This spring Seattle Pacific University sent redesigned financial-aid award letters to admitted freshmen. The changes weren’t drastic—the university listed the federal Parent PLUS loan for the first time and rearranged other information—but the staff had discussed them for two years.
The goal was providing better information to students. But Seattle Pacific learned that doing so isn’t as simple as it seems. The federal government, too, wants to make sure that award letters are clear to students and parents.
Complaints that the letters are confusing have been circling for years. In 2008, as part of the Higher Education Opportunity Act, Congress told the Education Department to form a group to suggest improvements in the letters. Then the department was to come up with a model format, including certain pieces of information, like cost of attendance. It was supposed to set the group to work within six months of the law’s enactment. That deadline has long since passed.
BEFORE AND AFTER:
Sample Financial-Aid Award Letters from Seattle Pacific U.
“We are still in the early stages,” Sara Gast, a press officer for the department, said in an e-mail, “and a committee to develop a model award letter has not yet been formed. We are working on it.”
Colleges currently have a lot of latitude in how they present the information in their award letters. The varied presentations may make sense to college officials, but they can make it harder for students to evaluate the kind of support they are being offered.
A 2010 survey of college freshmen and sophomores, and of the parents of such students, conducted by FastWeb, a scholarship-matching service, found that more than half of respondents had difficulty comparing awards, though about two-thirds said individual awards were clear and easy to understand.
Mark Kantrowitz, publisher of the Web sites FinAid and FastWeb, has long advocated for clarity in award letters. “I get a lot of complaints from families that can’t make heads or tails of their award letter,” he says.
Mr. Kantrowitz recently released a lengthy proposal of 59 mandatory and 39 recommended standards. He says colleges should be required to include a detailed breakdown of their cost of attendance on the awards, list the federal expected family contribution, organize awards by type (grants versus loans), and explain loan repayment, among other things.
He’s convinced that colleges won’t improve their award letters unless the government requires them to. He points out that the National Association of Student Financial Aid Administrators, known as Nasfaa, has long had an “evaluation tool” to help colleges design their letters, but he says that hasn’t changed anything. At the very least, Mr. Kantrowitz says, it’s high time for the Education Department to get moving on what the law already requires.
Mr. Kantrowitz’s suggestions aren’t so different from those in Nasfaa’s award-letter assessment tool. The tool also asks if a college’s letter explains what goes into the cost of attendance, lays out the expected family contribution, groups aid by category, and describes the terms and conditions for each kind of aid. And Nasfaa is willing to go further, as long as colleges are still able to address their different student populations as they see fit. “Generally speaking, we would be supportive of the concept of this model,” says Justin Draeger, president of the association, “where there’s some room for schools to be able to customize.”
On the Ground
The letter Seattle Pacific debated for years doesn’t follow all the suggestions laid out by Mr. Kantrowitz or by Nasfaa. For instance, the university doesn’t list its cost of attendance. Rather, it encloses a worksheet with its letter that students can use to calculate their total cost and their cost after aid, based on their enrollment status and living situation. The university hopes the worksheet, which can also be filled out online, will allow families to weigh various financing options and make informed choices. Besides, families may well know of other resources —say, money from a grandparent—that the university doesn’t know about and that could limit their borrowing needs.
“There’s some value in having parents and students fill it out by hand,” says Jordan Grant, director of student financial services.
Then, when incoming freshmen are on campus for orientation, the financial-aid staff will go over the worksheet with them and help clarify their options. Of course, by then the students have decided where to enroll.
At Seattle Pacific, the big question for its new award letter was whether to include PLUS. That federal loan is made to parents, who must pass a credit check to receive the money. Unlike other federal student loans, the PLUS program allows families to borrow up to the cost of attendance minus any other financial aid.
Mr. Grant was leaning toward including the PLUS loan, especially because families often saw the loan in their packages from other colleges. Seattle Pacific mentioned that parents could apply for PLUS loans in a note on its old letter, but the university still got calls from confused families who wondered why it wasn’t on their awards.
Mr. Grant wanted to hear what his staff thought. After all, the award letter is a major piece of communication from any college to its prospective students. That’s certainly the case at Seattle Pacific, where about 90 percent of students receive financial aid.
As it turned out, the staff had very different ideas of how to best help families. Some argued that the university should include the maximum PLUS loan a parent could borrow in the awards. Carlie A. Curlee, a student-financial-services counselor, fell into that camp. “I think it’s good for people to hear upfront what they’re eligible for,” she says.
Others didn’t want to include the loan at all. Rosanna L. Woods, a former student-financial-services representative at Seattle Pacific who was involved in the discussions, says she is all for families taking out the loans they are eligible for, but she wants them to be educated first. (When families read the note about PLUS in the old letter, they would contact the university for information.)
Besides, she adds, families are not guaranteed a PLUS loan: They have to pass the credit check. A family that planned on that option and was denied could be in a tough spot.
A Positive Response
In the end, they compromised. Students can take out additional federal loans if their parents are denied PLUS, and the university now includes PLUS up to the amount students can get in such cases: $4,000, for freshmen and sophomores. Mr. Grant thinks this fits his students’ needs. Last year, 19 percent of dependent students who filed for aid had a parent apply for a PLUS loan, and 82 percent of those were approved.
Seattle Pacific’s new letter puts PLUS, along with Work-Study, in a new category, called “Additional Financial Aid Eligibility.” The goal is to help families understand that they must take extra steps to receive the money. So far, the response to the new letter has been positive, Mr. Grant says. His staff members say it seems to be clearer to families, who have been asking more focused questions this year. Of course, admitted freshmen never saw the old version of the letter. The office will know more about how changes are being received once the letter goes out to continuing students in May.
Next, Mr. Grant would like to separate grants from loans on the letter. But that’s easier said than done. Like many financial-aid offices, his relies on off-the-shelf software, and the default is to lump the two together. It’s possible to adjust the format, he says, but the university tries to avoid doing so because someone has to make sure the customization still works after every software update. Like so many aspects of award letters, this, too, is a work in progress.
