Title: Financial Aid Offers Often Don't Share The Full Cost of College

Description: Paying for college is one of the biggest financial
decisions students and their families make. In FY 2022, the Department
of Education provided $112 billion in federal student financial aid to
more than 10 million students. But there are concerns about whether
students are receiving from colleges all the information they need about
college costs in these financial aid offers. We find out more from GAO's
Melissa Emrey-Arras.

Related GAO Work: GAO-23-104708, Financial Aid Offers: Action Needed to
Improve Information on College Costs and Student Aid

Released: December 2022

[Music]

[Melissa Emrey-Arras:] We think there should definitely be a requirement
so that all students have access to clear and standard information.

[Holly Hobbs:] Hi and welcome to GAO's Watchdog Report, your source for
news and information from the U.S. Government Accountability Office. I'm
your host, Holly Hobbs. Paying for college is one of the biggest
financial decisions students and their families make. Many rely on
student aid to help cover tuition and other school related costs. And in
fiscal year 2022, for example, the Department of Education provided $112
billion in federal grants, loans and other aid to more than 10 million
students. But there are concerns about whether financial aid offers
include all of the information needed to make decisions about college.
Today, we'll talk with Melissa Emrey-Arras, an expert on higher
education, about a new report on the information students received from
their colleges when financial aid offers are made. Thanks for joining
us.

[Melissa Emrey-Arras:] Thank you, Holly. It's great to be here.

[Holly Hobbs:] So, Melissa, why did we look at this issue? How do
college financial aid offers impact students' decisions on where to go? 

[Melissa Emrey-Arras:] As you know, college is expensive. And paying for
college is one of the biggest decisions that students and their families
make. One of the ways that they make that decision is by trying to
figure out how much it will cost for them to go to college. And to do
that, they often use financial aid offers. These are letters that they
receive that say how much it costs to go to the college. The student can
then use that to help them figure out if they can afford to go to that
college. It can help them decide which college to go to, or whether to
go to college at all.

[Holly Hobbs:] And are colleges giving students and their families the
information they need?

[Melissa Emrey-Arras:] Unfortunately not. We found that 91% of colleges
do not provide students with the information they need. And that is
specifically about how much it will cost them to attend the college. We
refer to this as the net price. What that means is, what is the actual
cost that that student will pay to go to the college? 

[Holly Hobbs:] So how do we know that most of them don't provide this?

[Melissa Emrey-Arras:] That's a great question. In the past, there is no
national data on this. And, we actually obtained national data. We did
that by looking at financial aid offers that were sent to actual
students from a nationally representative sample of 176 colleges. And
because the data are nationally representative, we know that our
findings represent findings of colleges across the country.

[Holly Hobbs:] So, if colleges aren't giving information on the net
price, the actual price that students would pay, what kind of
information are they giving?

[Melissa Emrey-Arras:] It really depends, Holly. Some colleges are
providing really limited information on just the tuition and fees for
the college. Others may provide some information on other costs, but not
the complete cost that the students will incur. And yet, it's hard to
believe this, but there are other colleges that provide no cost
information whatsoever in their aid offers. We found that over 20% of
colleges don't have a single cost listed in their financial aid offer.
They just note the grants and loans that the student is eligible for,
but they don't say how much it's going to cost them to go to that
college.

[Holly Hobbs:] We're saying colleges should include more information
about costs. What would this information look like?

[Melissa Emrey-Arras:] That information should include tuition, fees,
housing costs, the cost for meals, the cost for books or supplies, and
the costs for other living expenses such as transportation. They're
missing a big chunk of the actual costs that students will pay once they
go to that school. The Department of Education estimates that students
living off campus will have average costs of $17,000 a year for their
living expenses. And if that $17,000 cost isn't listed on that financial
aid offer, students are going to be really surprised to see how much it
costs for them to live off campus when they arrive at that school.

[Holly Hobbs:] So, if a student has multiple offers and is trying to
make a decision about which college to go to, how can they compare these
financial aid offers if the colleges don't present that information in a
standard way?

[Melissa Emrey-Arras:] It's very hard for them to make that comparison
without that standard information. You could have two colleges that have
identical costs and identical aid, and yet the way that they present
that information in their financial aid offers is so different that it
could make one college look like it's completely free for the student to
attend, while the other college could look like it costs $20,000 more a
year to go to. And again, these would be colleges that could have the
exact same aid offer to a student, it's just that the way that they
present the information could be so different. Unfortunately, we heard
in our work that there could be a competitive advantage for some
colleges to make themselves look less expensive to students in order to
encourage those students to enroll.

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[Holly Hobbs:] Melissa just told us that students and their families
rely on colleges to provide important information in financial aid
offers on the cost of attending their schools. But that often this
information is not provided and that colleges may even have an incentive
for not providing it. So, Melissa, what can happen if a student doesn't
get the information they need?

[Melissa Emrey-Arras:] If a student doesn't have the information needed,
they can make a bad decision about which college to go to. They could
choose a college that is completely unaffordable. Also, down the road,
if they go to a college and they end up having costs that they weren't
expecting, they can end up in a financial crisis. Some of our past work
at GAO has focused on food insecurity among college students, and it's
possible for students to cut back on essentials like food if they have
unexpected costs for textbooks or for medical care, for example. And
students in a financial crisis could even consider dropping out of
school because they don't have the funds to continue. So there are
serious consequences to students not getting the information that they
need upfront in their financial aid offers.

[Holly Hobbs:] Do we think there should be a requirement to provide this
information, and how would that happen?

[Melissa Emrey-Arras:] Yes. There should definitely be a requirement.
Right now, the situation is such that some students have access to this
information. There are certain veterans, for example, that have access
to clear and standard information in their financial aid offers. But
that benefit is not extended to the rest of the student population. And
we've seen the federal government step in at other points in other
markets to make sure that consumers have standard information to make
big ticket financial decisions. We've seen that in the credit card
world. We've seen that in the world of mortgages, where there are
required disclosures to make sure that there is standard information to
help consumers navigate tricky financial products. And that just does
not exist at this point in time for financial aid offers for all
students.

[Holly Hobbs:] And last question, what's the bottom line of this report?

[Melissa Emrey-Arras:] We are recommending that Congress consider
legislation to require colleges to provide all students with clear and
standard information in their financial aid offers. We believe that this
will help make sure that all students know how much college will cost
them.

[Holly Hobbs:] That was Melissa Emrey-Arras talking about GAO's recent
review of federal financial aid. Thanks for your time, Melissa.

[Melissa Emrey-Arras:] Thanks, Holly.

[Holly Hobbs:] And thank you for listening to the watchdog report. To
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