The vast majority of colleges and universities are failing their prospective students when it comes to telling them what they can expect to pay, according to a new report from Congress’s General Accounting Office (GAO). The report estimated that nine out of 10 colleges either don’t include or underestimate the net price of attending in financial aid letters. This makes it challenging for prospective students to figure out which school is most affordable for them.
Dr. Kelly Rosinger, associate professor at the Penn State University College of Education
According to the GAO report, students who pick a college that is unaffordable for them are more likely to have to cut back on essentials like food while attending and are more likely to drop out. Having more student loan debt may make borrowers less likely to become homeowners or to be able to save for their own or their children’s futures.
“It’s critically important for students to understand that they are borrowing, if they are borrowing, and how much they’re borrowing,” said Rosinger. “Award letters have really not done a great job of distinguishing between grants and loans, sometimes intentionally.”
To examine the role that colleges’ financial aid disclosures play in the confusion, the GAO surveyed a nationally representative sample of 176 schools and compared their aid information to 10 best practices from the Department of Education and a commission of 22 federal agencies.
These best practices include itemizing key direct and indirect costs (like tuition, housing, and books), offering a cost of attendance estimate that includes these key costs, and providing an estimate of the net price by subtracting only gift aid (grants and scholarships that don’t need to be repaid) from the cost of attendance.
The GAO estimated that 41% of colleges don’t include a net price and that 50% understate it, often by excluding key costs such as books and including aid that must be repaid, like loans. 55% of schools don’t itemize key costs, and 55% don’t provide a total cost of attendance that included the key costs. 22% don’t provide any information on college costs at all in their financial aid offers. The margin of error was +/- 7%.
