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Going to college is a high-stakes decision as aspiring college students must determine the best fit for their finances and academic and career goals. However, financial aid offers, the communications that outline the financial aid that applicants are eligible to receive, are complex, jargony, and difficult to compare from school to school. uAspire advises thousands of students applying to college each year. We see firsthand the challenges financial aid offers present. We spoke with GBH and Hechinger Report’s College Uncovered about the lack of standardization or transparency in financial aid offers. Here are more examples of the issues we see.
 

Most Financial Aid Offers Lack the Correct Net Cost

Students and families' main question is: How much will college cost? The Government Accountability Office (GAO), Congress’s nonpartisan research office, did a thorough analysis of financial aid offers and found that 91% of colleges do not show an accurate net price, 41% do not include any net price, and an additional 50% of colleges understate the net price. These data points reflect the experiences of uAspire advisors when they support students with reviewing their financial aid offers.

Our example financial aid offer shows this problem clearly. The total direct cost is $24,540. The total indirect cost is $4,580. The total financial aid package is $10,670. How much will this college cost? With some calculations and an understanding of financial aid lingo, a student would need to add the direct and indirect costs and subtract the financial aid package to get to $19,450. But that isn’t clear, and $5,500 of the financial aid package is Federal Direct loans that must be repaid.
 

Grouping Different Types of Aid Together Obfuscates the True Cost of College

Bundling together the different types of financial aid (grants/scholarships, loans, and work-study) on the offer obfuscates the full cost and confuses students. uAspire and New America analyzed 515 financial aid offers for Decoding the Cost of College and found most colleges do this. Of institutions with Federal Work-Study in the packages, 70% did not explain how work-study differs from other types of aid. The differences in the work study program are important to understand. Students can access these funds only if they secure a work-study eligible job, and some campuses don’t have enough. The funds are paid via paycheck throughout the semester, not all at once at the beginning of the semester. Our example financial aid offer bundles loans and federal work-study with grants, so while the student is receiving a financial aid package of $59,995, $5,500 will need to be repaid, and $2,500 is contingent upon finding a work-study job and working the hours to earn it.

Confusing Jargon and Terminology

When uAspire advisors review financial aid offers with students, part of the job is explaining the jargon and technical terms of the aid offers. In Decoding the Cost of College, of the 455 colleges that offered an unsubsidized student loan, we found 136 unique terms for that loan, including 24 that did not include the word “loan.” Some financial aid offers have included phrases such as “LN Fed Direct Subsidized Ln” for the federal loans. Not clearly stating “loan” and including it with the grant aid confuses how much of this package needs to be repaid. 

Financial aid offers must be standardized and clear

Financial aid offers help students make college decisions that can have lifelong financial impacts. Confusing and misleading financial aid communication can lead students to choose schools that appear more affordable while actually leading to more debt, higher-than-expected costs, and increased chances of leaving school before receiving a degree. Understanding how much you must pay to attend college should not be complicated. Federal policy should require student-tested, standardized financial aid communications that make college costs clear.