Colleges are being encouraged to voluntarily use a standard financial aid letter or "shopping sheet" released today by the U.S. Department of Education Department and the Consumer Financial Protection Bureau.
In June, higher education leaders met with administration officials at the White House to discuss college costs and the concept of having a common format for award letters. Ten college presidents and heads of state systems agreed to use the model letter and U.S. Secretary of Education Arne Duncan said in a conference call yesterday that he hopes others will follow. "This is one piece of the puzzle" to make college costs more transparent, he said. "We think it is a critically important part of the puzzle that has been missing for too long."
A sample shopping sheet was posted on the CFPB website in the fall to attract feedback from potential users.
Rather than a burden, Duncan says he thinks the one-page shopping sheet could ultimately be a cost savings to institutions. "Every university is already sending information to students each year, just not in a clear way that is understandable," he said. Education officials say these obscurities can make the task of comparison-shopping for the most affordable and appropriate college difficult, prompting a need for a standardized format letter.
The sheet contains details on:
•College costs for one year (including tuition, fees, housing, meals, books, supplies, transportation, etc.);
• Financial aid, including a clear emphasis on the difference between grants, scholarships, and loans;
• Net cost of attending, after grants and scholarships;
•Average monthly payments for the federal student loans the student would likely owe after graduation; and,
• Statistics on the college's six-year graduation rate, and default rates.
The letter could become mandatory if the Understanding the True Cost of College Act introduced by Senator Al Franken (D-Minn.)is adopted.
The National Association of Student Financial Aid Administrators also offered recommendations for clear language in award letters this spring. The final version reflected public feedback including many recommendations submitted by NASFAA.
Following the release of the final shopping sheet, in a written statement NASFAA President Justin Draeger urged institutions to carefully review the format before agreeing to adopt it.
"We appreciate that the CFPB and Department of Education incorporated the recommendations of financial aid administrators when revising the financial aid Shopping Sheet," said Draeger. "While we are pleased that institutions are not required to adopt the shopping sheet, we remain concerned with the inflexible standardization of the shopping sheet, and more broadly, with the multitude of consumer disclosure initiatives that have been introduced in recent months. Institutions need flexibility to design a financial aid award letter that best meets the needs of their unique student populations."
Draeger added that his organization of financial aid administrators values efforts to increase the effectiveness of financial aid award letters and fully supports the need for accurate, clear and relevant information regarding college costs.
Use of the aid letter template is voluntary. Secretary Duncan published an open letter to college and university presidents, asking them to adopt the shopping sheet as part of their financial aid awards starting in the 2013-14 school year.
Lauren Asher, president of The Institute for College Access & Success urged all colleges to adopt the "user-friendly" shopping sheet. "Students and families need to know how much each college will really cost them after they apply for aid and before they make the final call about where to go," she said in a written statement. "But right now financial aid offers can be more confusing than clarifying, with different information presented in different ways or not at all." The shopping sheet makes it easy to understand and compare how much students and families would need to save, earn or borrow to cover all college costs, said Asher.