No Clear Winner: Consumer Testing of Financial Aid Award Letters

The National Association of Student Financial Aid Administrators (NASFAA) has released a report containing findings from the consumer testing of various financial aid award letters.  Focus groups of parents and students reacted to three proposed financial aid award letters — the U.S. Department of Education’s Shopping Sheet (a standardized financial aid award letter), one based on recommendations from a NASFAA task force, and one a hybrid of the two. Participants were asked for their feedback on the overall clarity of each letter, features they found useful or confusing, and suggestions for improvement.   Conclusions revealed that while no letter was a clear winner, respondents showed a slight preference for the letter combining elements from the Department of Education’s Shopping Sheet and the NASFAA task force letter. Based on the findings, the NASFAA report recommends further consumer testing, (referencing the findings from an earlier Center for American Progress study also calling for more consumer testing ) to continue to improve the letter’s usefulness to students and parents, as well as consideration of the quantity and timing of information distributed to students and their families.

Among the report’s findings:

• Participants rated the ease of comprehension relatively low across all three letters, though they showed a preference for the letter that made clear how much it would cost them to attend the college, how much they would receive in aid, and how much they would have to pay themselves.
  • The preferred letter (chosen by 46% of participants) did not do enough, however, to clarify indirect costs (e.g., food and housing) or to incorporate a family’s expected financial contribution into the estimated cost of attendance.
• Overall, layout and design were very important to all respondents, with many citing this as a primary recommendation for improvement.
  • Suggestions included increasing font size to emphasize importance, using boxes to delineate other important information, and breaking down information by college semester.
  • The most popular letter had a solid introductory paragraph, additional resources and contact information “boxed” so it stood out, and a straightforward ,simple layout, particularly appreciated by parents.
  • Respondents felt the letter should be on paper (rather than exist solely online) so parents of dependent students could have easy and ready access to it.
• Parents and students overwhelming indicated a desire to determine easily the “bottom line” from any financial aid award letter- in clear, easy to understand language they wanted to know how much going to college was going to cost them.
• Participants were also interested in a more personalized approach to the letters, through more introductory text or follow up human interaction from guidance counselors or financial aid offices.
  • Given this insight, report authors suggest giving institutions more flexibility to individualize the core content of each letter based on student circumstances (e.g., dependent status, future or current student).
• In addition to feedback on the letters themselves, the focus groups asked several questions to determine how well participants understood key financial aid concepts.
  • Most respondents were able to correctly identify the total cost of attendance from all three of the letters.
  • Very few respondents indicated an understanding of the difference between an institution’s “sticker price“(published tuition and fees) and net cost (cost after aid) as laid out in any of the letters.
  • Very few respondents seemed to understand the difference between subsidized and unsubsidized loans.
  • Most participants were able to identify correctly the difference between scholarships and loans.
  • Given the confusion stemming from complicated (and sometimes inconsistent) financial aid terminology, the report authors suggest incorporating a standardized glossary with each award letter to help the reader correctly interpret their financial aid package.