Issue Briefs

About

In 2022, a Government Accountability Office (GAO) report reviewed award letters from 176 colleges and universities and, from that, extrapolated that about 91% of colleges either understated or omitted “net price” in their award letters to prospective students. This prompted Congress to propose legislation that would require the Department of Education to publish requirements for aid offers, including standardized terms and definitions, formatting rules, a prohibition on displaying loans in a way that suggests a reduction in out-of-pocket cost, and a requirement to present direct costs before indirect costs.

Institutions develop their own aid offers based on the programs they offer and the students they serve, and the financial aid community has argued that schools know best how to communicate with their own students and need latitude to customize. The widely shared view among higher education associations is that legislative efforts to bring greater clarity to aid offers are well-placed, while efforts aimed at rigid standardization may miss the mark, and that any standardized elements or definitions should be consumer-tested. A common concern is that forcing overly broad aid information into an inflexible template could produce a less understandable offer. Additionally, several states, such as Minnesota, New York, and New Jersey, have required a state-level award letter, raising the potential issue of conflicting mandates at the state and federal level.

Notably, the recent bills do not mandate a single uniform federal form and would preserve institutional discretion over format while standardizing terminology and certain content, an approach that consumer advocates have criticized as not going far enough to enable apples-to-apples comparisons.

History

In 2012, responding to Executive Order 13607, the Department of Education introduced a template for financial aid award letters that colleges could use at their discretion, called the "Financial Aid Shopping Sheet." This was later updated and renamed the College Financing Plan.

Following the 2022 GAO report, the push for standardized award letters intensified, leading to Reps. Lisa McClain and Virginia Foxx introducing the College Cost Transparency and Student Protection Act (H.R. 1311). In parallel, the sector pursued a voluntary route: in September 2023, the College Cost Transparency Initiative, a task force of ten higher education associations, including NAICU, announced that more than 360 institutions had committed to a common set of principles and standards for aid offers.

The issue carried into the 119th Congress alongside related transparency measures, including proposals for a universal net price calculator and expanded College Scorecard data, with congressional attention renewed after the passage of the One Big Beautiful Bill Act. The most recent version of these bills, the Senate’s Improving Financial Aid Offers for Students Act (S. 4435), led by Sens. Cassidy and Grassley, represents a sensible compromise solution that NAICU supports. When NAICU was asked to provide input on the most recent version of the bill, we shared what we were hearing from campuses, and several of those points made it into the final version, which we are grateful for.