NASFAA Award Notification and Consumer Information Task Force: A Report

1. NASFAA Award Notification and Consumer Information Task Force: A Report Eileen O’Leary Asst. VP, Student Financial Services Stonehill College

2. Is there a problem? “In the work I do with low-income, inner city, first in their family seniors, I have seen some of the most inadequate award notices, many without COA details, a lack of clarity between grants and loans, and few details about renewal requirements. In my opinion, this lack of disclosure begs for regulation if the community will not self-regulate. All students need better financing information to make their enrollment decisions, especially with the level of unmet need most students are experiencing.”–Ellen Frishberg, SEED

3. Pushback… • “I know what my school's abilities are and I know what information my students need and how I can deliver it. The proposed standardized award letter would not be as clear as I believe ours are and would not provide the information we do to our students.” – finald-l posting • “If there are deceptive award letters out there, let the department deal with those schools directly and stop trying to continually implement "one-size-fits-all" legislation that adds undue burden on financial aid offices and doesn't ultimately make it clearer for the students.” –finaid-l posting

4. NASFAA Response: Task Force on Award Notification and Consumer Information www.nasfaa.org/advocacy

5. Chair: Doug Levy – Macomb Community College Members: Anthony Sozzo – NY Medical College, NASFAA Graduate & Professional Issues Committee Ben Burton – Ivy Tech Community College of Indiana Brenda Brown – U of Miami School of Law Dan Davenport - U of Idaho, Chair NASFAA Federal Issues Committee Diane Stemper – The Ohio State University Eileen O’Leary - Stonehill College, NASFAA Board Member Michelle Stipp – DeVry University Myrna Perkins – Barton Community College Nancy Hoover – Denison University Paula Luff – DePaul University, NASFAA Board Member Terri LeGrand – Wake Forest University

6. Commission • Examine best practices in award notification and report back to the NASFAA Board of Directors with recommendations on how to improve or standardize elements of an award notification.

7. Provide the Board with recommendations on effective elements, principles, and role of the award letter • Map a campaign to raise awareness among institutions of need to implement best practices

8. Goals • Identify best practices for award notifications and dissemination • Develop glossary of standard terminology • Gather examples of award notifications and consumer information disclosures that illustrate best practices, to serve as resources for other institutions

9. Determine whether on-line notifications require different considerations than paper formats • Liaise with admissions, the business office, and registrar's office to understand different points of view on award notifications

10. Recommend ways to minimize the quantity but maximize the effectiveness of student consumer information • Make recommendation regarding the desirability of model formats and whether different models would be needed

11. Critical Findings: • Well‐presented, easy‐to‐understand financial aid award notice • Standardization of the content, terminology and definitions • Flexibility in the format of the award notice

12. Recommendations of Task Force Recommendation #1: Include ten core elements on every award notification

13. Core Elements of an Award Letter: 1. Cost of Attendance The federally defined Cost of Attendance (COA). At a minimum, this cost of attendance should include: • Expected charges for one year for tuition and mandatory fees • Room and board (for on‐campus residents) • Estimated living expenses (for off‐campus residents) • Estimated transportation costs • Estimated books and supplies costs

14. Core Elements of an Award Letter: 2. Scholarship and Grant Awards (Gift Aid) • This element should include gift aid from all sources (federal, state, institutional, and private) • Transparently indicate awards that are gift aid as opposed to self‐help so that students can easily calculate their net costs after gift aid.

15. Core Elements of an Award Letter: 3. Net Costs After Gift Aid • Students must understand their financial responsibility after gift aid is subtracted • Optionally, display how much of the gift aid will cover direct costs in addition to the overall net cost after gift aid. For example, if total gift aid is $5,000, direct costs are $8,000 and indirect costs are $7,000, the display of net costs would be: • Net Direct Costs after Gift Aid $3,000 • Net Total Costs after Gift Aid $10,000

16. Core Elements of an Award Letter: 4. Self‐Help Section • Self‐help includes all student loan and work‐study awards • Parent PLUS loans could be included in this section if the school chooses to include these in the award notification • The student should be advised that loans would be used to help pay the remaining net costs after gift aid.

17. Core Elements of an Award Letter: 5. Assumptions • The award notification should include (or contain links to) the assumptions used to determine aid awards as well as any conditions that must be met to continue to receive the awards, such as: • Enrollment status, including effect on award amounts/levels • Housing status • General terms and conditions • Award‐specific terms and conditions

18. Core Elements of an Award Letter: 6. Link to Resource of Total Loan Debt (Aggregator) and Calculator from ED or other Third Party 7. Link to Consumer Information Disclosures 8. Link to a Public Glossary of Standard Terms & Definitions 9. Contact Information for the Financial Aid Office 10. Deadlines and Next Steps

19. Recommendation #2: Components of the cost of attendance should be broken down into two, clearly labeled classifications: • Direct Costs • Expected charges for one year for tuition and mandatory fees • Room and board (for on‐campus residents) • Indirect Costs • Estimated living expenses (for off‐campus residents) • Estimated transportation costs • Estimated books and supplies costs • Estimated miscellaneous costs

20. Recommendation #3: Students should be informed of the potential debt they may incur at a college before paying the enrollment deposit.

21. Recommendation #4: Award notifications should provide enrolled students with their cumulative loan history (federal and private if known) and the ability to calculate repayment estimates before they borrow additional loans to pay their college costs either on the college’s website or by linking to a federal or a third party site.

22. Recommendation #5: The U.S. Department of Education should mandate that all educational loans from private lenders as well as from colleges and universities be reported to one, central database.

23. Recommendation #6: Each award notification sent to students should include a link to a school‐created web resource that contains links to student consumer information, loan counseling, cumulative indebtedness, student loan default rate, repayment information, glossary of financial aid terms, federal student loan history, the College Navigator, and the school’s net price calculator. This web resource should also link to nonfederal student loan history (once this resource is available) and the College Scorecard.

24. Stonehill College Mock-up of Award Letter using Task Force Recommendations

25. My Personal Observations… • Are problems universal or outliers? • Are poor notifications more prevalent in one sector or another? • Essential information is not always financial aid related • Provide info at appropriate time • Inappropriate and inefficient if all schools have to create aggregated info • What is NASFAA’s leverage? • NACAC standards are essential to membership – should NASFAA’s be?

26. Student Consumer Information Requirements http://www.nasfaa.org/research/News/NASFAA_Resources_to_Help_Members_Comply_with_Consumer_Disclosure_Requirements.aspx

27. Questions ?