In both the stacks of research compiled by education think tanks and in the conversations had around the dining room table by families of aspiring college students, one stumbling block to college enrollment predictably crops up—financial aid.
The topics range from avoiding endless, crushing debt to options for part-time jobs. But often the focus returns to the complexities of applying for financial aid and determining what a student has been awarded.
To help, a sizable segment of the higher education community has been working to make financial aid options clearer and simpler—especially the sometimes inconsistent and confusing messaging about what has been awarded—so students can determine their final costs and weigh which schools they can afford.
“There are many universities out there that have best practices in place when it comes to guidance and transparency in an award letter, but we still have a lot to do,” said Brent Benner, assistant vice president for enrollment management at the University of Tampa (FL), who has spoken to higher ed groups on the topic. “It definitely seems to be less than half of them.”
Benner said his university simplified and clarified the language in its financial aid letter over the last few years based on input from admission counselors and families. So has The University of North Carolina at Chapel Hill (UNC) where Jackie Copeland serves as the institution’s interim associate provost and director for the Office of Scholarships and Student Aid. “It is something that has been buzzing around a lot lately—this idea that the offer should be more clear and easier to understand. We have been working over several years to redesign ours so that it accomplishes that,” she said.
After finding that misunderstandings about financial aid caused students to have a negative attitude and even sometimes drop out, The University of Iowa financial aid office also revised its award information to make it personal to the individual student and less confusing. Officials reported the change reduced calls to the financial aid office and resulted in better, more informed questions from students and parents.
But such changes are needed across the board to help applicants compare offers from multiple schools and plan for college costs, said Rick Shipman, executive director of financial aid at Michigan State University.
“Simplifying the award notice would be a major step to reducing the confusion families experience when pursuing financial assistance,” Shipman said. “In the end, the student should know how much they are expected to borrow or work. And if there is a gap between what the school costs and the total aid, that should be expressly noted so the student can look for additional funding or consider other schools.”
Those changes are overdue, said Rachel Fishman, a researcher with New America who has studied the process. She co-authored a report in 2018 that spelled out recommended upgrades to award notifications—a report that likely spurred renewed interest in federal legislation to standardize and simplify award documents. Although that legislation wasn’t passed, Fishman believes the proposal will find its way into a future Higher Education Act reauthorization. “There is still some resistance, but we are in much better place than we were five or 10 years ago,” she said.
In the past, for instance, the net price figures used by colleges often were based on different calculations and some award letters suggested students would have no out-of-pocket expenses, although that calculation included work-study income or loans, Fishman said. “It was a lot like the Wild West for a long time. It was impossible to compare one financial aid offer to another or often to understand what was in each,” she said.
Only about half of high school counselors said they were well-versed in interpreting a financial aid award letter, and fewer than 30 percent felt knowledgeable about the terms of student loans and using a net price calculator.
Many colleges and universities have worked to correct those issues. But more changes are still needed to make the financial aid award process more transparent, advocates say.
New America recently developed design principles for financial aid award information based on prototypes reviewed by college-goers of all types and their families. That process indicated that clarity in the financial aid offer reflected well upon an institution, according to Sophie Nguyen, who co-authored the report with Fishman. “We found that students were pretty well-informed about financial aid, but when we asked them to look more closely at some of the offers, they recognized that material was missing or confusing and they wanted something more,” she said. “And the prestige of the colleges increased in their eyes when the institutions offered clearer, more complete information.”
The National Association of Student Financial Aid Administrators (NASFAA) has carefully tracked efforts to standardize the process and encouraged its member institutions to improve their award letters. “A lot of institutions are working on them right now,” said Megan Coval, vice president of policy and federal relations for NASFAA. “I don’t believe the intent of colleges is to be unclear or nefarious, but there is a lot of information and it hasn’t always been presented in the most clear and accessible way.”
A 2017 NACAC survey of counselors and families suggested improvements to aid award information could fill some important gaps. Only about half of high school counselors said they were well-versed in interpreting a financial aid award letter, and fewer than 30 percent felt knowledgeable about the terms of student loans and using a net price calculator. Only about 42 percent felt they had a strong understanding of the difference between a federal and private college loan. Admission counselors reported a better understanding of those topics, but still less than half reported a solid understanding of key topics addressed in the award letter.
NACAC and NASFAA have worked on efforts to clarify award information in recent years, and in November were together awarded a Lumina Foundation Grant to reimagine the admission and financial aid processes to enhance equity in higher ed. (See sidebar.)
Important work is already underway to address the barriers students face in the financial aid process. Colleges and universities have attempted in recent years to spell out aid options more clearly. And the federal government and organizations, such as NACAC and NASFAA, have created additional resources to help families understand the financial aid options available to them.
But major hurdles persist, including the complicated nature of the Free Application for Federal Student Aid (FAFSA). “Part of the reason students don’t apply for financial aid is complexity. The current FAFSA form has 108 questions and may be intimidating and overwhelming,” said Jeff Levy, an independent educational consultant in Santa Monica, California. He noted that data indicates low-income and first-generation students in particular are often dissuaded from completing the form because of its complexity and the types of questions asked.
Recent legislation simplified the FAFSA, with the changes slated to go into effect for the 2023–24 school year. (See sidebar.) Coval said the move will reduce the number of questions and allow students to quickly determine if they are eligible for the Pell Grant. The extensive changes will improve the form in a number of other ways, benefiting nontraditional collegegoers in particular.
