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Dec 6, 2022 | Economy, Education, In The News

The Government Accountability Office (GAO) published an alarming report, finding that a vast majority – 91 percent – of colleges mislead potential students on the true cost of their education. After reviewing the report, U.S. Rep. Young Kim (CA-39) and Sens. Chuck Grassley (R-IA) and Tina Smith (D-MN) renewed their push for the Understanding the True Cost of College Act.   

GAO analyzed a representative sample of financial aid offer letters from hundreds of colleges. These letters are the first official notices from colleges to students, which are then used to compare prices and inform future decisions. The analysis found:  

  • 91 percent of colleges understate the total cost;
  • 65 percent leave out important details about aid packages; and,
  • 31 percent list loans as grants. 

The GAO report notes the Understanding the True Cost of College Act is already before Congress and would help fix this lack of clarity. Specifically, the bill would require colleges to follow well-documented best practices for information contained in all financial aid offer letters. It would create a universal financial aid offer letter so students can easily compare financial aid packages between schools. 

“Today’s GAO report reaffirms what we hear every day from students and families in California and across the nation – too many colleges misrepresent the total cost of programs and financial aid options,” said Rep. Kim. “Families deserve the most accurate information regarding the cost of college and available resources. That is why Congress must pass our Understanding the True Cost of College Act as soon as possible to ensure a streamlined, transparent financial aid process that allows families to make the best, informed decision possible to reduce student debt. I will not stop fighting to make life more affordable for the communities I represent.”  

“It’s disturbing that so many colleges are misleading students by leaving out important details, conflating loans and grants and even understating total costs. There have been previous attempts to create voluntary standards, but it is clear that is not working. Congress needs to pass the Understanding the True Cost of College Act to ensure students are able to easily compare financial aid offers by creating a uniform, standard offer letter. It’s clear our bill is needed now more than ever,” Grassley said.  

“This GAO report is a big, red flag signaling that students are systematically at risk of being misled about the total cost of college. This report demonstrates that the voluntary efforts and standards for communicating the important details of financial aid packages to students have failed. Congress must act to increase the transparency and accuracy of these offers for students and families, and our bipartisan bill would fix this widespread problem once and for all,” said Smith. “Our bill, the Understanding the True Cost of College Act, would equip students and their families with the accurate, consistent and complete information they need to make informed decisions.” 

“We’ve known for years that financial aid offers can be extremely confusing at best — and misleading at worst. This well-documented lack of transparency creates unnecessary complexity and confusion for students and their families, many of whom are already struggling to pull together limited resources and a patchwork of financial aid to cover college costs. It’s long past time that lawmakers pass the bipartisan Understanding the True Cost of College Act, which requires college to provide clear, transparent, and comparable information about college costs and the financial aid options available to cover them,” said Michele Shepard, Senior Director of College Affordability, The Institute for College Access & Success (TICAS). 

The Understanding the True Cost of College Act would improve financial aid transparency by:

  • Standardizing financial aid offer forms and ensuring the Department of Education works with colleges, consumer groups, students, and school guidance counselors to develop standard definitions for award letters; and,
  • Establishing basic minimums of information that must be included on page one of the uniform financial aid offer form such as cost of attendance, grant aid, the net amount a student is responsible for paying after subtracting grant aid, work study assistance, eligible amounts of federal student loans, information on calculating the costs of repaying student loans, disclosures related to private loans and parent loans, treatment of scholarships, and the terms and conditions of federal financial aid.

Rep. Kim introduced the Understanding the True Cost of College Act of 2021 with Rep. Raja Krishnamoorthi (IL-08) in November 2021. A similar version of this bill was introduced in the Senate by Senators Chuck Grassley (R-IA), Tina Smith (D-MN) and Joni Ernst (R-IA) in April 2021.  

The Understanding the True Cost of College Act is endorsed by 35 organizations, such as: The U.S. Chamber of Commerce, Los Angeles Area Chamber of Commerce, Veterans Education Success, University of California Student Association, California Community Colleges Chancellor’s Office, NAACP, Partners for College Affordability and Public Trust, National Scholarship Providers Association (NSPA), Institute for Higher Education Policy (IHEP), ACT, Inc and more. Read their letter of support here

Full text of the bill is available HERE.

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