It’s that time of year – fall tuition bills have been or will shortly be mailed to students. In response, it is likely your office will receive more than one call from a student or parent who had no idea how much would need to be paid for the student to matriculate. How can that be when award letters were sent months ago? In their recent study, Decoding the Cost of College: The Case for Transparent Financial Aid Award Letters, New America and UAspire explain the challenges families face understanding the information provided by colleges.
As part of the study, 11,257 financial aid award letters from 910 colleges across 47 states were reviewed. Ninety six percent (96%) of the colleges were 4-year public or private institutions. The award letters were sent to 5,908 high school students representing 19 states and 74% of the students were Pell-eligible. The findings go a long way to explain why families are so confused about college costs. Keep in mind, these are high school seniors receiving multiple award letters from different institutions.
What the results say
- Of 455 colleges offering Federal Direct Unsubsidized Stafford loans, 136 unique terms for that loan type were used
- More than one third of award letters had no information about Cost of Attendance
- 70% of the award letters grouped all aid types together with no definition of Grant, Loan or Work-Study (Federal or Institutional)
- 15% of award letters included Federal Direct PLUS loans for parents as part of the financial aid package
- 70% included no explanation of Work-Study (Federal or Institutional)
- 21% (194) of colleges calculated what the student would need to pay and among the 194, there were 23 different ways of calculating costs
- 50% of colleges included specific steps students need to take to accept and complete processing of aid
As a result of these findings, New America and UAspire are making the following recommendations:
- Require written (paper or digital) financial aid offers for all students and stop using the term ‘Award Letter’ – use “Financial Aid Offer” instead.
- Use standard terms and student-friendly definitions (see page 27 of the study for recommended definitions)
- Include the Cost of Attendance with a breakdown of direct costs vs. indirect expenses.
- List gift aid and loans separately.
- Do not include Federal Direct PLUS and Work-Study (Federal or Institutional) as line items in aid offers.
- Calculate the student’s net cost and estimated bill.
- Identify critical next steps.
When to make tweaks to your process
Why talk about Financial Aid offer letters in July? We understand that there are many barriers to implementing the suggestions above. Financial Aid Management Systems may limit the ability to customize forms and if you send offers via mail, adding additional pages of information can be costly. If Financial Aid offers are delivered via a web portal or email, you may not have the IT resources to change from the current format. There may be institutional pressure to present Financial Aid offers in a particular way that doesn’t meet all the recommendations above. Finally, there’s just not a lot of down time between now and when your next round of Financial Aid offers will be sent.
There are many benefits to instituting the recommended changes above; your transparency will inspire consumer confidence and create a trusting relationship with families; your institution will likely experience less enrollment ‘melt’ after the fall bills are distributed; and students will be making informed decisions as to whether your institution is affordable.
If you need assistance, HEAG is here to help. Please contact firstname.lastname@example.org for more information on how we can assist with improving Financial Aid Offer letters and streamlining the delivery of this extremely important student service.