By Rachel Fishman, Acting Director, Education Policy Program at New America
Reading time: Five minutes
Disclaimer: The views and opinions expressed here are those of the author and do not necessarily reflect the official policy of position of the National College Attainment Network (NCAN).
Note: Portions of this blog were published in New America’s EdCentral.
The Government Accountability Office (GAO) recently released
a report that felt all too familiar. The report found that the financial aid offers (also known as award letters) that colleges and universities send to students
that detail personalized cost and aid information are a challenge for most families to navigate. The way in which colleges and universities communicate this information is mediocre at best, and many times can be downright confusing and misleading.
The lack of progress on improving these communications means that college access advocates must renew efforts to call on Congress to legislate change through the "Understanding the True Cost of College Act".
10 years ago, I was working at a TRIO Education Opportunity Center located in the basement of Boston’s public library. I helped low-income, predominantly first-generation students fill out the FAFSA and navigate financial aid offers. I was surprised to
see that nothing had really changed with financial aid offers since I received them as a high school senior. Just like when I was a high schooler, we would open up Excel to gather the price and aid information in each offer and try our best to standardize
it so we could make apples-to-apples comparisons.
Helping low-income and first-generation students navigate the complex college-going process, including obtaining financial aid, was one of the driving reasons I decided to go into policy and advocacy. In 2018, I had the opportunity to tackle the issue
with a team of researchers at New America and uAspire, a nonprofit organization whose mission it is to ensure that all young people have the financial information and resources necessary to find
an affordable path to and through college. We published a groundbreaking report that finally revealed in great detail just how bad
colleges and universities were at communicating their price and aid options.
Our research revealed several serious issues with financial aid offers. Over a third of the letters contained no information on price. For one type of common loan, the federal direct unsubsidized loan, we found there were over 130 different ways institutions
labeled this loan, including several institutions not calling it a loan at all. Most institutions lumped all types of aid together like loans, grants, and work study, even though they have very different terms and conditions. And some institutions
used the Parent PLUS loan, a loan that a parent has to apply and be approved for, to “zero out” an aid offer making it seem like students received a full ride.
Our report brought a lot of attention to the issue. Prior to it, there had been efforts since 2012 from the Obama Administration and in Congress to standardize financial aid offers so that students could get the information in the right format and make apples-to-apples comparisons among the institutions where they’d been accepted. Until our report, those efforts
largely stalled due in large part to colleges and universities lobbying against any standardization. They claimed that the problem was the result of a few bad actors, not systemic. It wasn't until our research showing widespread problems with financial
aid offers was released that Congress started taking note.
Meanwhile, the National Association of Student Financial Aid Administrators (NASFAA) made clear that their members were required to follow their code of conduct which had several rules
about financial aid offers. The U.S. Department of Education (ED) issued guidance to colleges and universities making clear what the best practices are for financial aid offers (guidance that still stands). Congress also acted - the Understanding the True Cost of College Act, which has been around since 2012 and is the gold standard piece of legislation for standardizing financial aid offers, was reintroduced with significant revisions based on research.
Yet even with ED guidance, a strong code of conduct from NASFAA, and best practice consumer research from our organization, not to mention the multiple taskforces, convenings, and researchdedicated to improving financial aid offers, the GAO report shows that nothing has fundamentally changed with financial aid offers.
According to the GAO report, institutions still neglect to list price on their offers, and when they do, a vast majority understate price. An estimated 41% of colleges didn’t include net price information and for those that did, approximately
half understated it. They lump aid together, sometimes not even calling a loan a loan. In all, the GAO identified 10 best practices offers should follow including itemizing key direct and indirect costs, providing total cost of attendance, separating
types of aid, and accurately labeling aid. The majority (63%) of colleges only follow five or fewer of these practices. Only 15% made changes based on guidance from ED which is the most pressure the Department can exert in absence of a Congressional
mandate.
It is clear now that NASFAA’s code of conduct and ED’s guidance to institutions about best practices are not enough to achieve
the change needed given the magnitude of the issue. While NASFAA is organizing a new task force (which includes the leaders of 10 higher education associations) to try and tackle the issue,
without a push for legislation, we will most likely continue to see little progress made on improving these communications.
That’s why the GAO has called Congress to act. At New America, we have advocated for the passage of the Understanding the True Cost of College Act since 2012. This legislation is research-based and would convene stakeholders such as students, college access organizations, and financial aid administrators to create a uniform financial
aid cover sheet that would allow students and families to make apples-to-apples comparisons across all the institutions they’ve been accepted to. Importantly, this legislation would still give institutions the flexibility to supplement the cover sheet
with whatever information they want to tailor to the student.
A college education is one of the most expensive transactions a student and family can make, and they deserve to have a common disclosure understanding price and financial aid options. Other complex consumer transactions from mortgages, to health insurance,
to cars all have required comparison disclosures. Higher education should be no different.
It is time to put this issue to bed once and for all and pass the Understanding the True Cost of College Act. If I am using an Excel or Google Sheet to determine net price with my children about a decade from now, we will have utterly failed students
and families.
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