The Obama administration revealed the final design for a standardized financial aid award letter on July 24, 2012. This one-page financial aid "shopping sheet"
will provide students and their families with clear and easy to understand information about college costs and financial aid. It will enable families to compare college costs and financial aid offers side by side, helping them make more informed decisions concerning the tradeoffs between college affordability and college quality, fit and other criteria for choosing a college.
The White House describes the shopping sheet as "an individualized standard financial aid letter that will help students understand their costs before making the final decision on where to enroll."
The shopping sheet clearly separates and distinguishes between loans and grants, avoiding the lack of clarity that is common in many current financial aid award letters. Some current award letters emphasize a net cost figure that subtracts the entire financial aid package from the cost of attendance. But the financial aid package includes loans, which do not reduce the family's costs. This confusion concerning loans and grants contributes to excessive borrowing. The lack of a standard award letter also makes it difficult to comparison-shop.
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In contrast, the shopping sheet presents families with a net price figure. This is the difference between total college costs and just the grants, scholarships and other forms of financial aid that do not need to be repaid. The net price is a discounted sticker price. It represents the amount of money the family will have to pay from savings, income and loans to cover college costs. The net price is a better basis for comparing different colleges. The shopping sheet presents loans as an option for financing the net price.
The financial aid shopping sheet also discloses information about graduation rates, loan default rates and median debt at graduation.
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In a statement, the White House said "Too often, students and families face the daunting task of deciding where to enroll, whether to write a check, or whether to sign for a student loan, without a clear explanation of what the costs mean, or how these costs compare to other colleges they are considering. As a result, too many students leave college with debt that they didn’t understand at the time that they entered school. "
The financial aid shopping sheet is the result of a collaboration between the US Department of Education and the Consumer Financial Protection Bureau (CFPB).
Adoption of the shopping sheet is currently on a voluntary basis. Secretary of Education Arne Duncan expects colleges to embrace the model form out of self interest and because it is the right thing to do. If a college doesn't adopt the shopping sheet, families will wonder why not. What does this college have to hide? Secretary Duncan says that university presidents are excited about this development. He is calling on colleges to voluntarily adopt the shopping sheet starting in the 2013-14 academic year.
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Congress could choose to make the shopping sheet mandatory. Senator Al Franken (D-MN) introduced legislation in late May to standardize financial aid offer forms. Then Understanding the True Cost of College Act (S.3244)
proposes a standard financial aid award letter that is similar to the White House shopping sheet, but would be required of all colleges receiving Title IV federal student aid.
Mark Kantrowitz is a nationally-recognized financial aid expert. He testified before the Advisory Committee on Student Financial Assistance in March 2011 and a U.S. Department of Education meeting in September 2011 about the need to standardize financial aid award letters. He has written articles about standardizing financial aid award letters for the Council on Law in Higher Education, Inside Higher Ed and Higher Ed Watch. Mark also wrote Fastweb’s Quick Reference Guide to Evaluating Financial Aid Award Letters and developed FinAid’s award letter comparison tool.