Before College: Games Colleges Play With Financial Aid Award Letters

Last spring, we published three articles about games colleges play in making financial aid offers and informing students of their tuition and other costs. Washington plays games, too, with TEACH Grants, which ultimately become expensive loans for most recipients.

Last week, National Public Radio ran a story about “award letters” colleges send students. It focused on a recent report, Decoding the Cost of College: The Case for Transparent Financial Aid Award Letters.

Based on an analysis of 515 award letters that different colleges sent high-need to undergraduates, the report listed seven frequent problems with those letters:

(1) Confusing Terminology: 455 that offered unsubsidized student loans used 134 different phrases and terms to describe them, including 24 that didn’t include the word loan.

(2) Omitted Student Costs: One-third contained no information on the costs students would pay at their colleges, making it impossible to determine whether the colleges were affordable.

(3) No Distinction Between Types of Financial Aid: 70% grouped all aid offers together and provided no guidance about the differences between grants, loans, scholarships, and work-study.

(4) Misleading Parent Loan Information: Almost 15% listed Federal Direct Parent PLUS Loans as awards just like they listed grants and scholarships, thereby making their aid offers appear more generous than they really were.

(5) Not Explaining Work-Study: Work-study offers part-time employment to financially needy students, but 70% of the letters that came from schools offering work-study neither defined nor explained the program.

(6) Inconsistent Bottom Line: Only 40% showed unmet need — how much cost would remain after financial aid offers was applied — and they calculated unmet need in 23 different ways.

(7) Missing and Misleading “Next Step” Information: Only about half told students how to accept or decline the financial aid they offered, and their policies about this were inconsistent.

Not every college sends award letters containing such deficiencies. However, colleges that do are, at the very least, close to being deceptive trade practices.

How should students react to such award letters? If possible, enroll elsewhere. Schools using such letters are either incompetent or underhanded. Either way, they can’t be trusted.

Or, if students must attend an institution supplying such letters, they or their parents should contact its financial aid office and demand to be clearly and fully informed about whatever is confusing or missing.

Students victimized by such award letters may also consider submitting complaints to the Federal Trade Commission. Sometimes it’s investigations result in complainants getting money back.

Financial aid award letters should never trick students into selecting schools they can’t afford without taking on giant debts. So check out these letters from top to bottom. And always beware!

Need help decoding financial aid award letters sent to you or a loved one? Contact College Affordability Solutions for a free consultation!

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