Commentary: Financial Games Colleges Play

"Every spring, colleges send two sets of letters to millions of prospective students. First the good news: an acceptance letter. Then, a few weeks later, a 'financial-aid award letter,' theoretically explaining how much college will cost," Kevin Carey of New America writes for The Wall Street Journal

"Parents and students are supposed to use this second letter to make one of the biggest financial decisions of their lives. But the task is often nearly impossible, as shown by an analysis from my colleagues at the think tank New America, working with uAspire, a nonprofit that provides financial-aid counseling.

The study, published last week, examined 11,000 award letters sent in 2016 by more than 900 colleges. It found most of them use obscure terminology, omit vital information, or present financial calculations that appear deliberately deceptive. Many letters are confusing in their own unique ways, making it difficult for students to compare colleges.

... There’s a solution: Require all colleges to use the recommended award letter. The Department of Veterans Affairs already mandates this for financial-aid letters going to students benefiting from the GI Bill. Congress should expand that protection to every college applicant. Providing consumers with consistent, transparent information is a goal embraced by Republicans and Democrats alike. Cars have window stickers that list fuel-economy ratings and the manufacturer’s suggested retail price. Mortgages come with a standard form showing an itemized list of costs and fees.

So far the higher-education industry has resisted such regulation. The National Association of Student Financial Aid Administrators has a code of conduct requiring its members to disclose the cost of college attendance and to label loans accurately. The association does not, however, independently audit colleges for compliance. The group’s president, Justin Draeger, tells me his organization would support new federal policies to require consistent labeling, as well as to prohibit colleges from lumping together grants and loans. But his association, perhaps reflecting the opinions of its members, officially opposes requiring all colleges to use the recommended award letter."

NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 6/14/2018

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