39,000; for Northwestern, she'll owe about $27,000; and for Berkeley, she'll owe about $15,000.
The cost comparison then breaks down for each school what her monthly student loan payment over 10 years will be. It's pretty shocking to see that if a student decides to go to Michigan, she'll end up paying approximately $2,400 per month in loans. To put that into perspective, the tool tells her that's the equivalent of buying 49 $50 textbooks every single month for 10 years. To make these kinds of estimates more accurate, a user can anonymously enter the details of any financial aid a school has offered.
The Consumer Financial Protection Bureau and the Department of Education are looking for feedback from users on the usefulness of the tool. With student loan debt higher than credit card debt, it's essential to brush up on the financial implications of attending school.