May 29, 2012
The two most prominent prongs of the college admissions process today appear to be (1) What's the best college for me? and (2) How can I afford it? Finding the answer to #1 is easier than solving #2 these days. Why is that?
Well, first, finding the "best" college is usually a combination of mechanics and intuition. The mechanical part comprises articulating your basic (or even detailed) requirements, such as location, size, weather, curricula offered, graduation rates, retention rates, diversity, and so forth. The intuition factor emerges during campus visits. That's when you look to your gut and ask, "Can I see myself here?" Finding the right college is essentially a shopping adventure, knowing what you want and then going out and taking schools for a kind of test drive.
Figuring out how to pay for that best college is a whole 'nother matter, as they say 'round these here parts. The challenge comes by trying to figure out how much money that ideal school will be willing to give you in financial aid. The "hidden" challenge comes when you finally receive that school's offer of aid. How can you tell a good offer from an offer that will put you in debt for years, if not decades to come? That issue brings us to the point of this article: Why are college financial aid package letters so treacherous and confusing?
The National Association of Student Financial Aid Administrators (NASFAA) brings news of a Federal government effort to help students and, perhaps a bit more impotently, parents deal with this perplexing issue. Here's the thrust of this important story:
Sen. Al Franken (D-MN) introduced the "Understanding the True Cost of College Act" to mandate higher education institutions use a standardized award letter, uniform financial aid terms, and provide information about student loan repayment and a host of other student aid-related disclosures. The bill directs the Secretary of Education to consult with relevant Federal agencies to develop the format and content of the form, with input from students, families, institutions of higher education, secondary and postsecondary counselors and nonprofit consumer groups.
“The amount of debt students in Minnesota graduate with has skyrocketed, and part of the problem is that students often don't have a clear picture of how much their education is going to actually cost them," said Franken. “My legislation will require schools to use a universal financial aid letter so students and their families will know exactly how much college will cost, and will help them compare apples to apples when deciding what school a student will attend."
“We appreciate Sen. Franken's willingness to reach out to the financial aid community while constructing this bill," said NASFAA President Justin Draeger. “NASFAA supports standardizing certain elements and terms on award letters and we agree with portions of Mr. Franken's bill. However, financial aid administrators require some flexibility to customize some of the content and delivery of award letters to meet the unique needs of the diverse student populations they serve. We embrace our role and responsibility to ensure students receive clear and accurate information. A task force of NASFAA members recently published a report that recommends elements that should be included in award letters, a glossary of standardized award letter terms, and additional student-specific loan information that should be compiled by the U.S. Department of Education and provided to every borrower."
“We look forward to working with Congress to ensure that clear and simple disclosure information can be provided to students and parents in way that is not overly-prescriptive and does not hinder an institution's ability to meet the specific needs of its student body or restrict innovative methods of delivery," Draeger added.
Specifically, Franken's proposal would require schools to include the following information and disclosures in a “consumer-friendly" manner that is “simple and understandable" on the first page of the award letter (whether in printed or electronic format):
There are additional suggestions offered for this initiative, all of which give the "consumer" a much clearer picture about what is being offered and how much debt is being incurred. It's a sensible effort to help students and parents gain much more control over college selection and affordability.
However, the one possible downside to all of this may be that many "dream" schools will be revealed as risky "investments" based on the amount of long-term student (and parent) debt resulting from the intricacies of their financial aid packages. Let's hope that this standardization effort, combined with high schoolers' in-the-know search process, can result in a much more sane and orderly college admissions process.
Be sure to check out all my college-related articles and book reviews at College Confidential.
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