Government Study Reveals Need for Clearer College Financial Aid Offer Letters

A Government Accountability Office report confirms inconsistent financial aid offer letters from colleges and universities leave families without a clear understanding of the true cost of higher education—strengthening the case for clearer, standardized requirements. 

A study by the federal Government Accountability Office (GAO) found that 91% of colleges and universities understated or failed to  include a clear net price — the amount a student pays after scholarships and grants — in their financial aid offer letters. In addition, many financial aid offers don’t itemize costs such as tuition, fees, housing, books, and transportation, which leads to surprise expenses for families and makes budgeting difficult.

Colleges and universities send these “award” letters to accepted students each year, and for the nearly 75% of undergraduates receiving some form of financial aid, they are often the primary source of information families rely on to understand affordability and make enrollment decisions.

Despite their importance, there is currently no standard format for how financial aid information is presented. Colleges use different terminology, layouts, and assumptions, leaving families to decipher complex financial information on their own and making it difficult to compare offers across institutions. Clearer, more consistent requirements would help ensure families receive the information they need during such a critical moment. Establishing a standard offer letter would be a good step toward providing clarity and transparency.

Hidden Costs

The same GAO study found some offer letters do not clearly identify funds that need to be repaid, such as federal student loans. In many cases, institutions subtract Parent PLUS loans – federal loans made to parents with minimal credit checks – from the total cost of attendance.

The report notes just how misleading this can be: “Subtracting this type of loan from the cost of attendance can drastically underestimate the amount a student’s family will need to pay for college.”

Taken together, it’s much more difficult for families to make informed financial decisions without a complete view  of the costs they will actually  pay.

Reform Is Needed

The report concluded that “further congressional action would be necessary to ensure that students receive the information they need in their financial aid offers to make informed education and financial choices.” 

This reflects growing recognition that clearer, more consistent requirements are needed to bring transparency and comparability to the presentation of how financial aid information. Policy efforts focused on standardizing financial aid offer letters seek to make sure families receive clear, plain-language information across institutions, including a clearly stated net price, itemized costs, and transparent distinctions between grants and loans.