Colleges and universities are receiving a final version of the “financial aid shopping sheet” designed by the Obama administration to provide students with standard, easy-to-understand information about their financial aid award and obligations.
The model letter is the culmination of an administration effort to get colleges to standardize award letters so that they provide clear information on grants, loans and other available aid to students along with the student’s total net cost of attendance. The Education Department and Consumer Finance Protection Bureau jointly unveiled the model after months of collaborating on the project.
“We are standing up for a simple and sensible concept: students should know before they owe,” said Richard Cordray, the bureau director.
Cordray said the letter is designed to minimize confusion so that students and their families understand their costs and risks.
“Too often students receive financial aid award letters that are laden with jargon, use inconsistent terms and calculations, and make it unnecessarily difficult to compare different financial aid awards side-by-side,” he said.
Since opening for business in 2011, the consumer bureau has heard from “thousands of student loan borrowers who say that they simply did not understand what they signed up for,” he said. In some cases, students took out private student loans when they still had not exhausted all of their eligibility for subsidized federal student loans.
“All too often, borrowers got in way over their heads.”
Among other components, the shopping sheet clearly states the aid that will come to students in the form of grants, loans and scholarships. It also lists additional options such as college work study as well as the expected family contribution that students and their families are expected to make toward the cost of attendance.
While participation by colleges is voluntary, administration officials are calling on colleges to adopt the form. In June, the White House held a forum led by Vice President Biden in which 10 post-secondary institutions committed to using the model. The 10 included North Carolina A&T University, a historically Black institution. North Carolina A&T said it joined the initial wave of institutions using the letter because it wanted to avoid confusion among the large share of students at the university who rely on some form of financial aid.
“The form lays out what is a loan and what is a scholarship. It lays out the total cost of attendance including tuition, fees, and other expenses,” Cordray said. “And in doing all of this, it enables prospective students to compare one college offer to another.”
The National Association of Student Financial Aid Administrators (NASFAA), which represents campus financial aid directors, is urging its members to “carefully review” the shopping sheet before adopting it.
NASFAA President Justin Draeger said the Obama administration has incorporated some of the association’s recommendations for the final award letter. Yet he voiced some caution.
“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,” he said in a statement. “Institutions need flexibility to design a financial aid award letter that best meets the needs of their unique student populations.”
The shopping sheet is available at http://collegecost.ed.gov/shopping_sheet.pdf.