One year after the White House unveiled a website that helped users plan for the costs necessary to attend college, a new article from Inside Higher Ed gives the effort low marks.
According to the piece, the “shopping sheet”—and the accompanying college scorecard—have been met with little interest from students and pushback from higher education institutions that felt the government tool was a one-size-fits-all solution to explaining college finance.
In interviews, Inside Higher Ed learned there were several proposed explanations for the limited interest in the shopper sheet, mainly that the U.S. Department of Education could have done better spreading the word to students and families about the shopping sheets and that the sheet itself also is tough to understand at first.
Students and families that did benefit from the financial cheat sheet were likely a savvier audience to begin with, the article suggested. From the piece:
“What I would say from talking to high school counselors is they don’t even know that it’s out there,” said Mary Nucciarone, associate director of financial aid at the University of Notre Dame, who said she’s dubious about the “one-size-fits-all” nature of the shopping sheet. “If the purpose was to have low-income students see college as a possibility, that’s not really who is using calculators.”
The shopping sheet was designed to clearly identify to students and families which parts of their financial aid package is scholarships and which parts are loans or other types of aid. It also provides statistics on the average debt load of graduates and graduation rates. The form is mostly voluntary, though several statewide public university systems adopted it back in 2012. It was designed as an alternative to the conventional award letters universities send to admitted students, which some accuse of being unclear over how much the student is receiving in aid versus loans.
[Read our Story Starters on College Affordability and Finance]
The higher education community isn’t exactly enamored of the shopping sheet. Last year, Rachel Fishman of New America Foundation explained how the group that represents university financial aid offices took an antagonistic stance toward the federal guide. Her piece details how universities describe both grants and loans as “awards,” while the shopping sheet makes the distinction clear. The group, the National Association of Student Financial Aid Administrators (NASFAA), has argued that universities already have become more transparent about the costs associated with attending. Due to changes in the 2008 reauthorization of the main federal bill that legislates financial aid—the Higher Education Act—campuses were required in 2011 to provide net price calculators as a service to prospective students.
But even if more students and universities warmed up to the shopper sheet, information holes exist, argues Jeff Selingo at Education Sector. A large amount of the public information we have on student debt loads per institution are self-reported, he writes. And in many cases, government data released in recent years to add a transparent shine to college affordability use broad numbers that don’t help individual families. He takes aim at the use of average debt, rather than the more reliable median figure, and of debt data that lump in what students and their parents—through the PLUS loan—borrow.
In the past few months a handful of studies, many funded by The Gates Foundation, have proposed dramatic changes to the delivery of financial aid to students. One report supports holding institutions more accountable for the financial well-being of its students by limiting the schools’continued access to federal funds if certain cohorts of vulnerable students fall behind on their loan repayments. While such a carrot and stick rule already exists, critics say the 30- to 40-percent default rate threshold is too generous and spares many bad actors from facing consequences.
This week the Education Department announced renewed efforts to tighten the rules related to loan repayment rates and institutional eligibility for federal financial aid, known as ”gainful employment.”
Other reports have taken a critical look at the terminology used in justifying the steep costs of obtaining a degree. Last year, the Institute for Higher Education Policy released a white paper that called on the higher education community to start discussing college the same way one would talk about owning a mortgage. While a home may cost 10 times what an individual earns in one year, the repayment period makes the investment manageable. That long ball approach should be applied to the rhetoric surrounding college finance, the writers argue.
But the huge rates of return most studies point to in extolling the virtues of a postsecondary degree are mere averages, and many individuals are stuck on the low end of that scale, explains a May report from Education Sector:
“In fact, scholars have observed returns as low as −32 percent (in which case more education actually lowers earnings) and as high as 51 percent. This astounding variation in financial outcomes is certainly one reason that students are wise to not base their decisions entirely on the average rate of return. A number of factors influence a student’s outcome.”
While the impending doubling of the interest rate on subsidized Stafford loans has dominated recent conversations of college affordability, the fiscal impact of that increase for borrowers translates into roughly an additional $1,000 that they’ll owe over the course of the loan. The most an undergraduate can borrow in subsidized Staffords over a four-year period is $19,000, several thousand less than what is available to them through unsubsidized loans and dwarfed by what many parents do: take out an uncapped amount through the federal Parent PLUS loan program at 7.9 percent.
[See EdMedia Commons posts on college costs, federal loan program expenditures, and issues concerning dropouts.]
And often missing in the conversation about hedging financial risk from borrowing federal loans? The various income-based repayment programs that can cut the monthly payments a borrower has to make by 70 or sometimes 100 percent, with total debt forgiveness after two decades and protections against hits to the principal.
However, IBR can’t help students who borrow from private lenders, though in the past year the newly created Consumer Finance Protection Bureau has mounted a public campaign to warn borrowers against the dangers of tapping into this practically bottomless but at times usurious market.
Photo Source: EWA
