Part 1 Deep Dive: Foxx’s College Cost Reduction Act Includes Financial Aid Offer Provisions
By Megan Walter, NASFAA Policy Team
Rep. Virginia Foxx (R-N.C.), chairwoman of the House Committee on Education and the Workforce, last Thursday introduced the College Cost Reduction Act, which seeks to address issues around college cost, accountability, and transparency.
This article, the first in a three-part series analyzing the bill, focuses on aspects of the bill that would create a standardized financial aid offer for institutions to use. Additionally, the article touches on updates the bill would make to the College Scorecard, and the creation of a new Postsecondary Student Data System.
Standardized Financial Aid Offer
The bill introduces a standardized aid offer, similar to the guidelines that the Understanding the True Cost of College Act has introduced, with fewer required or restrictive elements. The form would first require institutions to list their entire cost of attendance (COA) for a student, including both their direct costs, which includes all costs billed to the student and additional costs otherwise required by the institution for enrollment and also indirect costs, such as books, supplies, technology, and transportation.
The bill would allow schools to add items that are applicable to their institution, or remove components if they do not apply. Institutions would also be required to indicate whether the aid offer estimates are based on full-time or part-time enrollment, and if any of the costs listed are estimated based on a prior year or the academic period indicated on the aid offer.
Following COA information, institutions must list all forms of grants and/or scholarships the student has been offered or received, by source (e.g.institutional, state, federal, or other.) Schools must disclose that this type of aid does not need to be repaid.
Required next on the aid offer is net price. This bill includes the requirement for two calculations related to net price, direct net price, and annual net price. Direct net price is direct costs, as defined in the bill, minus any grants and/or scholarships offered.
Annual net price is calculated by taking the entire COA, direct and indirect costs, and subtracting any grants and/or scholarships offered. This section would also require institutions to include a disclosure that the net price is based on an estimate of the total COA for the year, and not necessarily the amount the student will owe directly to the institution.
After the required Net Price calculations, the bill then focuses on how subsidized, unsubsidized, private and/or institutional loans may be presented. All loans offered must plainly include at minimum the word “loan” in their title, be clearly labeled as either subsidized or unsubsidized, and if they are an interest-bearing loan, that must be made clear. Notably, this bill eliminates the PLUS loan programs – covered in a forthcoming article – so requirements for those programs are not included in the loans section of the aid offer.
Private loans can only be included with a dollar amount on the aid offer if the loan has already been applied for and approved for that amount. Institutions may not list an amount next to private loans on the aid offer to show what amount a student may be eligible to receive.
Student employment aid types must also be listed in a separate section with their own totals. If offered Federal Work-Study, the institution must include information about the maximum annual amount the student may earn through the program, and a disclosure that any amounts received are subject to the availability of qualified employment and earnings are disbursed over time as earned.
Required disclosures on the aid offer include instructions for students who wish to decline, accept, or adjust their offered aid, an explanation that verification of information provided on the FAFSA may require the student to submit further documentation, and where students can find more information regarding their financial aid, college costs, and student outcomes specific to the institution. That would include a link to the College Scorecard and the Universal Net Price Calculator proposed in this bill.
While a standard form, this bill would give institutions some flexibility. Notably, institutions are able to supplement the form with any other additional information as long as it does not misrepresent or conflict with the information in the form related to costs, financial aid offered, or the net price. Schools are also able to exclude a required item or disclosure from the form on an individual student basis, or entirely if the student is not eligible for an aid type, the institution doesn’t participate in an aid program, or the COA item is not applicable to the student or institution.
The Department of Education (ED), in consultation with the heads of relevant federal agencies and higher education stakeholders, would establish the standard terminology and definitions that will be used on the aid offers. ED must also develop multiple drafts of the standard form that shall go through consumer testing, as well as separate forms for use for undergraduate students versus graduate students.
College Scorecard
This bill would add an additional data point to the College Scorecard to match the new data point required on aid offers – “total net price required for completion” – which is calculated by taking the direct costs, or the cost required for enrollment, minus any grants and/or scholarships the student received. ED is also required to add to and make public on the Scorecard the number of students enrolled in distance education, information on students’ progression and completion, the grants and scholarships received by students, and the number and percentage of students receiving such awards, a link to the institution’s website containing campus safety data, as well as disaggregated student information based on varied characteristics. The Scorecard must also include a universal net price calculator.
ED would also be required to ensure students who submit a FAFSA receive links to the College Scorecard website applicable to each of the institutions that the student listed on their form.
Postsecondary Student Data System
The College Cost Reduction Act would allow the National Center for Education Statistics (NCES) to create a post-secondary student-level data system. The system would collect data elements on Title IV or veteran education benefits receiving students, such as student enrollment, persistence and progression, enrollment status, credential-seeking status, student demographic characteristics, as well as measures related to college preparedness, and information on types of aid received. The bill would allow data sharing by the institution of higher education, ED, or NCES, when possible, to avoid duplication of reporting by institutions.
Stay tuned to Today’s News for part two of this deep dive and for any updates on the College Cost Reduction Act.
Publication Date: 1/19/2024
Mary G | 1/24/2024 3:22:34 PM
Would this replace the College Financing Plan template? Seems a bit redundant.
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