Decoding the Cost of College
In Decoding the Cost of College, we took a close look at financial aid offers from 500 schools that were predominantly four-year public and nonprofit colleges and universities. Each of the financial aid offers we reviewed included a Pell Grant so that we could make consistent comparisons. This research revealed just how challenging it is for students and families to understand a financial aid offer from a college, let alone compare it to offers from other colleges.
Many of the offers described financial aid using jargon and inconsistent terminology, making them difficult to understand and compare. We found that over a third of institutions did not include any information on the actual price that the college was charging. Grants, loans, and Federal Work-Study were often grouped and totaled together even though they have very different terms and conditions. Some financial aid offers inappropriately included federal Parent PLUS loans in the package even though parents can access these only after passing a credit check, making it seem that the college was being more generous than it actually was. Few offers provided any sort of calculation about the remaining cost that students and their families were responsible for paying. And only half of the institutions provided information about what next steps students should take to accept or decline their grants, scholarships, and loans.
Based on these findings, we suggested that state and federal policymakers create a standardized template for financial aid offers through legislation. In the interim, colleges, when designing their own offers, should:
- Require a written financial aid offer to all qualified students and employ standardized terms with student-friendly definitions
- Include full cost of attendance with a breakdown of direct costs and indirect expenses
- List grants/scholarships and loans separately
- Separate Parent PLUS loans and Federal Work-Study from scholarships, grants, and student loans
- Calculate the student’s net cost and estimated bill
- Identify critical next steps