Interpreting and comparing financial aid award letters is another hurdle for students, despite recent improvements made by several institutions. NASFAA spells out fundamental standards in its Code of Conduct for member institutions, which it recently updated. That code recommends:
Coval and others believe a fundamental and necessary improvement would be the use of consistent, simple language in award letters. “We should eliminate the financial aid-ese,” said Benner. “You don’t have to dumb it down too much, but assume that the person receiving it is the first person in their family to attend college. Just make it understandable.”
Copeland agreed and said the form also should provide clear information about ways to get further support. The revisions to the UNC package will make it more “dynamic” so that students can easily link to information that will help them immediately and thoroughly understand specific issues. For instance, it can link to clear information about how a federal loan works and its interest rate—or specifically what work-study employment would mean.
Copeland said providing a clear, accurate cost of attendance should be a priority, and Benner noted that the estimate should include information about whether changes to tuition are likely, perhaps with information about historic trends in annual cost adjustments at the institution.
Shipman at Michigan State University said various types of aid should be categorized and clearly identified. “Gift aid that doesn’t need to be repaid such as grants and scholarships should be in one category, loan programs fall into another category, and work-study is the final category. It is very confusing for families when they find so many different awards with different names,” he said.
Shipman also said information about loans should be concise and clear. “A student might be awarded five different kinds of loans with no explanation for why that is. Do they need all of them? Are the terms and conditions, like the interest rate, the same? Are some known to be better than others?” he said.
Levy said a clear subtraction of the cost of attendance minus all grants and scholarships should be presented to the family to show them what their net price will be. According to Benner, net price calculators can be valuable but too often aren’t accurate or accessible. He also said expected borrowing should be separate, and notes that sometimes Parent Plus loans and other borrowing can be presented in a way that suggests it is something other than debt. And he recommended institutions provide an estimate of other costs of attendance and provide the offer earlier to allow more time for students to weigh their options.
Copeland also noted that employment opportunities and the potential for them to offset costs should be spelled out separately. Additionally, she noted that sometimes the award letter is confusing or misleading because the software platform used by the college or university to generate it doesn’t allow flexibility, does not use accessible language, or is not well-suited to the specific institution. She said standardization might prompt software developers to address those issues.
Fishman and New America have developed a list of changes to the award letter, similar to the one NASFAA promoted. They include:
Coval was skeptical, however, about full standardization of award letters because each institution and each potential student has different needs. She said there is “a lot of interest” in the award letter process and that NASFAA supports some standardization guidance from the federal government, but with limits. “We are OK with Congress engaging a little bit. But some of the draft legislation has been concerning. This is an instance where we want to self-regulate as a community as much as possible because we know what needs to be done and our members want to do it,” she said.
Copeland agreed and suggested that while some standardization would be beneficial, the aid report required by a community college or small urban school might be different than one from a sprawling state university. Employment information or institutional loans may vary widely from institution to institution. And some schools may also report out graduate student eligibility for aid. “The student’s financial aid offer is very important and should be clear and accurate. I think colleges and universities understand that and are working in that direction. They know it will benefit them and their incoming students,” she said.
Jim Paterson is a former school counselor living in Lewes, Delaware.
The FAFSA will undergo a number of changes under legislation passed late last year that should make it less confusing and daunting. However, students will have to wait until July 2023 to take advantage of the improvements.
The FAFSA Simplification Act:
The National Association of Student Financial Aid Administrators spelled out the changes in a detailed analysis of the legislation.
A grant to NACAC and the National Association of Student Financial Aid Administrators (NASFAA) from the Lumina Foundation will bring new ideas about the college admission and financial aid systems that should benefit all students, particularly those from underserved communities.
“Each year, overly complex admission and financial aid processes discourage otherwise qualified students from pursuing higher education. The very systems created to encourage students to enroll in college disproportionately disadvantage marginalized populations,” said NACAC CEO Angel B. Pérez. “This project seeks to reconstruct admission and financial aid processes by putting students at the center and building it from the ground up.”
Pérez said that focusing on students can also help with institutional success. “We believe we can achieve equity for racial and ethnic minority students while helping institutions of higher education meet their goals,” he said.
The wide-ranging grant from Lumina, announced in November, will allow NACAC and NASFFA to reimagine college admission and financial aid systems to better promote racial equity in US higher education by examining, dissecting, and re-structuring the admission and aid processes. Since research shows college access is not fairly or equally distributed, the project will seek to focus on “equality of opportunity.”
As part of the grant, the groups will convene a panel of thought leaders to consider entry challenges to postsecondary education for traditional-aged and adult students of color and examine ways in which an admission and financial aid system would be designed if racial and ethnic equity were the primary objectives. NACAC and NASFAA will work with a design thinking firm to structure the group’s work and ensure that many voices are represented. The work will include direct interviews and feedback from students, both traditional-aged and adult, school counselors, college advisors, and other stakeholders. The panel will then reexamine internal workings of the admission and financial aid processes at the full range of postsecondary institutions and provide recommendations about optimizing them to achieve racial equity goals.
In announcing the grant, officials from the two organizations noted that studies clearly suggest disparities in higher education access for traditional and adult students of color are at a critical point, exposed by the COVID-19 pandemic and the racial justice crisis that crested in 2020. “Researchers believe that the inequities will worsen without decisive action,” they noted.
The work will culminate in July with a set of recommendations for colleges to follow in developing admission and financial aid processes that enhance racial and ethnic justice and inclusion. In addition to a step-by-step manual that colleges can follow, the project will identify systemic barriers within higher education and provide state and federal policy recommendations.
Department of Education
The Institute for College Access and Success (TICAS)
National Association of Student Financial Aid Administrators (NASFAA)