The end of confusing financial aid awards
(MoneyWatch) COMMENTARY It can be confusing trying to decipher a financial aid award. In a recent post looking at whether a financial aid award was any good, I wrote about the difficulties that families experience when financial aid awards arrive.
Fortunately, help is on the way. The federal government recently unveiled a valuable interactive tool that will assist families evaluate any financial aid award. The financial aid tool, which was created by the Consumer Financial Protection Bureau, also gives families the opportunity to compare award letters at the nation's four- or two-year schools. Just as important, the tool will also provide families with an idea of what the cost of borrowing for college will be for their household.
The new tool will help families who receive confusing award letters or awards that don't include all the necessary numbers. For instance, some schools produce award letters that never mention what the cost of the institution is. Sometimes schools do not clearly identify the loans in a package, leading some families to mistakenly assume that they are grants. Many schools don't include what the interest rates or monthly payments would be for families who borrow for college.
I'd suggest that plenty of these omissions are intentional. When parents are perplexed by aid awards, they are more likely to get buffaloed.
The new government tool is a prototype and the CFPB is asking for the public's feedback before finalizing the tool.
The Obama administration has previously suggested that it would require schools in the future to use a standardized financial aid form. I hope this happens. Standardized financial aid awards, which industry groups have resisted, would eliminate much of the confusion that families experience at this time of year.
