The U.S. Department of Education has issued non-binding guidance intending to influence how colleges and universities present student financial aid information to prospective students and families. The Department believes that if colleges and universities follow the published guidance “the clarity, transparency, and basic understandability of financial aid offers for students and families” will be improved.
 
The guidance provides a list of eight practices that institutions of higher education “should avoid when issuing financial aid offers.”  The list includes the following suggestions:

1. Avoid calling your financial aid offer an “award” and avoid calling it a “letter.”
2. Avoid issuing a financial aid offer that does not include cost of attendance.
3. Avoid listing the cost of attendance without breaking it down into clear components.
4. Avoid listing grant and/or scholarship aid, loans, and work-study together.
5. Avoid listing student loans without clarifying the source (federal, state, institutional, or private).
6. Avoid listing Parent PLUS loans with student loans.
7. Avoid issuing a financial aid offer without critical next steps.
8. Avoid issuing a financial aid offer without net cost calculated.

There has been a renewed focus on the idea of standardized financial aid award letters. For example, a report by New America published last year highlighted the perceived failure of financial aid award letters to clearly, accurately, and transparently communicate the true cost of college. A similar conclusion was published in a report by the University of Pennsylvania in March.
 
Congress continues to examine financial aid award letters as an area of potential increased regulation, and recently reintroduced bipartisan legislation (Understanding the True Cost of College Act) that would put into place very specific parameters about how financial aid award letters are presented to students. As Congress continues its quest to reauthorize the Higher Education Act, it is very possible that reforming financial aid award letters could be an area of bipartisan agreement.