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. {MUSIC} [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 hear more podcasts, subscribe to us on Apple Podcasts, Spotify or wherever you listen and make sure to leave a rating and review to let others know about the work we're doing. For more from the congressional watchdog, the U.S. Government Accountability Office, visit us at GAO.gov.