As Congress works to renew the Higher Education Act this year, student leaders in Minnesota are pushing legislators to make state student loans more accessible.
The Minnesota Student Association, the Minnesota State University Student Association and national higher education advocates say the Higher Education Opportunity Act of 2008 restricted how colleges inform students about non-federal loans, driving many students to options more costly than loans provided by the state.
The law, enacted in 2010, required colleges to certify all non-federal loans through a lengthy process, said Tricia Grimes, a financial aid analyst at the Minnesota Office of Higher Education.
“What has ended up happening is that many colleges have chosen not to go through that process,” she said.
As a result, advocates for student loan reform say, colleges don’t sufficiently promote state-sponsored loans, leaving students insufficiently informed.
Since 2010, the number of borrowers for Minnesota’s state student loan, the SELF loan, has declined by nearly 50 percent, Grimes said.
“It’s causing students thousands of extra dollars in interest because we’re trying to navigate this field that’s very complicated and many of us are really young [and] this is our first real responsibility,” said MSUSA member Alexandra Griffin.
While in Washington, D.C., earlier this month, members of MSA and MSUSA lobbied for financial aid offices to have more freedom in promoting non-federal loans.
“It’s really important that students know about [state loans], and it’s really important that the University is able to offer information about it,” said Joelle Stangler, MSA’s president-elect and current ranking representative to the Board of Regents.
Grimes said OHE officials have been in contact with members of the House of Representatives’ Committee on Education and the Workforce, but no changes to loan laws have been confirmed.
Increasing financial literacy
Student government leaders say a lack of knowledge about loan options may also be to blame for the SELF loan’s decreased use.
Stangler said next year, MSA plans to increase financial literacy among students to make sure they know which financial decisions are best for them.
“We also know that we can ourselves inform students about this loan,” she said.
Griffin took out a SELF loan during her freshman year at Winona State University in 2009 after the college’s financial aid office recommended it.
But the following year, she said, her loan options were unclear.
“I have a SELF loan that I took out in 2009 when they could say, ‘This was the best loan; you should take it,’” she said. “But then the next year, I was applying for additional loans, and I had to try and figure out for myself which one was better.”
Griffin ended up choosing a more expensive loan from Wells Fargo, which she said wasn’t the best option.
MSUSA launched a student financial literacy campaign this year, aiming to inform students about aid options so they can find the best loans.
Griffin said many students, like her, could benefit from more financial knowledge.
“I didn’t even really realize what I was doing when I was ,” she said. “Now I realize the impact of it.”