Presentation from NACAC's 2017 National Conference on interpreting financial aid award letters

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C06:
Interpreting the Financial
Aid Award Letter
Panel Presentation

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Presenters:
• David Hawkins (Moderator), NACAC
• Ken Anselment, Lawrence University (WI)
• Sara Kyle, The Blake School (MN)
• Cassie Magesis, The Urban Assembly (NY)
• Diane Cheng, The Institute for College Access and Success (CA)

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• Undergraduate university with college of liberal arts
(80%) + a conservatory of music (20%)
• 1,500 Lawrentians from all over the world
• 2,000 courses taught annually; 60% w/class size of 1
• Home to music makers, dreamers of dreams, and
snozzberries that taste like snozzberries.

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NASFAA’s Code of Conduct
Institutional award notifications and/or institutionally provided materials shall include the
following:
A. A breakdown of individual components of the institution’s Cost of Attendance,
designating all potential billable charges.
B. Clear identification of each award, indicating type of aid, i.e., gift aid (grant,
scholarship), work, or loan.
C. Standard terminology and definitions, using NASFAA’s glossary of award letter
terms.
D. Renewal requirements for each award.

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“Consumers need college information that is timely,
useful, comprehensible, and takes account of the
different needs of a diverse student population.”
NASFAA // No Clear Winner: Consumer Testing of
Financial Aid Award Letters (19)

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10 recommended award-letter inclusions:
1. Cost of attendance
2. Gift aid
3. Net costs after gift aid
4. Self-help options
5. Assumptions
6. Links to loan debt aggregators and
calculator
7. Link to consumer information disclosures
8. Link to public glossary of standard terms
and definitions
9. Financial aid office contact information
10. Deadlines and next steps

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Let’s apply this to a sample letter for a sample student…
David Hawkins

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1
2
3
4
5
6
7
8
9
10
1. Cost of attendance
2. Gift aid
3. Net costs after gift aid
4. Self-help options
5. Assumptions
6. Links to loan debt
aggregators and calculator
7. Link to consumer
information disclosures
8. Link to public glossary of
standard terms and
definitions
9. Financial aid office contact
information
10. Deadlines and next steps
David Hawkins

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• PK-12, 130 seniors
• Over 2.7 million in financial aid
• Over 23% of upper school students receive financial aid
• 80 million capital campaign – Financial Aid priority

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Challenges
• Language: Admission and Financial Aid
• Minnesota Culture
• Fear
• Clarity
– Cost of Attendance
– Travel Budget

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Challenges
• The Check – how much?
– One lump sum, pay as you go
• Mixed Messages
– Conditional admit + Academic scholarship
– Admit/Deny
• The packaging of PLUS
• Families taking risks

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Best Practices
• Honesty is the best policy
– It is important to counsel students about how much debt is too much
• Transparency
– Cost of Attendance calculation
– Total bill vs. monthly bill
• Follow up calls from the college
– to help students and parents understand the package.

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Magical Thinking: The Optimists View
• Uniform award format
• Required pre-borrowing loan counseling
• Education about National Association of Student
Financial Aid Administrators’ (NASFAA) Code of
Conduct

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The Urban Assembly
• The Urban Assembly (UA) is a non-profit organization
dedicated to empowering underserved youth by
providing them with the academic and life skills
necessary for postsecondary success.
• UA creates and supports small public schools in New
York City.
• Since its first school opened in 1997, UA now supports
21 schools throughout Brooklyn, Manhattan and the
Bronx
• Our goal is to prepare 100% of our graduates for
success in the 21st century economy

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UA’s Students
• We serve 9,000 students across our 21 schools
– 97% of our students identify as students of color
– 88% of our students and their families live below the
poverty line
– Almost all will be the first in their families to go to
college
– 20% of our students require Individualized Education
Plans
– 17% of our students are English Language Learners

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Counseling Affordability
• Affordability is a part of every aspect of our college
counseling process.
– Developing the college list
– Filing financial aid applications
– Analyzing financial aid packages
– Appealing financial aid packages
– Dissecting the bill

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How do we counsel around affordability?
1. We have intimate knowledge of the family’s financial
situation.
– We collect financial documents from each family
– We file FAFSA/TAP/CSS with each family
2. We make sure our kids understand key financial aid
definitions
3. We help each student analyze and compare their financial
aid packages
4. We always multiply Total Financial Responsibility by four

