The September 2007 Issue of Consumer Reports contains a call for greater clarity and consistency in the way colleges award financial aid and communicate those aid packages to families. Here’s an excerpt:
Students and parents should have access to understandable information at critical points in the financing process. The current system makes that nearly impossible. Colleges calculate the cost of attending in different ways, so comparisons are difficult. Financial aid award letters don’t always make clear the difference between grants, which don’t need to be repaid, and loans, which do. They also give little or no guidance on how to minimize loans, secure low-cost financing, or figure out the bottom-line costs of loans.
The article goes on:
Research by Consumers Union, the nonprofit publisher of Consumer Reports, has found that students and their parents turn most often to a college’s financial aid office for the ins and outs of paying for an education. But the information they get is often inconsistent and at times misleading. For example, some expensive colleges give enticingly large financial aid awards, but hide the amount families must pay.
The editorial then calls upon Congress to make legislative requirements for colleges to disclose financial aid information in a more consistent manner, and for lenders to disclose loan terms more clearly.
All this points to the fact that colleges are businesses, and they will continue to try to entice students to their campuses. I don’t believe most college in America are trying to be sneaky. But they are trying to award aid dollars in a way that will bring in the maximum number of students to the campus at the lowest possible subsidy.
This also points to the fact that many families need independent, expert advice to help them navigate the college admissions and financial aid process. Colleges and lenders have become more savvy over the years in how they market to families. Now it’s time for families to learn how to best play the same game to their own advantage.