Award Season

Award season is upon us. The academy awaits. Excitement and surprise are in the air.

I write not of the Oscars, though. The awards I refer to are the financial aid letters students admitted early to college have begun receiving these past few weeks.

Hollywood has rightfully used its award season to speak out against abuse in the entertainment industry. I want to use the aid award season to speak out about a problem in our industry.

I recently had a phone call with the parent of one of my students, a senior admitted early to several colleges. Confused and uncertain, the parent struggled to understand the financial aid letters his son had received: the size of the Stafford loans, the grant award given by the universities and the necessary PLUS loans (to be taken out by parents). On one of the forms, there was no indication of the net price to attend that institution. Why did one of the letters refer to a “Fed Direct Unsub,” and was that the same as an “Unsub DL”?

This parent, himself a financial planner, was at a loss.

He’s not alone. The nonprofit uAspire, an organization working to promote college access and affordability, recently examined over 11,000 financial award letters from more than 900 different colleges. These letters explained awards for 6,023 unique students, of whom 76 percent received Pell Grants.

The results are striking. More than one-third of the letters didn’t include the cost of the college on the same page where the financial aid awards were listed. Less than one-third of the letters differentiated between types of aid, such as grants, scholarships and loans, failing to help students understand the difference between gifts and money that needed to be paid back. Some letters subtracted aid from the overall cost of attendance. Other letters even subtracted loans to parents, making it look like a family owed nothing when, in fact, they were on the hook for thousands of dollars in loans.

Imagine trying to buy a house without knowing the size of your mortgage or the interest rate and having only a rough idea of the overall cost of the property. No one would make that deal, and yet we force thousands of students and their families to pay for college without clarifying their financial responsibility.

Award letters are chock-full of confusing jargon and terminology that makes it difficult to compare aid packages from different schools. In the sample studied by uAspire, there were 454 letters that offered the Federal Direct unsubsidized loan, and yet, the researchers identified 143 unique titles for the loan. Of those letters, 26 did not even use the word “loan,” instead opting for terms that obfuscated how much was being borrowed.

I am far from the first person to decry the problems with financial award letters. The National Association of Student Financial Aid Administrators, the trade group for financial aid officers, adopted a code of conduct in 2015 that requires members to use standard terms and basic facts in delivering financial aid information. In 2011, the Department of Education unveiled a voluntary financial aid shopping sheet in an effort to make financing college more comprehensible.

Both measures have not lived up to their promise.

Obviously, the problems with the cost of higher education run far deeper than award letters. Sara Goldrick-Rab articulates some of the scope of these problems in Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream. According to Goldrick-Rab, the new economics of college find higher education more expensive than ever before, families with fewer resources to afford it and less aid available from public institutions.

In 1990, for example, only the poorest quartile of American families had to pay more than 20 percent of their income for college. Today, 75 percent of American college students pay that much. For families most in need of robust financial aid awards -- those making an average of $16,000 -- the net price of college in 1990 took 45 percent of their earnings. Now, that number is around 85 percent.

Unfortunately, these problems stand to get worse. The Congressional Budget Office just released a report evaluating the Republican update to the Higher Education Act, which went through the House at the end of 2017. Euphemistically termed the PROSPER Act, the legislation, according to the CBO, will cut $15 billion in student loans if it becomes law.

Forget about simplifying award letters. The PROSPER Act will eliminate many of the awards altogether.

There may be little that aid officers at colleges and universities can do to battle lawmakers bent on making college less affordable. They can, however, make award season more straightforward. No need for a fancy dress or black tie. Just make what college costs black-and-white.