Today, the Government Accountability Office (GAO) published an alarming report, finding that a vast majority – 91 percent – of colleges mislead potential students on the true cost of their education. After reviewing the report, Sen. Chuck Grassley (R-Iowa), Sen. Tina Smith (D-Minn.) and Rep. Young Kim (R-Calif.) renewed their bipartisan push for the Understanding the True Cost of College Act.
“It’s disturbing that so many colleges are misleading students by leaving out important details, conflating loans and grants and even understating total costs. Previous attempts to create voluntary standards have been unsuccessful, with students literally paying the price. Congress needs to pass the Understanding the True Cost of College Act to ensure students are able to easily compare financial aid offers by creating a uniform, standard offer letter. It’s clear our bill is needed now more than ever,” Grassley said.
“This GAO report is a big, red flag signaling that students are systematically at risk of being misled about the total cost of college. This report demonstrates that the voluntary efforts and standards for communicating the important details of financial aid packages to students have failed. Congress must act to increase the transparency and accuracy of these offers for students and families, and our bipartisan bill would fix this widespread problem once and for all,” said Smith. “Our bill, the Understanding the True Cost of College Act, would equip students and their families with the accurate, consistent and complete information they need to make informed decisions.”
“Today’s GAO report reaffirms what we hear every day from students and families in California and across the nation – too many colleges misrepresent the total cost of programs and financial aid options,” said Kim. “Families deserve the most accurate information regarding the cost of college and available resources. That is why Congress must pass our Understanding the True Cost of College Act as soon as possible to ensure a streamlined, transparent financial aid process that allows families to make the best, informed decision possible to reduce student debt. I will not stop fighting to make life more affordable for the communities I represent.”
GAO analyzed a representative sample of financial aid offer letters from hundreds of colleges. These letters are the first official notices from colleges to students, which are then used to compare prices and inform future decisions. The analysis found:
- 91% of colleges understate the total cost;
- 65% leave out important details about aid packages;
- 31% list loans as grants; and
- Not a single school examined by the GAO used all ten best practices.
The GAO report notes the Understanding the True Cost of College Act is already before Congress and would help fix this lack of clarity. Specifically, the bill would require colleges to follow well-documented best practices for information contained in all financial aid offer letters. It would create a universal financial aid offer letter so students can easily compare financial aid packages between schools.
“I am dismayed, but unsurprised, that colleges and universities continue to omit or understate their price and misrepresent aid options to students and families in financial aid offers. New America’s research almost five years ago had the same findings. In the intervening years, voluntary efforts and formal guidance from the U.S. Department of Education has resulted in no substantial change in how institutions provide this information. The Understanding the True Cost of College Act is the gold standard, signature legislation that will solve this common sense issue once and for all and help students and families make financially-informed postsecondary decisions. We applaud Senators Grassley, Smith, and Ernst for centering students and families in this bill, and urge Congress to act,” Rachel Fishman, Acting Director, Higher Education Program, New America said.
“We’ve known for years that financial aid offers can be extremely confusing at best — and misleading at worst. This well-documented lack of transparency creates unnecessary complexity and confusion for students and their families, many of whom are already struggling to pull together limited resources and a patchwork of financial aid to cover college costs. It’s long past time that lawmakers pass the bipartisan Understanding the True Cost of College Act, which requires college to provide clear, transparent, and comparable information about college costs and the financial aid options available to cover them,” said Michele Shepard, Senior Director of College Affordability, The Institute for College Access & Success (TICAS).
Full text of the bill is available HERE.
The GAO report is available HERE.
Grassley and Smith have introduced other bipartisan legislation to help provide students and their families with better information about the costs of college, including:
- The Net Price Calculator Improvement Act – improves the effectiveness of and access to tools that provide students with early, individualized estimates of higher education costs and financial aid before they decide where to apply.
- The Know Before You Owe Federal Student Loan Act – makes counseling about the likely cost of loans compared to income an annual requirement before new student loans are disbursed.