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Illustration of a clear piggy bank filled with words like "grants," "net price" and "loans."

A group of higher education associations is trying to make financial aid offers easier for students to understand.

Photo illustration by Justin Morrison/Inside Higher Ed | Rawpixel | Getty Images

Nearly a year after the Government Accountability Office criticized colleges and universities’ financial aid offers, a group of higher education associations in Washington, D.C., is rolling out an initiative to make those offers easier for students to understand.

That plan, which more than 350 colleges and universities have signed on to, largely relies on a voluntary commitment from those institutions to do better. The College Cost Transparency Initiative doesn’t add new requirements beyond the voluntary best practices that have been in place for years. Some advocates who prefer a more standardized approach to aid offers are skeptical that this effort will lead to meaningful change, given that the issue has persisted for years despite Education Department guidance and other voluntary efforts from higher education groups. They want Congress to take action and force compliance.

Officials with the initiative, which will compile a list of partner institutions that are committed to ensuring their aid offers meet the minimum standards, say the public pledges show buy-in from campus leaders to address this long-standing issue and will push other institutions to get on board. The initiative’s work, which included focus groups and other meetings over the last year, was in part aimed at addressing the GAO’s concerns.

“We’re doing this first and foremost because we think it’s the right thing to do, and the sooner we get it done, the better,” said Peter McPherson, the president emeritus of the Association of Public and Land-grant Universities who chaired the task force. “The problem is that you need to get the attention and engagement from the president or the provost to get the institution really engaged, so a best practice is just that compared to a commitment by the institution.”

Students and families rely on financial aid offers to see what kind of aid they’re eligible for and how much college will cost. But these offers often vary from institution to institution and can be misleading at times. A GAO report late last year sharply criticized the clarity, consistency and transparency of the offers and called for Congress to set minimum standards.

The GAO found that nearly two-thirds of colleges did not provide students with all the key information they need to make informed financial aid decisions. Most failed to accurately tell students how much they would have to pay out of pocket to finance their education using loans or other means. When students don’t have accurate and complete information, they might choose to attend a college they can’t afford or end up with loans they can’t repay. Additionally, the variability in how the information is presented makes it difficult to compare offers from different institutions.

“We hope this is just the beginning of an effort that will really get higher education focused on transparently communicating the cost of attending their colleges and their financial aid offers,” said Justin Draeger, a task force member and president and CEO of the National Association of Student Financial Aid Administrators, which will manage the initiative moving forward.

Under Education Department guidance issued in 2019 and updated in 2021, colleges and universities should avoid referring to financial aid offers as an “award” or “letter” because loans are not awards and the term “offer” is cleaner. The guidance calls for including and breaking down the cost of attendance as well as listing money from grants, scholarships, loans and work-study as separate line items.

This College Cost Transparency Initiative is essentially calling on institutions to commit to following the federal guidance, along with other principles and standards. Those include explaining all types of aid offered using plain, standardized language while prominently displaying critical components of the offers, including loans and the total cost of attendance. The task force eventually plans to review institutions’ aid offers and list those that are in compliance with its standards on its website,

Draeger said the standards should mean that students will see a net price—what they’re expected to pay after grants and scholarships have been factored in—on every aid offer, and that participating institutions will now be calculating that figure in the same way. Ninety-one percent of the colleges studied in the GAO report understated or failed to include the amount a student would have to pay in their aid offers.

The initiative could help ensure more institutions are following those best practices, Draeger said, in part because of the peer pressure involved with the public commitments. The initiative got the attention of the campus leaders needed to make system-level changes, he said.

NASFAA convened its own task force in 2012 to examine aid offers and added minimum requirements for these forms to its code of conduct in 2014. And yet, the issue has persisted.

“The GAO report identified several reasons why aid administrators indicated that their aid offers weren’t always in compliance,” Draeger said. “One of those, for example, was that they didn’t have the resources to implement system changes to be in compliance. Well, resource allocations ultimately are made at the leadership level, and so this was one of the reasons why we really needed campus leaders to buy in to this.”

Rachel Fishman, director of the higher education program at New America, a left-leaning think tank, questioned how much a voluntary commitment could lead to a systems-level change.

“It’s not a bad thing to get principles and standards out there and to get people to partner, but it’s not going to make the meaningful change that we really need, because we’ve been through this before and I don’t see how this is going to be much different,” she said.

Fishman worked with uAspire, a nonprofit that helps students navigate the process of finding and applying for financial aid, to analyze thousands of aid offers for a 2018 report. She found inconsistencies in what the offers included and in the ways institutions described the different methods a student could pay for college.

While it’s good to get buy-in from institutional leaders, Fishman said, “real change here is only going to happen with legislation.”

Fishman and other consumer protection advocates joined the GAO in calling for Congress to require colleges and universities to meet certain standards in their aid offers. Several lawmakers have introduced bills this Congress to improve aid offers, citing the GAO report. So far, none of the bills have moved forward.

North Carolina representative Virginia Foxx, the Republican who chairs the House Education and Workforce Committee, said in the initiative’s news release that the task force is “a big step in the right direction.” Earlier this year, Foxx reintroduced the College Cost Transparency and Student Protection Act, which would standardize the aid offers.

“Getting the federal student loan program in check requires action from both lawmakers and postsecondary education institutions, and I’m glad to see we’re working together towards the same goal of greater transparency,” Foxx said in the release.

Draeger said the task force’s work was not aimed at forestalling legislation. NASFAA has supported bills to require the use of standardized terms and elements but has resisted efforts to create one standard form.

“Whether legislation comes on aid offers wasn’t really at the forefront of my mind,” he said, “because legislation is not a fast process, and I also don’t see it as a panacea on college cost transparency. I would hope that legislators can maybe be informed by this effort. But I think we have to be realistic about how slowly legislation moves and how slowly legislation is implemented. In the meantime, I think it comes down to ‘Why wait? Let’s do something now.’”

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