Our bi-annual research on College Parents consistently finds that paying for college is most often the 2nd largest expense in the life of a family. Next to purchasing a home, paying for college can be a daunting event.
Consider some of the highlights:
The study, published last week, examined 11,000 award letters sent in 2016 by more than 900 colleges. It found most of them use obscure terminology, omit vital information, or present financial calculations that appear deliberately deceptive. Many letters are confusing in their own unique ways, making it difficult for students to compare colleges.
This week Kevin Carey from New America published an opinion article in the Wall Street Journal that is worth considering. Titled the “Financial Games Colleges Play” it highlights the need for greater transparent policies by colleges and universities as well as the need for greater standards within the higher education community. His view is that college and university financial “aid-award letters often confuse students with jargon or deceptive claims of zero ‘net cost.”
According to Carey, “each school can create its own format for award letters since there is no mandatory standard. In 2012 the Education Department and the Consumer Financial Protection Bureau created a recommended version, but most colleges don’t use it. Imagine trying to compare boxes of macaroni at the supermarket if more than half the manufacturers designed their own nutrition labels.
Take the letters in the study that included Pell grants. Of the 515 colleges that awarded them via nonstandard letters, more than a third provided no information about how much attending school would cost. The letters highlighted grants and scholarships as a way of convincing students to enroll, but without listing tuition or explaining how much money students would owe.”
College Parents of America supports efforts to promote greater transparency. Carey advocates for a reasonable solution: “Require all colleges to use the recommended award letter. The Department of Veterans Affairs already mandates this for financial-aid letters going to students benefiting from the GI Bill. Congress should expand that protection to every college applicant. Providing consumers with consistent, transparent information is a goal embraced by Republicans and Democrats alike. Cars have window stickers that list fuel-economy ratings and the manufacturer’s suggested retail price. Mortgages come with a standard form showing an itemized list of costs and fees.”
Lastly, we agree with the conclusion that Carey asserts and suggests that “selecting a college is one of the most complicated and important financial decisions many people ever make. Right now, students don’t even have enough information to understand what they’re choosing. That’s a shame, and it goes a long way toward explaining why so many students leave college with debt they can’t afford to repay.”