Government Accountability Office (GAO) Blasts Colleges on Aid Offers.
Most Colleges Omit or Understate Net Costs in Financial-Aid Offers, Federal Watchdog Finds.
Financial Aid offer letters continue to cause controversy. A recent Government Accountability Office (GAO) report blasts colleges on failing to provide students with details on how much their education will cost. We break down the GAO’s best practices and how your institution can do better to be better.
The slow march towards increased clarity of financial aid offers plods on. Years of federal pressure, regulations, and public shaming have not abated. Recent headlines shared a Government Accountability Office (GAO) report blasting colleges on failing to provide students with details on how much their education will cost. In their review of 176 unnamed college offer letters against their 10 best practices they found none followed all 10 best practices and two-thirds followed half or fewer. Based upon their analysis, the GAO is recommending additional legislation, and Congress is very receptive.
Below is an overview of the GAO best practices and why they are important to follow.
| GAO Best practice | Why this is important |
| Informing students about how much they will need to pay for college | |
| 1. Itemize key direct and indirect costs | Students need to budget for both direct costs (e.g., tuition and fees) and indirect costs (e.g., books, transportation, and personal expenses). |
| 2. Provide a total cost of attendance (COA) that includes key costs Students should know the total cost of the college. | This information helps them determine the relative value of grants and scholarships and other types of student aid. |
| 3. Estimate the net price (by subtracting only gift aid from key costs) | Estimating net price in this manner provides students the most complete information about the amount they will need to pay for college. |
| Informing students about how much they will need to pay for college | |
| 4. Separate gift aid, loans, and work-study | Students should be able to immediately recognize the different types of aid in their offer. |
| 5. Do not include a parent PLUS Loan or, if included, separate and differentiate it from student loans | Parent PLUS Loans differ from student loans in several important ways, so they should not be included together. |
| 6. Label type of aid | Students should know the type of aid (grants, loans, and work-study) being offered. |
| 7. Label source of aid | Student should know the source (federal, state, institutional, or private) of the aid because the protections and stipulations differ. |
| 8. Include actionable next steps | Students should be informed of their next steps to accept, decline, or adjust the aid in the offer and the college’s point of contact for additional assistance. |
| 9. Highlight key details and distinctions about loans, grants, and work-study | Students need to know key details about the aid so they can assess which aid options are best for them. For example, such details might include information about minimum academic requirements to maintain a scholarship or explaining that work-study is not guaranteed since students need to apply for these jobs on campus. |
| 10. Do not refer to the offer as an “award” | Students should know that loans and work-study are not “awards” because they generally must be repaid or earned through employment, respectively. |
Source: GAO analysis of federal documents. | GAO-23-104708
https://www.gao.gov/assets/gao-23-104708.pdf
Representative Virginia Foxx, Chair of the House Education and Workforce Committee, in a joint statement with Representative Lisa McClain said, “Since these institutions refuse to hold themselves accountable, Congress must pass legislation to protect students and families. That’s why we are introducing the College Cost Transparency and Student Protection Act. This legislation will empower students and families throughout the college shopping process and prevent postsecondary institutions from hiding their true price tag.”
The National Association of Student Financial Aid Administrators, NASFAA, provided an offer model template as an example of how to provide a clear picture of costs and aid (https://www.nasfaa.org/uploads/documents/dependent_aid_offer_model.pdf) which addresses many of the items mentioned by the GAO.
Some colleges are deciding to get ahead of the curve and adopt the practices shared in the NASFAA offer template. SIG has helped several clients utilize Banner Communication Management, BCM, to meet this challenge. The financial aid offer communication is one of the most complex we build within BCM. On top of design concerns, an offer can require twenty or more custom data fields to manage the various calculations. Using BCM, if the data exists within Banner we can represent it within a communication. As in most areas of higher education, each institution may have a slightly different approach to how they would like to implement – uncovering and understanding these details are critical.
At the upcoming SIGConnect free online conference, we will be presenting a detailed walk through of how to approach constructing a financial aid offer communication on your campus. We will present on how to approach the data fields and important design considerations. We hope you can join us to better understand how BCM can help your institution meet this important challenge. Learn more about SIGConnect 2023 here.
Financial Aid continues to be a challenging area of the institution, going through a litany of change. FAFSA simplification, budget terminology redesign, student aid index implementation are just a few major modifications. Please keep an eye out for future blog posts to help keep on top of these and other areas of concern.
References:
Inside Higher Ed https://www.insidehighered.com/admissions/article/2022/12/12/gao-report-blasts-colleges-aid-offers
Chronicle of Higher Education https://www.chronicle.com/article/most-colleges-omit-or-understate-net-costs-in-financial-aid-offers-federal-watchdog-finds
