Jul 24, 2012

Comparison Shopping Financial Aid Just Became a Little Easier

Coppin State University, a member of the University System of Maryland
This week, the White House took an important step toward lifting the fog that has typically surrounded the awarding of financial aid by colleges and universities.

As part of the President's “know before you go” initiative, the Administration unveiled the final version of the model financial aid award letter, or “Shopping Sheet”—a standardized financial aid letter that will help students and their families understand costs before making the final decision on where to enroll in college.

Developed as a joint project between the U.S. Department of Education and the Consumer Financial Protection Bureau, the Shopping Sheet will allow students to easily compare aid packages offered by different institutions. 

It’s no secret that students and families often make decisions about colleges and financial aid without fully understanding the fine print.  They don’t always see the relationship between free money (merit aid) and student loans.  And they’re sometimes fooled by the terms and length of the offer.

Because of this kind of confusion, too many students leave college with debt that they didn’t initially understand or that they were forced to assume in order to finish school.

The Shopping Sheet makes clear the costs, terms, and responsibilities of student loans upfront—before students have signed-on with a college.  It includes total cost of enrollment broken into tuition, housing, books, and transportation.   In addition, it specifies grants and scholarships broken down by type as well as provides loan options and the school’s overall graduation, loan default, and median borrowing rates.

To underscore the importance of college participation in the initiative, Secretary of Education Duncan published an open letter to college and university presidents, asking them to adopt the Shopping Sheet as part of their financial aid awards starting in the 2013-14 school year.  He’s also made the form part of the agreement governing the Principles of Excellence for Serving Military and Veterans.

Ten colleges, universities, and systems—including the University System of Maryland—have already committed to the project as part of their aid awards starting in 2013 and others area actively considering the idea.

Although some institutions are wary about government interference in their communications with students, it’s clear consumers are determined to be heard and schools will need to be more forthcoming about disclosing important financial information. 

Those choosing to ignore the initiative may find college applicants and their financially-strapped families a little less than understanding about their desire to make offers on their terms.

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