Writing Transparent Aid Offers: A Strategy To Support Retention and Rebuild Trust
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In recent years, several bills have been introduced in an attempt to regulate financial aid offers.
These bills attempt to address a serious issue for students and parents. With no current federal guidelines for college financial aid offer letters, they often vary widely in format, content, and terminology. It's virtually impossible for families to compare aid packages in an "apples-to-apples" manner, which often results in students accruing more expenses than expected and taking on debt beyond what they have budgeted for. Ultimately, it jeopardizes their ability to complete their degrees.
In the words of Megan Walter, senior policy analyst at NASFAA and program director for the College Cost Transparency Initiative (CCT), "aid offer legislation is not going away."
"We're very close to having some sort of legislation soon," she said in a session at the American Association of Colleges & Universities Annual Meeting in January. Her co-presenter, Terry Hartle (senior fellow for the American Council on Education and long-time higher ed advocate), warned that the federal government could impose a one-size-fits-all form if the industry doesn't start producing clear, straightforward offer letters.
Here, we examine how cost transparency impacts the entire institution, the challenges that a standardized form would pose, and how colleges can improve their letters as part of a collective effort to meet transparency standards on their own.
Cost Transparency Affects More Than the Financial Aid Office
Although financial aid professionals are charged with producing aid offer letters, this issue goes far beyond the confines of these offices.
"When students don't understand their costs, it impacts every part of the institution," Walter explained. "If a student underestimates their total cost -- maybe they don't account for transportation expenses or books -- and realizes mid-year that they can't afford to stay enrolled, that will affect enrollment, housing, and retention and graduation rates."
If an institution is truly committed to improving retention and completion, students must be empowered with the knowledge they need to plan financially for their education.
College cost transparency is also a prime opportunity for the sector to rebuild trust with the public, which has eroded over the years. "If the same key information is presented clearly so [students and families] can easily compare, that builds confidence," Walter said. Conversely, vague wording and a lack of clarity sow mistrust.
What's at Stake with a Standardized Form?
The implementation of a standardized form poses challenges for both institutions and families.
"We hear from our members that they want to keep the flexibility in designing their aid offers," explained Walter. "They want to control the design, include the information that's most relevant to their students, and have space to explain things in a way that makes sense for their institution."
She worries that if schools are required to use a standardized template, they may start sending their "own supplemental materials alongside it to communicate what they're conveying now through their own aid offers."
Unfortunately, students and parents already receive such a large volume of paperwork from colleges and universities. "Adding another document into the mix could just make things more confusing," she said. "That's why we feel so strongly about avoiding a mandated standardized template and proving that institutions can meet transparency standards on their own."
The clock is ticking, though. Walter warned that Senator Grassley (R-IA) is likely to introduce his bill at every congressional session with slight tweaks.
"His bill actually made it all the way to President Biden's desk in the spring of 2024 but was ultimately vetoed because of other legislation attached to the package," she explained. "I think this is something that institutions aren't totally aware of -- just how close we came to having a really prescriptive, standardized aid offer requirement."
So, how exactly can colleges avoid a standardized form and instead meet transparency efforts on their own?
Writing Transparent Aid Offers
This is where the College Cost Transparency Initiative can help. Walter and Hartle's session at AAC&U was one of many that they've presented over the past few years in an effort to promote CCT's mission.
CCT is a task force that was formed by the leaders of 10 higher education associations to "assist efforts by institutions to communicate with students and families about college costs in a way that is clear, accurate, and helpful." They promote a simple set of principles and standards for writing aid offers that allow institutions flexibility but ultimately help students compare offer letters.
One of the major issues addressed in CCT's standards is how institutions calculate net price.
"Net Price should be the total cost of attendance -- including direct and indirect costs -- minus only grants and scholarships (the free money that doesn't have to be paid back)," Walter said. "But some schools calculate it incorrectly. For example, some only include direct costs, like tuition and housing, which might leave out thousands of dollars a student may need to cover."
Other common issues are including federal loans and work-study in the calculation or including Parent PLUS Loans in the calculation.
"A Parent PLUS Loan is not guaranteed," warned Walter. "It depends on the parents' credit and willingness to borrow. So, if a school tells a student their net price is, say, $5,000, but that's only because they assumed the parent would take out a $25,000 loan, families take issue with that."
Echoing these sentiments, Joseph Bagnoli, Jr., vice president of enrollment and dean of admission & financial aid at Grinnell College, said, "As students compare financial aid offers, it's important that they be able to consider the type of financial aid being used to address their family's financial need. Will loans, student work, summer savings expectations, or grants be included in the financing plan? How much of their financial need will be met through the combination of aid they've received? If there is a gap between the list price of a college and the financial aid they've been awarded, what options are there for the family to meet those additional costs?"
Bagnoli stressed that the answers to these questions should be easy to find in an award letter and any supporting documents.
"If they are not and the student enrolls without a full understanding of the financial obligations associated with a particular college, student retention is ultimately at risk," he warned.
The Bottom Line
Financial aid offers are a building block of an institution's relationship with a student. They present a key opportunity to establish trust not only with that student and family but with the general public as well. As colleges continue to face growing public scrutiny, prioritizing transparency with costs is a solid step we can take to restore the public's faith in higher education and safeguard the future of our institutions.
Our future depends upon this transparency -- in more ways than one. When an institution fails to disclose the true cost of college, it stands to lose the students staff and faculty worked so hard to enroll.
