Decoding The Cost of College: The Case for Transparent Financial Aid Award Letters
Students and families confront a detrimental lack of information and transparency when making one of the biggest financial decisions of their lives: paying for college. New America and uAspire, a nonprofit leader on college affordability, analyzed thousands of financial aid award letters and found not only that financial aid is insufficient to cover the cost of college for many students, but also that award letters lack consistency and transparency. As a result, it is exceedingly difficult for students and families to make a financially-informed college decision. While solutions for tackling the cost barrier may be complex, solutions to improve award letter terminology and formatting are well within reach.
Through a quantitative analysis of over 11,000 financial aid award letters, we found that students who receive a Pell Grant are still left to cover a significant gap—an average of nearly $12,000. The gap persisted even when students made cost-saving decisions about where to attend (public versus private colleges and universities) or where to live (at home versus on campus). Given that financial aid falls short, clear and consistent communication on award letters is critical.
After a thorough qualitative review using a subset of 515 award letters from unique institutions, we emerged with seven key findings:
Based on these findings, we present seven policy recommendations, calling on federal, state, and institutional parties to create systems-level change. Federal policymakers should conduct consumer testing, and then set and require award letter standards via federal mandate. State governments should adopt common award letter terms, calculations, and formats across their systems of higher education. Colleges and universities should develop more student-centered financial aid offers and tools, as well as align their efforts with other key departments serving student financial needs.
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The database used for the research of this report was made possible with support from ECMC Foundation.
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