Obama Administration and the Consumer Financial Protection Bureau Partner to Promote Transparency in College Costs
Today, the U.S. Department of Education unveiled the Obama Administration’s model financial aid award letter, also known as the Shopping Sheet — a personalized way to help students understand the type and amount of aid they qualify for and easily compare aid packages offered by different institutions.
The Department of Education partnered with the Consumer Financial Protection Bureau to develop the Financial Aid Shopping Sheet to promote transparency in student financial disclosures. The Shopping Sheet is designed to help students better understand the amount of grants and scholarships they would receive from a given institution, and the amount of loans an institution recommends a student take out to cover out-of-pocket costs. While the Shopping Sheet isn’t mandatory, this standard format should be considered a best practice in helping students to compare costs across different colleges.
“Countless students I meet across the country feel like the first time they really understood how much student loan debt they were in was when the first bill arrived,” said U.S. Secretary of Education Arne Duncan. “We must unravel the mystery of higher education pricing by giving students and families the information they need to make smart educational choices. The Shopping Sheet is a positive step in that direction.”
“Students should know before they owe,” said CFPB Director Richard Cordray. “But unfortunately, we have heard from so many student-loan borrowers who say that they simply did not understand what they signed up for. The Financial Aid Shopping Sheet gives students real numbers and a clear format that makes sense of a huge financial undertaking that too often is complex and confusing.”
There are more than 7,000 institutions of higher education in America. Each institution has its own financial aid award letter. Some of these letters are very good and provide helpful information to prospective and current students but many are confusing and, in some cases, misleading. The Financial Aid Shopping Sheet is a model of what a good financial aid award letter should look like. It makes student loan costs clear upfront – before students have enrolled – by outlining their total estimated annual costs; how much grant money student will receive and how much they may have to take out in the form of student loans; the institution’s graduation and default rates; and an estimate of monthly loan payments after graduation.
The Shopping Sheet is the product of extensive feedback from the public, consumer advocacy groups, and leaders from the higher education community. Since posting a draft version of the Shopping Sheet for public comment in October of 2011, the Administration and the CFPB received and reviewed over 1,000 comments before releasing the final version today.
In conjunction with the release of the Shopping Sheet, today Secretary Duncan published an open letter to college and university presidents, asking them to voluntarily adopt the Shopping Sheet as part of their financial aid awards starting in the 2013-14 school year. Institutions of higher education interested in adopting the Shopping Sheet may contact the Department of Education at ShoppingSheet@ed.gov for additional information.
“Today, I want to challenge every college and university in the country to hold themselves accountable to higher standards of transparency as one step toward our collective goal of meeting the President’s 2020 goal and producing the highest percentage of college graduates in the world,” Secretary Duncan said. “Having easy-to-understand information will help students and families make smarter decisions about higher education. We don’t want students and families taking on more debt than they need. We don’t want them defaulting. Worst of all, we don’t want them deciding they cannot afford college.”
Today’s announcement builds on the Obama Administration’s commitment to address the growing challenge of college costs. Last year, the President convened leading college presidents from around the nation to discuss innovative solutions and proposals to keep costs down while maintaining quality in higher education.
This spring, as the Shopping Sheet was being finalized, the President and other Administration officials held discussions across the country with college presidents and higher education leaders on the importance of transparency around college costs. At a meeting held with Vice President Joe Biden, the Department of Education, and the CFPB at the White House in early June, 10 college presidents committed to providing key financial information to all their incoming students starting with the 2013-14 school year, and several other college presidents have made the same commitment in the last few months, in advance of the Financial Aid Shopping Sheet.