Students are comparing more than just professors, sports teams, parties, and dorm rooms when they choose a college these days. With the average American undergraduate student incurring over $25,000 of debt by the time he or she graduates, students and their families are also scrutinizing financial aid packages.
However, as Matt Kantrowitz explains in his 2011 “Proposal for Standardization of Financial Aid Award Letters and Net Price Calculators,” (PDF) many financial aid award letters fail to make clear a distinction between gift aid and loans, and information about interest rates or payment schedules on loans is rarely included. Kantrowitz explains that financial aid award letters rarely offer a clear number for what out-of-pocket costs will really be for families, and if they do offer a number it is usually underestimated. These practices leave many students and their families confused and improperly informed when it comes time to choose a college they can afford.
Last week U.S. Senator Al Franken from Minnesota, along with eight co-sponsors, proposed a bill targeted at making the financial aid award letter less confusing for students and their families. The bill, “Understanding the True Cost of College,” calls for the standardization of financial aid award letters, which are currently restricted only by voluntary standards and best practices.
The bill would have the Department of Education collaborate with colleges and students to create standard definitions for the terminology used in award letters. Additionally, the passage of the bill would require the establishment of minimum information standards such as: cost of attendance, amount of grant aid, and the net amount that a student will owe.
This bill has been proposed at a time when, according to the Minnesota Office of Higher Education, 71% of students graduating high school in Minnesota go on to pursue an undergraduate education. Minnesota students should have the ability to make truly informed college choices in order to ensure the stability of their financial futures.