To Make College Shopping Easier, White House Launches “Know Before You Owe”

It’s not every day that the US Secretary of Education calls me wanting to talk, but on Tuesday afternoon that’s just what happened.  When I asked Secretary Duncan what he wanted to talk about, he said, “college affordability.”

Phillip Taylor

Earlier that day he, Vice President Joe Biden, and Consumer Financial Bureau Director Richard Cordray kicked off a new project to convince universities to adopt a universal “Know Before You Owe” financial aid shopping sheet — designed to make it easier to compare college costs and financial aid offers. Too often, he said, families and students confuse grants and loans, aren’t informed about the cost of housing and meal plans, and aren’t able to accurately compare offers from different schools. The idea is that if all colleges were to use a well-designed, universal financial aid award sheet, fewer students would take out loans they couldn’t pay back.

You may know already that New Hampshire students carry the highest student debt in the country.  The cost of attending the in-state university is almost $30,000. Is transparency about tuition really the most important issue for the Secretary of Education to consider?

Fonna Tasha

While transparency may not be the problem, it turns out it is a problem. Tara Payne of the New Hampshire Higher Education Assistance Foundation counsels families making college choices, and says she does see offers from schools with confusing — even misleading — award offers.  She suggested I ask three schools for their financial award letters, and see how well I could compare their contents. Unfortunately, UNH was the only school that agreed to share.  Their letter listed all of the scholarships and loans the sample student was awarded, and totaled them. It wasn’t misleading, but it wasn’t very descriptive, either. For example, it didn’t list the total cost, only the aid awarded — and I had to Google SEOG to find out if it was a loan or a grant. Compared to the federal template, — well, it really didn’t compare to the federal template at all. Take a look.

The CFB award letter lays out how the cost of a school compares to others schools’, how that school’s student loan default rate compares to other schools’, the graduation rates, and the student retention rates. With all that potentially condemning information laid bare, it seems likely only the best-performing schools would participate.

A task force created by National Association of Financial Aid Administrators assessed the government’s template and recommended that the comparative costs, default rates, graduation and retention rates be available not directly on the award letter but instead on a website designed by each university. While this may lessen the degree of transparency, it could increase the likelihood that schools will actually adopt the award letter.

Are you a student or parent of a student who has recently decided on a college? What was your experience like comparing schools? Let us know by leaving a comment right here.


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