Colleges Agree To More Transparency In School Costs
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The Obama administration and a handful of college presidents have agreed on a deal that's supposed to take the mystery out of financial aid. President Obama has been critical of colleges for not being more transparent, and he's made the cost of higher education an election-year issue.
But NPR's Claudio Sanchez reports it's not clear when or if more schools will sign on to the agreement.
CLAUDIO SANCHEZ, BYLINE: The agreement is rather small. Starting next year, a total of 96 private and public colleges and universities will offer parents and families a so-called shopping sheet. In that single page document, schools will provide user-friendly information about their total cost per year, explain the difference between grants and loans, what students monthly payments are likely to be after graduation, default rates and dropout rates.
This shopping sheet will also allow families to compare financial aid packages before they choose a school.
VICE PRESIDENT JOE BIDEN: I want to thank you for making a commitment on transparency, empowering...
SANCHEZ: With cameras clicking away, Vice President Joe Biden thanked the college presidents invited to the White House for the announcement. There were no speeches or reporters' questions, so it was left up to Education Secretary Arne Duncan to explain why the agreement is necessary.
SECRETARY ARNE DUNCAN: Each year, colleges and universities send prospective students and their parents financial aid award letters, intended to lay out how much it will cost them to attend school. But, as you guys know, these letters often contain different information and often, frankly, do a poor job of making clear how much a student will receive in terms of grants and scholarships, and how much they'll have to borrow in terms of student loans.
SANCHEZ: Duncan said this not only makes it difficult to figure out how much college will cost, but makes it impossible for families to compare institutions' pricing schemes.
DUNCAN: And that's why we've been working so hard on designing an easy-to-use form that standardizes this information, and makes the true cost of higher education much more transparent.
SANCHEZ: Other than individual institutions, higher education groups have not endorsed this idea. They say there isn't even a draft of this shopping sheet and want more details.
Mark Kantrowitz, though, likes the idea. He runs a website called FinAid.org and tracks college costs and financial aid issues.
MARK KANTROWITZ: I think that the financial aid shopping sheet, when finalized, will provide families with a clear basis for finding the best value that they can afford.
SANCHEZ: Kantrowitz says right now colleges provide either too much confusing information or not enough. He says families are often in the dark about just how much debt they're going to have to take on.
KANTROWITZ: I've had families come to me saying they're getting a free ride from XYZ University. When I look at their award letter, I see that there's a $20,000 parent PLUS loan, in addition to five to $10,000 of Stafford loans, and maybe even some private student loans.
SANCHEZ: Politically, though, momentum is building for mandating that all colleges provide a standard financial aid award letter. Today's agreement is strictly voluntary. And higher education groups say they're in no hurry to sign up until they know more.
Claudio Sanchez, NPR News.