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Financial aid definitions
• Cost of Attendance (COA) = Direct costs + Indirect
Costs
• Total Financial Responsibility = COA – Grants
• Gap = upfront money = COA – Financial Aid
• Financial aid = Grants, loans and work study

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Award Letter Challenges
• When COA is not listed
• When only direct costs are listed on the package, not
indirect costs
• When PLUS loans are included in packages
• When work study is included in packages
• When packages are not given in a timely manner
• When aid is given by semesters

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Counselor Tips
• Collect award letters – they’re pretty consistent
• Debt repayment calculators
• Make the kids do the work – analyzing packages
• Have frank conversations about money before spring
of junior year
• www.projectonstudentdebt.org
• https://projects.propublica.org/colleges/

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• An independent, nonprofit research and policy organization that works to
make higher education more available and affordable for people of all
backgrounds
• Our work on financial aid communication includes award letters, net price
calculators, and loan counseling.
• TICAS also works on issues related to student borrowing (see The Project on
Student Debt and IBRinfo.org), grant aid, FAFSA simplification, and data
policy
The Institute for College Access & Success
(TICAS)

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• Great variation in what information is included and how it is
presented
– Many don’t include the full cost of attendance
– Many don’t calculate the “net price”
– Many group grants, loans, and work-study together
• Too much jargon and unexplained abbreviations
Financial Aid Award Letters:
What We’ve Found

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Award Letter Example
Displays only partial cost of attendance

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Award Letter
Example
• $0 “unmet estimated
costs” assume over
$17,000 of borrowing for
one year
• Doesn’t calculate net
price, but it’s actually
$20,014 (not $0).

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Award Letter Example
Financial Aid Shopping Sheet
 Full cost of attendance
 Separates gift aid
 Highlights net price

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Award Letter Example
Financial Aid Shopping
Sheet
 Presents self-help
separately from gift aid
 No numerical figures
for PLUS or private loans

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• Compare “net prices”, not aid packages
– Net price = full cost of attendance minus grants and scholarships
– The school with the largest aid package may not be the most affordable if it has
high costs and/or if the aid package includes loans
• Make sure the cost information is complete
• Distinguish grants, loans, and work-study
• Federal student loans are the safest way to borrow
Financial Aid Award Letters:
Tips for Students and Counselors
http://bit.ly/2wlHOox

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• Be wary of award letters that look too good to be true (e.g., a $0
estimated cost after subtracting large loan amounts)
• Keep an eye out for next steps and deadlines, including
requests for additional documentation (“verification”)
• Use the Consumer Financial Protection Bureau’s “Paying for
College” tool to compare award packages for up to 3 schools at a
time. (http://bit.ly/2o6DxVj).
• Find these tips and more at http://bit.ly/2wlHOox.
Financial Aid Award Letters:
Tips for Students and Counselors

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Financial Aid Toolkit - Overview
• Online “one-stop shop” for counselors with information
about financial aid, a searchable database of resources,
and outreach tools
• Includes resources in Spanish and information for
parents
• http://FinancialAidToolkit.ed.gov

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Financial Aid
Toolkit –
Search
Function

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Student Loans
Resources
• TICAS resources
– Federal Student Loan Terms for 2017-18
– http://projectonstudentdebt.org
• Helpful resources from the Department of Education:
– Information on StudentAid.gov, including about income-driven
repayment plans (http://studentaid.gov/idr)
– Videos
– Repayment estimator

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http://ticas.org/sites/default/files/pub_fil
es/loan_terms_2017-18.pdf
(Excerpt)

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https://www.youtube.com/u
ser/FederalStudentAid

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Repayment Estimator
• Enter specific loan information (can be hypothetical), use average loan
balances, or import your actual loan data.
• Enter tax filing status, income, family size, state of residence
• View estimated payments under different repayment plans (see screenshot
on next slide)
• http://studentaid.gov/repayment-estimator

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Repayment
Estimator
(Excerpt)
• Sample estimated
payments ($25,000
in unsubsidized
Stafford loans, 6.8%
interest rate, single,
$30,000 AGI)
• Can expand
sections for more
details on each plan