The National Association of Student Financial Aid Administrators, known as Nasfaa, has now released a new set of suggestions for improving financial-aid award letters, which colleges send to admitted and returning students to inform them of the grants, scholarships, and loans they are eligible for.
Award letters are notoriously difficult to understand and compare across different colleges. While Nasfaa opposes a standardized format, it does recommend consistent terminology. Their report includes a proposed glossary of financial aid terms, but it would be even better if they had also recommended better disclosure of merit versus need-based awards.
In a report on the new suggestions, the group lists 10 elements it says should appear in every award letter, including a breakdown of the cost of attendance and the college’s net cost after grant aid is subtracted….
It suggests that colleges inform enrolled students of their cumulative loan history and provide a way for them to estimate their repayment costs before they borrow more. And it recommends that the Education Department require all educational loans—including private loans and loans offered by the colleges themselves—to be reported to a central database.
Given all the publicity about the growing burden of student loans, we may soon see some type of reform requiring more consistent financial aid reporting. I suspect at least some of the Nasfaa recommendations will be part of any change. In the meantime, families can use these tools to compare financial aid offered by different schools.