Financial-Aid Letters Still Confusing for Students
The U.S. Department of Education has promoted a voluntary model award letter to give students clear information about college costs, grants, scholarships, and loans to help when comparing offers. More than 300 institutions agreed to adopt the shopping sheet, but reporter Marian Wang found many are sending out information in a different format that often leaves students misinformed and suggesting loans that would be a reach for some families.
At issue is how schools list the help offered to students, sometimes mixing grants and scholarshipswhich don't have to be repaid, alongside loans. Labeling all as "financial assistance" can give families a skewed picture of the true bottom-line cost. The new template provided by the federal government encourages colleges to be more transparent and separate the kinds of aid, but ProPublica gathered several letters and discovered many are not following the format and remain confusing.
ProPublica points out that many schools include Parent Plus loans in their financial aid package offer. This federal program allows families to take out as much as they need to cover college costs and they are easy to obtain. "In many cases, schools suggested Parent Plus loans to cover the sizable gap between aid and the stated cost of attendance, even if the loan would be beyond what a family could afford. Some even packaged Plus loans to match the estimated costs down to the dollar," according to the article.
While student-advocacy groups support a standardized financial-aid award letter, the challenge now is that it is optional. There are proposals in Congress, such as Understanding the True Cost of College Act sponsored by U.S. Sen. Al Franken (D-Minn.) that would make such transparency mandatory.