Today, leaders from 10 colleges and universities met with Obama administration officials in Washington and agreed to include clearer information about college costs, financial aid, and student outcomes in their financial-aid packages beginning in the fall of 2013.
The U.S. Department of Education and the new federal Consumer Financial Protection Bureau designed a model financial-aid award letter or Financial Aid Shopping Sheet and received feedback from students, parents, and the higher education community. The sheet is designed to improve college transparency and help consumers compare the true cost of higher education with five basic pieces of information:
•College costs for one year.
•Financial aid, including a clear emphasis on the difference between grants, scholarships, and loans.
•Net cost of attending, after grants and scholarships.
•Estimated monthly payments for the federal student loans the student would likely owe after graduation.
•Statistics on retention, completion, and default rates.
The higher education systems, representing 1.4 million students, who committed to following the proposed standard template include: Arizona State University, Miami Dade College, North Carolina Agricultural & Technical State University, State University System of New York, Syracuse University, University of Massachusetts System, University of North Carolina at Chapel Hill, University System of Maryland, University of Texas System.
In a press conference this afternoon, Secretary Arne Duncan said he's calling on the country's other 6,000 colleges to voluntarily adopt the easy-to-use form, which he noted is a triumph of common sense. "It's difficult to figure out how much college will cost," he said. "We have to empower parents and students to make a good choice. "
Richard Cordray, director of the CFPB, said that his agency has received thousands of complaints from students who said they didn't understand the loan process. Many took out higher-interest private loans, used credit cards to pay for tuition, and got in over their heads. "Taking on too much debt can have real consequences," said Cordray. "We want information to be clear and easy to understand so consumers to make wise decisions.
The Institute for College Access & Success, a Washington-based nonprofit that has advocated more transparency on college costs, issued a press release applauding the White House announcement. "This is a step in the right direction for students and families, who all deserve clear, comparable, and consumer-friendly financial-aid offers. It's hard enough to figure out how to pay for college without confusing, obscure, or misleading information about costs and aid. Consumers need to know what each college really costs and how much of that cost they will have to save, earn or borrow to cover," the statement said.
Justin Draeger, president of the National Association of Student Financial Aid Administrators, said the administration is working in an inclusive way with higher education officials to make improvements for consumers. Last month, NASFAA released recommendations for model financial-aid award letters that may become part of the process moving forward to clarify college costs.