I remember the first time of many when a student excitedly came to tell me that they got a full scholarship to college only to be informed that the financial aid award was filled with loans and teaser “scholarships” that disappear after the first year. The reason: deceptive and opaque financial aid award letters. There are many reasons to believe that this era is ending.
There are numerous studies that show that students and parents do not understand what the actual cost of college will be from the award letters they receive. A 2012 study by the National Association of Student Financial Aid Administrators found that “participants in this study did not find any of the letters to be clearly understandable.” A 2017 study by The Institute for College Access and Success noted that only seven percent of over 200 letters they reviewed met basic standards of providing the full cost of attendance, separating aid that needs to be earned or repaid from aid that doesn’t and calculating the net price. In 2018, New America and uAspire analyzed over 11,000 award letters, taking a deep dive into over 500, and found that seventy percent of offers put all the aid together, so it feels like one big gift. A 2022 GAO report concluded that 91% of colleges omitted or presented inaccurate net prices and 41% of colleges didn’t include anything about net price in their offers.
The issues are multifaceted. Admissions expert Mark Kantrowitz notes problems including confusing jargon and terminology, omission of the complete cost, failure to differentiate types of aid,, misleading packaging of parent PLUS Loans, vague definitions, poor placement of Work-Study, inconsistent bottom line calculations and no clear next steps. In 2019, an interagency task force, including almost all affected agencies and departments, noted similar challenges and suggested best practices to address these.
There is reason to believe changes are afoot. The College Financing Plan – CFP (formerly known as the Financial Aid Shopping Sheet) became available by the Department of Education for use beginning in the 2013-2014. Over 500 colleges signed up to use it in its initial rollout, including the State University of New York system and the University of North Carolina at Chapel Hill. It provided suggested templates and guidance to users. In 2021, New Jersey mandated a standardized Shopping Sheet for all colleges in the state.
This past year, a task force created last year by 10 higher education associations including the American Council on Education created standards for college financial aid letters, called the College Cost Transparency Initiative (CCT), including:
- Cost of Attendance
- The type and source of all financial aid being offered, separating into grants and scholarships from student loans or student employment
- An estimated net price
- Whether the financial aid is being offered once or on an ongoing basis, and if the aid is renewable, any requirements that must be met for renewal.
- All loans should be unambiguously labeled as such
- Use commonly understood terms and definitions, using the College Cost Transparency Initiative’s glossary of terms.
- Actionable next steps and important dates and contact information for the financial aid office.
Over 360 colleges signed up, serving 3.8 million college students, including highly selective colleges such as Bucknell, Dartmouth, Emory, Mt. Holyoke, Pomona, Rice; Large state universities, including Iowa State, James Madison, Ohio U, and Temple; and all the state universities in New York, Delaware, Washington, Wisconsin and Georgia
In addition, bipartisan bills have been introduced in Congress. Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) and Secretary of the House Republican Conference Lisa McClain (R-MI) reintroduced H.R. 1311, the College Cost Transparency and Student Protection Act for the 118th Congress and Senator Charles Grassley has reintroduced the Understanding the True Cost of College Act. Both mandate uniform financial aid offer forms with similar standards as CFP and CCT.
There should also be similar initiatives to standardize secondary transcripts, as is done in Wisconsin and Washington State and standards for high school profiles. At least on the financial aid front, simplified and comprehensible financial aid award letters seem to be moving toward universal acceptance.
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