136 names for the same loan

Daily Briefing

136 names for the same loan

Decision Day is fast approaching, and students across the United States are deciding where to enroll. For many, this decision will be based on the information contained in students’ financial aid letters, writes Elissa Nadworny for NPR.

But because financial aid letters vary greatly between colleges—and because they contain confusing jargon—students are often left confused and frustrated during the decision process.

“I think anyone who’s worked with students is just like, ‘No, no, no, no, no. What a mess,'” says Rachel Fishman, a Researcher at think tank New America, of the lack of standardization in financial aid offers. “It’s really the Wild West when it comes to how these letters look,” she adds.

And these variations in letters impact student enrollment decisions, says Laura Keane, Chief Policy Officer at nonprofit uAspire. “This is a really critical moment. This is the moment [students] decide,” she says. “Students rely on these financial aid offers to make their decisions.”

To determine which aspects of financial aid letters pose the greatest challenges for prospective students, Fishman and Keane analyzed more than 11,000 award letters from roughly 500 colleges, most of which were four-year institutions. Here are their three takeaways:

1: Award letters contain too much jargon and confusing terminology. Fishman and Keane point to the Federal Direct Unsubsidized Loan, a loan typically found in financial aid letters, to suggest that colleges and universities often overcomplicate the language in award letters. According to their report, colleges referred to this loan 136 different ways in award letters. And sometimes it wasn’t even referred to as a loan at all, but rather “Fed Dir Unsub” or “Unsubsidized.”

Though the confusing jargon is likely a product of the software colleges use to generate letters, “it’s still such a damning example of even the smallest thing that should be really simple—there are so many institutions doing different things,” says Fishman.

2: The cost of attendance is sometimes not included. More than a third of colleges didn’t include cost of attendance in their award letters. Instead, they simply stated how much the student was awarded. This is problematic, Fishman notes, as many students refer to these letters to determine how much college will cost them. “You’re looking around for this number, and there’s nothing,” she says.

3: Award letters don’t indicate what must be repaid. Seventy percent of offers are written as one lump sum, according to the report. McKenna Hensley, a first-year student at Ohio State University, recalls receiving award letters from colleges that included loans in the aid number, without indicating that the money must be repaid. “I was like, ‘Oh, you almost got me!'” she says. “‘This is a bad deal.'”

Other colleges sometimes lump work-study payments into the aid, even though students won’t receive that sum at the beginning of the semester to help cover tuition. “You’ll feel like you have a whole bunch of money,” says Hensley, “but you don’t.”

Nadworny writes that both colleges and lawmakers seem to be warming up to the idea of standardizing the financial aid letter process to better inform students of their options. For instance, a group of bipartisan senators recently reintroduced a bill proposing that all award letters look the same and include a standardized definitions of terms.

And Colorado State University (CSU), for example, has undergone two letter revamps after the college received a call from a high school guidance counselor who explained how her students were interpreting the letters.

“That was the moment we realized we needed to put some effort into making our offer easier to understand because it was the single most important document a student’s going to receive,” says CSU Assistant Vice President of Enrollment and Access Tom Biedscheid.

The University of Iowa has also made changes to its award letters, including personalizing information for each student and eliminating Parent Plus loans. “We need to be honest with our students even if that means ultimately they may not choose our school,” says Sara Even, the university’s Senior Associate Director of Financial Aid.

Both colleges report that after simplifying their financial aid letters and making them easier for students to understand, the number of questions from prospective students about the financial aid process has declined. Now, when students call the financial aid office, they ask deeper and more nuanced questions beyond, “How much do I owe?”

“We’ve learned that it’s not as simple as just changing something on a single page,” says Keane. “It’s really about transforming how to do student-centered financial literacy communication” (Nadworny, NPR, 4/10).

College cost and financial aid are top-of-mind issues for students and their families, yet most aid award letters—the first communication families receive from you on the topic—are difficult to understand and often missing critical information. Discover three ways you can improve your college or university's financial aid award letter and encourage students to enroll.

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