Confusing Financial Aid Letters Leave Students, Parents Adrift
Raised in foster care from the time he was 14, Marquell Moorer was determined to go to college, keeping up his grades and working part time at Dairy Queen to save up money for it.
By the end of his senior year at a high school in Milwaukee, he'd done so well that letters of acceptance started pouring in from not one or two, but 12 colleges and universities.
Moorer was still riding high when another wave of letters started to arrive: the ones outlining how much financial aid he would or would not be offered by each school.
And those proved a lot less clear cut.
"They'll tell you they're going to give you all this money, but it turns out to be a loan," he said. "They'll tell you the award and they'll let you know the tuition, but not the activities fees, travel, books — how much you need to live. They'll include work-study in their financial aid awards, but they don't tell you you're not guaranteed a job."
Financial aid offers from some universities and colleges, which have been landing in mailboxes around the country, are worse than frustrating. Many critics say they're misleading, crafted in a way that makes them look more appealing than they are, and they can be hard to compare with offers from competing schools.
With no parents or friends who had gone to college, and scant support from his high school, Moorer was lucky: He found a coach from an organization called College Possible, which helps low-income students navigate the obstacle course of admissions and financial aid.
"Even with my coach, it was difficult to figure out," said Moorer, now a sophomore at Augsburg College in Minneapolis, double majoring in business marketing and communications. "For a student who is first-generation and doesn't have a coach, it has to be very, very frustrating."
That's because, among other reasons, universities and colleges need to fill seats at a time of declining enrollment.
"Students and families don't necessarily question much," said Christine Roque, advising manager at uAspire, another organization that counsels low-income students about how to pay for higher education. "They think, 'The college must have my best interests in mind,' and they don't necessarily see them as businesses. There's that sense of trust."
The most misleading of these letters sometimes begin with words such as "Congratulations" but go on to outline financial aid that consists almost entirely of loans that have to be repaid. Loans are described as "awards."
The letters will list an "expected family contribution" of zero, not accounting for those parent or student loans, which, in fact, eventually require a substantial family contribution.
Other problems: work-study money promised as part of a financial aid package, even though work-study jobs or earnings can't be guaranteed. And while that, and the total amount of financial aid a university or college is offering, might be listed, the ultimate cost of tuition, room and board and other expenses often is not, complicating the process of understanding how much families actually will have to pay.
Some letters are packed with technical jargon and abbreviations that even families with experience in financial matters are unlikely to understand, such as "Unsub Staff" to refer to unsubsidized Stafford federal loans. One alludes bafflingly to something called "credit-based alternative loans."
When Bob Giannino, uAspire's CEO, showed some of these financial aid offers to the organization's board of directors — which includes venture capitalists, Ph.D.s, a top executive at a global bank and a partner at an international accounting firm — "they were all flummoxed," he said. "So imagine if you're the first in your family to go to college, maybe English is your family's second language. It's a pretty huge challenge."
Not every university does this. Duke, for instance, gets good grades for requiring its financial aid recipients to sit down with a counselor every year to make sure they understand the process. It even flies in some low-income applicants who have been accepted to the university, to meet with financial aid advisers.
"It's up to the school to be honest about what the cost is going to be," said Alison Rabil, Duke's director of financial aid.
Not being straightforward about it, critics say, only worsens the trillion-dollar student debt crisis, forcing families to borrow even more to fill the gaps they thought had been closed by their financial aid package. In some cases, these critics contend, unanticipated costs drive students to drop out.
That's to say nothing of other little-known practices that affect what students get. When some colleges and universities learn that students have won scholarships from outside organizations, for example, they reduce their own promised financial aid by an equivalent amount, according to a 2013 report by the National Scholarship Providers Association.
Repeated attempts to improve financial aid offer letters have made little difference. Sen. Al Franken, D-Minn., introduced a bill two years ago to create a standardized letter so students could compare financial aid. It was referred to a Senate committee, where it stalled.
"Knowing exactly how much college is going to cost should be as simple as knowing how many calories there are in a slice of bread," said Franken.
And while the Department of Education and the Consumer Financial Protection Bureau did create a standardized form for financial aid offices, called the Shopping Sheet, they're not required to use it, and advocates and universities alike complain the form is too restrictive.
The Shopping Sheet requires schools that don't have dorms or dining halls, for example, to estimate the cost of housing and food for students who live off campus, which the schools say creates an inexact comparison.
It was three years ago that a task force on this topic set up by the National Association of Student Financial Aid Administrators, or NASFAA, urged changes to financial aid notifications, saying that "a well-presented, easy-to-understand financial aid award notice is critical and should be a top priority" for financial aid offices.
But Douglas Levy, director of financial aid at Macomb Community College in Michigan, who was chairman of that committee, said, "I can't say that I've seen much movement" since then.
Some financial aid offer letters, Levy said, still look like they're "not exactly as upfront" as possible. "Whether that's intentional or not, I can't get into the colleges' heads, but it's selective in terms of what information you give students to put you in the best light. There's no doubt about it, it's used for marketing. It's used to make a case that you can afford that school."
Now, with little fanfare, NASFAA has unveiled a code of conduct that will take effect July 1, requiring some of the changes Levy's task force recommended.
NASFAA member institutions will now have to provide a breakdown of their costs of attendance; clearly identify which aid is in the form of grants or loans; and use standard terminology, such as "out-of-pocket costs" to indicate expenses that financial aid won't cover. Repeated violations of the new requirements can result in temporary or permanent suspension from the association, which has members from 3,000 colleges and universities.
Those changes won't come in time for students like the ones arriving now at uAspire, for what the organization's counselors grimly describe as "dream-crusher" meetings. That's when they tell the students that what looks like an offer of a full ride to college is actually an invitation for them and their families to go deep into debt.
"Financial aid offices are there to make sure the student finds the money to pay the school. That's the wrong incentive," said Dan Mendelsohn, uAspire's manager of postsecondary programs. "They should help the student understand whether or not they can afford to go there."
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