October 17, 2023

New AccessLex Institute Issue Brief Addresses Concerns with Financial Aid Offer Letters and Proposes Policy Recommendations to Improve Transparency

Logan Johnson, Policy Associate
Financial Education
Policy and Advocacy


Higher education institutions rely on offer letters to convey eligibility for financial aid programs to students and their families. These aid offers are frequently institution-specific, meaning the terminology and format vary between colleges. The lack of uniformity in aid offers has led to concerns about the potential for students and their families to make imprecise financial decisions when choosing which school to attend and misunderstand the debt they are taking on.

Our newly published issue brief, Charting a Clearer Path: Recommendations for Transparent and Consistent Financial Aid Offer Letters, explores these concerns in detail and offers policy recommendations for Congress to improve the transparency and clarity of financial aid offer letters.

In 2012, the Department of Education (ED) attempted to address this issue by introducing the Financial Aid Shopping Sheet, now known as the College Financing Plan. This form serves as an optional template that institutions can use to relay financial aid information in a manner that is reasonably understood and can be compared by students and their families.

In addition to the efforts of ED, the National Association for Financial Aid Administrators attempted to resolve the issue by updating its Code of Conduct in 2014, adding minimum requirements related to aid offers for member institutions. However, as of 2016, only 45 percent of Higher Education Act Title IV-participating institutions used the College Financing Plan, prompting further research. Organizations such as The Institute for College Access & Success, New America, uAspire, and the Government Accountability Office conducted analyses that revealed similar results – that aid offers often fail to delineate types of aid, omit the complete cost (COA), and use confusing jargon and terminology.

To offer solutions for the challenges students and their families experience with offer letters, AccessLex Institute has developed policy recommendations for Congress that address content and format standardization. Regarding content standardization, Congress should require institutions to include:

  1. the COA (i.e., direct and indirect costs),
  2. net price (i.e., scholarships and grants subtracted from the COA),
  3. delineations of types of aid,
  4. actionable next steps, and
  5. standardized terminology and definitions.

Additionally, schools should not refer to the aid offer as an "award." Concerning format standardization, Congress should require institutions to include a reference box on the first page that displays:

  • the total COA for that institution,
  • the total grants and scholarships offered to that student, and
  • the estimated net price.

By requiring content and format standardization, Congress can help students and their families better understand the amount of aid offered and effectively compare offers across institutions.

To learn more about our advocacy efforts related to financial aid offer letters and the accessibility and affordability of higher education more broadly, check out our #MakeTheCase Action Center.