Earlier this year, at the University of Michigan, President Obama outlined the steps that his Administration is taking to make college more affordable and to ensure that students “know before they owe.”
Today, as part of that ongoing effort, the Administration unveiled the final version of the model financial aid award letter, or “Shopping Sheet” — an individualized standard financial aid letter that will help students understand their costs before making the final decision on where to enroll. The shopping sheet will allow students to easily compare aid packages offered by different institutions. To develop the Shopping Sheet, the U.S. Department of Education partnered with the Consumer Financial Protection Bureau (CFPB), a new independent agency established in the wake of the financial crisis.
Too often, students and families face the daunting task of deciding where to enroll, whether to write a check, or whether to sign for a student loan, without a clear explanation of what the costs mean, or how these costs compare to other colleges they are considering. As a result, too many students leave college with debt that they didn’t understand at the time that they entered school. While many financial aid award letters provide this information, some can be confusing, lacking clear distinctions between grants and loans, as well information about post-graduate outcomes associated with the institution. These obscurities make the task of comparison-shopping for the most affordable and appropriate college even more difficult.
The Shopping Sheet makes clear the costs and responsibilities of student loans upfront – before students have enrolled – outlining their total estimated annual costs, institutional rates of completion and default, and information about a student’s potential monthly loan payments after graduation. Ultimately, this tool provides students and their families with useful information that can help them make a more informed decision about where to attend college and to help them better understand the debt burdens that may be face after graduation.
Secretary Duncan today will publish an open letter to college and university presidents, asking them to adopt the Shopping Sheet as part of their financial aid awards starting in the 2013-14 school year. Additionally, colleges who agree to the Principles of Excellence for Serving Military and Veterans will begin using this form during 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.
While states and colleges share responsibility to keep down the rising cost of college, improved consumer disclosures can ensure that students and families make wise decisions when investing in higher education. To learn more about President Obama’s comprehensive proposal to make college more affordable, please visit: http://www.whitehouse.gov/the-press-office/2012/01/27/fact-sheet-president-obama-s-blueprint-keeping-college-affordable-and-wi