Analyzing the College Affordability Act: Changes to Loan Counseling & Consumer Information

By Megan Walter, NASFAA Policy & Federal Relations Staff

Updated Nov. 6, 2019: A markup of this bill took place over three days from Oct. 29-31, 2019 — after the article below was written. An amendment in the nature of a substitute replaced the original bill text, and multiple amendments were adopted during the markup process. The substitute amendment and additional amendments made several minor changes, and this article has been updated to reflect those updates.

Editor's Note: This article is the fifth in a series of six that delves into Title IV-related issues contained in the House Democrats' bill to reauthorize the Higher Education Act, the College Affordability Act. This article details the proposed changes in the College Affordability Act affecting loan counseling and consumer information. See all of NASFAA's coverage of the College Affordability Act.

The College Affordability Act (CAA) makes several changes to consumer information and loan counseling provisions, including ending the ban on a student unit record system, enhancing loan entrance and exit counseling, and renaming the Master Promissory Note. The bill would also require the Department of Education (ED) to study the effectiveness of loan counseling, which NASFAA's Reauthorization Task Force suggested in its recommendations to Congress in 2016.

Postsecondary Data System and the Student Unit Record

The CAA repeals Section 134 of the Higher Education Act (HEA) — the section that currently bans the creation of a student unit record system — and creates a new postsecondary student data system. This data system would be a secure, privacy-protected database that would collect student-level data to monitor trends and aid in analysis of enrollment patterns, progression, completion, and higher education costs. The system would also cut down on institutional reporting burdens as offices could now use data collected through the postsecondary data system for other required reports under the HEA. The student-level data collected would also now include data disaggregated by race, as well as other student characteristics.

Annual Loan Acceptance

The Master Promissory Note (MPN) would be renamed the student loan contract under the provisions of the bill. The student loan contract could only be completed after all other required loan counseling and would be required to be completed annually. Students who receive additional loans during the same academic year would need to complete a new student loan contract. Unlike the current MPN, it could not be used for new loans within the same period of enrollment in an award year. 

Annual Entrance Counseling

Loan entrance counseling would be completed annually, prior to the student loan contract, and would include new consumer protection disclosures, such as projected monthly loan payments and recommendations to take advantage of grant aid and work-study before borrowing loans, and to exhaust federal loan options before borrowing private loans. Counseling would also include the interest rate for the loan and information on how interest accrues and capitalizes. Parent PLUS Loan borrowers would also be required to complete annual counseling. 

Exit Counseling

Exit counseling would be enhanced to include the borrower’s actual loan balance and loan repayment estimates under the CAA. Students completing exit counseling would receive a summary of their outstanding balance of principal and interest due on borrowed loan amounts, as well as an explanation of their grace period, the date they should expect to make their first payment, and an explanation that they can make payments on their loans during their grace period. For each loan the borrower receives, they would also receive contact information for the servicer and a link to their website, as well as a disclaimer that they have the option to request a credit report each year. 

Study of Effectiveness of Counseling

Lastly, as it relates to counseling, the CAA also includes a requirement for ED to pursue a study of the effectiveness of student loan counseling, which NASFAA's Reauthorization Task Force included in its recommendations to Congress in 2016. The study would include student data both in the aggregate and disaggregated by race, gender, income, disability status, and first generation status, information on student persistence, degree attainment, program completion, repayment status, and cumulative borrowing amounts.

Net Price Calculator

An amendment proposed to make changes to the net price calculator (NPC) during the markup process was officially adopted into the CAA. The changes would greatly expand the NPC requirements, by adding new institutional data that must be disclosed in the results. The language also includes rules about how and where institutions need to display the NPC on their website. The new amendment would also allow ED to create a consumer-tested, universal (NPC) that would allow students to go to one place to compare NPC information across institutions.

Changes to Consumer Information

The CAA would introduce changes to requirements around consumer information. The College Navigator would now include information for student eligibility and guidance on the Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Postsecondary institutions would also be required to release information on SNAP and WIC, as well as information on food pantries or other food assistance facilities or services available to enrolled students. 

The bill would also improve on the grant program aimed at adopting innovative ways to decrease the cost of college textbooks through digital or open educational resources, inclusive access programs, subscription models, or digital content distribution platforms. 

The Clery Act would have two new crime statistics that institutions would be required to report: the number of harassment incidents that were reported to campus security or local police, and the number of hazing incidents reported to campus security or local police. If a student organization committed the reported crime, the institution must provide an annual report available on their website that includes, among other items, the name of the organization, a description of the activities that led to the violation, and the charges and the sanctions placed by the university. 

Related to campus security, the CAA would require ED to create an online survey tool for campus safety. The survey would collect student experiences on their campus as they relate to domestic violence, dating violence, sexual assault, sexual harassment, and stalking. The survey would aim to learn if students are aware of the policies surrounding those issues on their campus, and provide details of any incidents and the actions that took place after the event occurred. They results from the survey would be used to increase the understanding of the institutions’ campus climate. 

Institutions would also be required to report crime statistics relating to  study abroad programs, such as information concerning crime and/or harm that occurred while participating in the institution’s study abroad program. These statistics would include the number of deaths of program participants that occurred during participation, sexual assaults against program participants, accidents or illnesses involving program participants, and incidents involving program participants that resulted in police involvement.

The CAA would also include a requirement for institutions to provide information on their transfer-related policies and information, such as explanations of any and all articulation agreements, deadlines for applications, and relevant financial aid information. The bill would mandate that the information be easy to find and readable, included on the website of the institution, and in at least one other relevant publication, such as a course catalog.

Another amendment added during the markup process would add an additional requirement to institutional disclosures. The bill would mandate that institutions must disclose, if applicable, any non-instructional spending increases by more than 5% from the previous year. Institutions would be required to disclose the amount that was spent publicly, as well as create and share an analysis of the spending’s expected impact on tuition.


Publication Date: 10/31/2019

Theodore M | 10/31/2019 1:12:00 PM

It seems to me that requiring a new student loan contract to increase a loan for the same loan period could cause overborrowing. Rather than borrow and increase if necessary, the extra steps migh cause more to just take the maximum up front.

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