Students to get loan reports

New law requires colleges to spell out student debt

As national student debt grows to $1.4 trillion, Florida colleges and universities are now required to provide students with annual reports that detail how much they’ve borrowed, their anticipated total loan amount and monthly payments.

The new state law, which took effect July 1 and applies only to federal loans, is intended to help students keep track of how much they owe.

Sen. Dorothy Hukill, R-Port Orange, said student debt is reaching a “critical mass.” She compared the information that colleges will be required to provide with the types of disclosures consumers receive when taking on a mortgage or purchasing a car.

Armed with more information, students might make different decisions about which courses they need or whether to take a part-time job, said Hukill, who sponsored the bill.

Calli Abisognio, a University of Central Florida freshman from Boca Raton, said she was hesitant to accept federal loans, but she needed the money to cover her costs.

She started classes less than a month ago and said she’s already borrowed about $2,000 for her summer classes.

“I’m just worried about paying back loans,” she said. “I don’t know how that works.”

Thomas Vo, president of the Florida Association of School Financial Aid Administrators, said state institutions have had different ways of giving out information about student loans.

But he also said the new law’s language is vague, and some institutions are worried about the extra burden of producing annual reports for every student.

The new law requires colleges to provide estimates of students’ total amount of student loans and total potential loan payment, including interest, monthly payments and the percentage of the borrowing limit that students have reached. Postsecondary institutions that disburse state financial aid will be required to provide the reports, though they won’t be liable for the information.

Florida Atlantic University had expanded its financial aid literacy programs even before the law took effect, spokeswoman Lisa Metcalf said.

She said FAU hosts workshops for local high schools, advises new students of alternatives to student loans and conducts presentations during orientation and freshmen classes.

“This is all part of our effort to make sure students are proactively managing their debt and maintaining appropriate budgets for their own financial well-being,” she said.

Broward College is developing a new easy-to-understand website to advise students about student loan information when they first apply for a loan, spokeswoman Lesli Franco said.

“In today’s digital age, openness and trust are everything,” she said. “We want to make sure we build a relationship that gives our students confidence in their decision to attend our institution.”

Palm Beach State officials also believe the new law “will help increase students loan awareness and repayment obligations,” spokeswoman Tabatha McDonald said.

Information about loans should be given to students in the context of a broader conversation about debt and finances, said Troy Miller, the associate director of research and policy for the Florida College Access Network, which pushes for more Floridians to earn post-secondary degrees and credentials.

“If we’re simply providing information about student loans that have been taken out, I would say that’s certainly helpful,” he said. “More beneficial would be providing financial literacy to students who need it the most.”

Ultimately, Miller said, receiving a degree “is a good return on investment for college students.”

Michael Cairo, 22, who recently served as student government president at FAU, said he sees the new law as a welcome change.

“Any kind of transparency, anything that will help students make wiser financial decisions is incredibly important,” Cairo said. “I’m 22 and a finance major. It’s taken me this long to seriously understand how amortization and interest works. I think a lot of students aren’t financially inclined and the information can be confusing, and they don’t understand the financial burdens.”