For years, colleges and universities have been criticized for providing their students with confusing, opaque and sometimes misleading financial aid offers.
Meanwhile, about 400 colleges and universities have agreed to take steps to bring “transparency, clarity and understanding” to their financial aid offerings, according to a task force to advance those efforts announced last month.
Two- and four-year public and private colleges in 43 states are among the schools that have committed to joining the task force’s effort, the College Cost Transparency Initiative, to provide students with clear and understandable aid offers. These include large public schools such as Arizona State University; liberal arts colleges such as Pomona College in Claremont, California; many community colleges; and at least one nonprofit school. The task force is made up of leaders from 10 college groups, including college financial aid officers, college presidents and admissions counselors.
Researchers who have studied the problem of unclear offers of help said it remains unclear whether the new efforts would succeed. While the universities that promise transparency serve more than four million students, the schools are only a fraction of the country’s roughly 3,900 degree-granting universities.
“We have been down this path repeatedly,” said Rachel Fishman, director of higher education programs at New America, a research organization in Washington, D.C. In 2018, New America and uAspire, a nonprofit group that advocates for college affordability, released a study , which identified deficiencies in financial aid offerings – such as schools that managed to describe student loans in terms that did not include the word “loan.”
Still, Brendan Williams, financial aid expert at uAspire, said that as more colleges sign up for the task force’s efforts, others could be inspired to do so, too. “I think it’s positive to see movement,” he said.
Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, which is administering the new initiative, said standardizing student aid letters is challenging because college funding comes from multiple sources: students and their families, federal and state governments , universities themselves and independent scholarship groups.
“The way we fund financial aid in this country is complex,” he said.
Colleges need some flexibility, he said, because while many target traditional students who enroll soon after high school, others focus on adults who may have different financial priorities.
Student aid offers – sometimes called financial aid award letters – are intended to detail the cost of attending college and the net cost a student will pay after receiving financial aid.
But colleges often use cryptic terms and factor different costs into their overall prices, making it difficult for students and families to know how much they would likely have to spend to attend a particular college and to compare offerings from different schools. Some offers blur the distinction between grants and scholarships, which do not have to be repaid, and loans, which do have to be repaid.
Late last year, the offers received renewed attention in a Government Accountability Office report that found that offers from about 91 percent of colleges either did not include or understated the net cost of attendance — the bottom line students need to know How much they pay per year at a particular school will cost them.
The GAO found that nearly a quarter of colleges “do not provide information about tuition costs in their financial aid offers.” Offering financial aid without providing information about costs, the report said, can “confuse students by giving the impression that college is more affordable than it actually is.” One anonymous example cited a college underestimating the net price by more than $47,000.
New America’s Ms. Fishman noted that the task force group’s list of partner colleges included the State University of New York system, which has 64 campuses — and is already required by state law to use a simplified, standardized form, like all public and private universities in New York.
However, other New York schools do not appear on the list. Mr. Draeger said that the partner schools were those that had officially submitted their financial aid forms for consideration and committed to the initiative’s minimum standards and principles. The group, he said, “will not automatically enroll schools in this initiative without their consent.”
This means that some colleges not on the list may already be using transparent forms but have not opted to submit their forms for review by the task force.
Paul Dieken, Pomona’s director of financial aid, said his college has long been committed to being clear about financial aid offers. “I have an ethical responsibility to be open with students,” he said. Pomona and other well-resourced colleges have little reason to be anything other than transparent, he said, because they can afford to be generous with financial aid. “That’s one of our selling points.”
The estimated total cost of attending Pomona for the 2023-24 school year is $85,300, but the average net price for students receiving financial aid (what they pay after grants and scholarships) is currently just over, according to Dieken $16,000. The college reported that 58 percent of its students receive some form of financial aid.
But colleges that can’t afford to fully meet a student’s financial needs without loans may worry that listing actual costs could make them appear less competitive, Mr. Dieken said.
Ms. Fishman argued that Congress should require colleges to adopt standardized, user-friendly aid offerings. “What’s needed,” she said, “is a law.”
There are two proposals in Congress aimed at clarifying the cost of college: the Understanding the True Cost of College Act and the College Cost Transparency and Student Protection Act. Mr. Williams of uAspire, which supports the Understanding the True Cost of College Act, said he was “confident that national attention will be focused on college affordability and bipartisan focus on the need for clear financial aid offerings for aspiring college students.” “Financially sound college decisions will lead to congressional action.”
Here you will find some questions and answers about financial aid offers:
What information should a study financing offer contain?
According to the Department of Education, colleges should detail the costs of attendance, including “direct” payments to the school in the form of tuition, fees, room and board, and “indirect” costs such as books, materials, transportation and personal expenses. This is sometimes referred to as the “sticker price.”
Then the university should deduct grants and scholarships that do not have to be repaid. (Schools determine eligibility for financial aid based on the student’s Free Application for Federal Student Aid (FAFSA).) The difference is the net cost to the student – the amount of money that students and families are expected to pay out of their own savings or income from work or by taking out a student loan.
Examples of what an offer of aid should look like, including the template recommended by the Department of Education, can be found on the College Cost Transparency Initiative website.
Until most colleges adopt a clearer form, the Consumer Financial Protection Bureau has a guide to help interpret offers of assistance.
When do students receive their funding offers?
Universities usually offer assistance when they issue admission letters to students. This may occur in the fall if students applied through early decision programs or to a school with rolling admissions, or in the spring. One uncertainty this year is whether aid offers could be delayed due to the later availability of the FAFSA. In recent years, the form became available online in October for the next academic year. But this year, a revision to the form and underlying relief formula pushed it back to December.
Where can I see the list of universities that have become partners in the Cost Transparency Initiative?
The initiative has a list on its website that will be updated as schools submit applications and are approved, Mr. Draeger said.