According to a new report by the Advisory Committee on Student Financial Assistance, an advice-giving body chartered by Congress to provide information to the U.S. Secretary of Education, Americans need to understand more about the net price of college, the amount of money students and their families actually have to pay, after scholarships and other grants. The Department has a solution, sort of.
As the study explains:
The [college financial aid profess] can be misleading and confusing to students and parents because some colleges choose to hide the gap on the financial aid award letter by including non-need-based loans as part of the financial aid package. Some aid administrators defend gapping by arguing that listing non-need-based loans on the award letter lets students and parents know that there are options for paying the gap. However, when some institutions include non-need-based loans and others do not, it makes comparing award letters a more difficult task for students and parents.
As a result of (relatively) recent legislation, colleges will, beginning in October, be including net price calculators on their websites. While this is designed to address the above problem, success here is unlikely.
This is not the Department of Education’s most meaningful reform. Helping students “understand” the net price of college is not the consequential thing to do. That’s because the average net price of a public college, tuition and room and board, is about $10,000 a year. At private colleges it’s a little over $20,000. That’s totally unaffordable for many American families.
Maybe the Department should work on reducing that net price. Helping people “understand” it is addressing a fake problem. Sure, colleges have an interest in obscuring the net price of college, but that’s because the net cost is so high. That’s the problem; the confusion families have is only a symptom of that problem.
Beyond this, according to the report:
Higher education institutions can pursue one of three options in developing their net price calculator: use the Department of Education’s template, use a third-party calculator, or customize an alternative calculator internally. If a college decides to use a third-party calculator or develop its own, the net price calculator is only required to include, at a minimum, the set of data elements found in the Department’s net price calculator template.
The three options mean, of course, that in the future “comparing award letters” will continue to be “a more difficult task for students and parents.” The Department’s own template is too simple and generic to present a true picture of the amount families will actually have to pay. Or, as the report itself explains:
Without additional guidance, these tools designed to help students and parents make informed decisions about college costs and financial aid may, in fact, hamper families‟ ability to accurately compare one institution’s financial aid package to another. The question remains as to what group or authority might establish necessary standards for integration.
The Department of Education has been and will continue to be integral to the improvement of both financial aid award letters and net price calculators.
This isn’t terribly reassuring.
