Most colleges are not following best practices for providing clear and standard information in their financial aid offers. That’s a direct quote from the latest federal analysis of how easy—or difficult—colleges and universities are making it for students to figure out how much higher ed will cost.
Those best practices urge college leaders to estimate the net price by deducting only grants and scholarships from the costs of tuition, books, housing, and meals. But about 90% of colleges “understate or don’t include the net price” in their offers, according to a report released this week by the Government Accountability Office.
Administrators should also take heed of the fact that the GAO is urging Congress to require colleges and universities to provide clear, standard information in all financial aid offers. One of higher ed’s professional organizations is encouraging campuses leaders to take further action in the wake of the report.
“Students and families need clear and understandable financial aid information in order to make wise college-going decisions,” stated Justin Draeger, president of the National Association of Student Financial Aid Administrators, which participated in the report. “The GAO report highlights the ways schools are falling short in communicating college costs to students. The higher education community has the capability to make a change now.”
NASFAA and nine other higher education associations recently produced a set of guiding principles and minimum standards for financial aid offers, Draeger added.
Financial aid transparency figures
The Department of Education disbursed nearly $112 billion in financial aid in the fiscal year 2021. For the study, GAO reviewed financial aid offers from 176 colleges. Nearly two-thirds of institutions follow half or fewer of the 10 best financial transparency practices while none of the institutions analyzed by the GAO followed all 10.
And about half of colleges and universities understate their net price in financial aid offers by excluding certain fees or including loans students will have to repay—both of which can make tuition seem more affordable. Approximately 40% do not provide a net price, says the GAO report, which reminded campus leaders of the 10 best practices:
- Itemize key direct and indirect costs
- Provide a total cost of attendance that includes key costs
- Estimate the net price (by subtracting only gift aid from key costs)
- Separate gift aid, loans, and work-study
- Do not include a parent PLUS Loan or, if included, separate and differentiate it from student loans
- Label type of aid
- Label source of aid
- Include actionable next steps
- Highlight key details and distinctions about loans, grants, and work-study
- Do not refer to the offer as an “award”
Colleges were also cautioned against the common practice of referring to financial offers that include loans as an “award” because it can confuse students about how much they will have to repay.
But colleges were commended for sending students a College Financing Plan that breaks down costs and financial aid in comprehensive detail. About 35% of institutions are using this resource, GAO estimates.