As anyone in our industry knows, the National Association of Student Financial Aid Administrators (NASFAA) is our go-to for best practices, research, and financial aid advocacy. NASFAA consists of more than 20,000 financial aid professionals, representing in excess of 3,000 colleges and universities offering Federal Financial Aid.
NASFAA has been instrumental in pushing for improvements to financial aid award letters, leading the way with research. In 2012, NASFAA conducted a study in conjunction with JBL Associates, testing three different award letters. The resulting report, “No Clear Winner: Consumer Testing of Financial Aid Award letters,” found (obviously) no clear winner. But the study did uncover consistent student and parent feedback that resulted in new recommendations being added to the NASFAA code of conduct.
Consider these four easy steps to ensure you’re integrating NASFAA’s recommendations into your award letter strategy:
Step 1: Show Cost Clearly
NASFAA recommends that schools provide a breakdown of the components that make up a students Cost of Attendance (COA). Students want transparency into charges that will absolutely be billed to them (direct cost) versus those charges that they may have more discretion over (indirect cost). Being able to clearly identify the two categories helps students and parents better understand how much a school is actually charging. Knowing the COA also provides students a true starting point in the evaluation of aid packages.
According to the Department of Education’s report “Undergraduates Who Do Not Apply For Financial Aid,” released in August of 2016, more than 20% of students did not apply for Federal Aid in 2011-2012. Of those students, 43% reported that they did not apply because they thought they could afford school without aid. The fact that students do not understand how much school will actually cost significantly skews this number. To overcome these issues, schools need to show costs clearly and consistently on all communications websites, Net Price Calculators, Financial Aid Shopping Sheets, award letters, and bills.
Step 2: Help Students Know What is What
Students don’t understand how they are paying for college. At a minimum, 50% of first-year students seriously underestimated how much they had borrowed, according to a Brown Center on Education Policy at Brookings study. Fostering clearer understanding of aid offers, and appropriately categorizing aid types, can help combat this.
Separating out information helps students understand both their current out-of-pocket money and their future costs in the way of loan payments. Each award letter should clearly identify aid sources by name and type of aid. Consider breaking the awards into separate sections, one each for:
- Gift Aid: grants and scholarships
- Work Aid: Federal Work Study
- Loans: Subsidized Stafford Loans, Unsubsidized Stafford Loans, Perkins Loans, PLUS Loans
Step 3: Standardize Industry Jargon
Financial aid terminology (which changes and shifts a little bit every year, right?) can be enough to paralyze a student. Think of it like this: Imagine you are dropped—without a translator—into a foreign country with many regional dialects and you’re told to find your way to Point X. Difficult, right? We’re essentially doing the same to students when we use or define financial aid terms differently.
Using standard financial aid terminology across institutions allows for a more consistent student experience. A cohesive set of terms means a student can learn the language of financial aid once—not with every award letter they receive. But standardizing the language doesn’t alleviate all problems. Think about the hundreds of acronyms in financial aid. We use this language daily; students do not.
Rather than tacking a glossary to the end of an award letter, it’s more useful for students to have access to the information they need right in the moment. Technology—think hyperlinks, hover text, and embedded videos—enable students to immediately access the information they need, rather than flipping between a glossary and back.
Step 4: Explain All The Fine Print
All too often, students have found their financial aid packages front-loaded with scholarships that are not renewable, or that would require heroic efforts in their first year to maintain. It’s imperative that students know what the renewal terms are on each of their awards. If they don’t, how can they plan appropriately for the long term? As we all know, it doesn’t matter how large the freshman class is if we cannot retain those students and make them sophomores, juniors, and seniors. Find a way to educate students about the renewal terms of each award, and you’ll help increase their chances for graduation.