Confused about the cost of college? In an effort to help educate families about college costs before enrolling or acquiring excessive debt, the Department of Education and the new Consumer Financial Protection Bureau has released a one-page financial aid award letter designed to make college pricing easier to understand.
In the early college search stages, many students and parents instantly add certain schools to their No way! list because of high cost. In reality, though, the majority of students do not pay full sticker price. Grants and scholarships, which differ from student loans in that they are considered gift money that does not have to be repaid, can dramatically reduce college sticker price.
The federal government and colleges and universities themselves are the largest source of grant aid in the country. State government, employers and other private organizations also provide grant aid for college students. Statistics show that grant aid during the 2010-11 academic year was $107.2 billion.
Once a student has been accepted into a college or university and the FAFSA and other necessary financial aid documents have been completed, schools supply a financial aid award letter, sometimes called a financial aid package. Financial aid award letters provide details of the financial aid money that you are eligible to receive, including government grants and loans. You are not required to accept all aid that you are eligible forfor example, some people choose to turn down loansand you will most likely be asked to return a signed copy of the letter to the colleges financial aid office.
Financial aid award letters are intended to be helpful, but more often than not they are confusing, explains Inside Higher Ed. The letters are not standardized, making it difficult to compare out-of-pocket costs to attend College A vs. College B. Some letters only notify students of their aid and fail to include the cost of attendance. Others neglect to include mandatory student fees or room and board charges, which can make a college seem cheaper to attend than it really is.
Including student loans or even recommendations for private loans mixed in with free grant money also causes many people to mistakenly assume they are paying far less for school than they really are. Many award packages fail to include pertinent information about the loans, such as interest rates.
Secretary of Education Arne Duncan said the lack of uniformity in how schools provide financial information makes comparison shopping, which we think is important, almost impossible. The new financial aid form from the Department of Education, dubbed the Shopping Sheet, was designed to help students compare financial aid and overall costs at a particular college or university.
The Shopping Sheet will include all costs associated with attendance but be tailored to each individual student. Loan interest rates, scholarship options, housing rent, food, books, and veterans benefits will all be displayed on this single form, serving as a calculator, according to ABC News.
The new-and-improved financial aid letter will also include the median amount that students borrow in federal student loans at the particular college or university, estimating the loan payment over the course of X number of years, as well as a section on the schools graduation rate and loan default rate.
Use of the Shopping Sheet will be voluntary and require an act of Congress to make it mandatory for all schools using federal aid, but Secretary Duncan released a letter asking colleges to adopt the form. Students should not have to wait until after they graduate to find out the size of their monthly student loan payment. Families choosing a college should have clear and comparable information in a common format to guide their choice. And no one should forego college because they think they cannot afford it, he wrote.
Learn more about financial aid and search for scholarships by state at StateUniversity.com.
Melissa Rhone earned her Bachelor of Music in Education from the University of Tampa. She resides in the Tampa Bay area and enjoys writing about college, pop culture, and epilepsy awareness.
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