Introduction and Context

How to pay for college has long been a top concern for students and families. While the federal government, states, and institutions provide financial aid, there are many hoops that students have to go through before being able to access aid. Even when students are finally accepted to colleges of their choice and receive financial aid offers—also known as financial aid award letters or packages—the process does not get any easier: the jargon, the vague fine print, the inconsistent breakdown of cost calculations all make it harder for students and families to understand the bottom line of the offer.

While the problems with financial aid offers have been acknowledged for a long time and some efforts have been made by the U.S. Department of Education,¹ the National Association of Student Financial Aid Administrators,² and the institutions themselves to improve their clarity,³ a survey released by Sallie Mae in April 2020 shows that students and families still struggle with comprehending the price of college and the availability of aid. Only a quarter of families find all components of a financial aid offer easy to understand, and 43 percent of families find at least one component difficult to understand.⁴

We partnered with uAspire, a nonprofit focused on college access and affordability, in 2018 in order to review thousands of financial aid offers from over 500 colleges and universities. We found alarming issues in current financial aid offers, such as the inconsistent use of terminology and the misleading inclusion of Parent PLUS loans.⁵ In fact, the 500 offers used more than 136 different terms to describe the Federal Direct Unsubsidized Loan, including 24 that did not even use the word loan. In our report, Decoding the Cost of College: The Case for Transparent Financial Aid Award Letters, we recommended several minimum bars financial aid offers must pass including listing price, separating loans from grants, and standardizing terms and formatting.

But our recommendations are just a start. We believe it is important that students and families be involved in deciding what formatting, terms, and elements matter most to them. For this reason, we kicked off a yearlong project in summer 2019 to design a financial aid offer that ensures students and families can successfully navigate and understand how much a college will cost and what types of financial aid they will receive. The project started with a convening of stakeholders to create financial aid offer prototypes and continued with two rounds of consumer testing that included interviews with students (both traditionally aged and non-traditionally aged) and parents. This research and the principles of design it yielded can inform the process of improving financial aid offers that is happening at institutions, states, and at the federal level.

This report will review findings from the 2018’s Decoding the Cost of College report, present each stage of our efforts to redesign financial aid offers that include the Financial Aid Offerpalooza and the interviews, and showcase the development of financial aid offers through each stage. Finally, we will discuss our recommendations for design principles, offering an example of how financial aid offers should be structured, and the role of policy in improving financial aid offers.