White House Urges More Student Loan Transparency

Can uniform financial aid letters solve our student debt problem?

This coming school year, the average California resident attending an in-state, public university will incur costs between $23,000 and $32,000. An out-of-state resident will pay $46,000 to $55,000. These exorbitant costs are certainly not exclusive to the Golden State. The expenses are putting a massive strain on young people throughout the nation — a strain that many don't realize until they are already deep in debt.

On June 5, the White House called on colleges and universities to adopt more transparent language about the cost of attending school in their financial aid letters. In the wake of nationwide trillion-dollar student loan debt, Vice President Biden is pushing for a clearer summary of what prospective students should expect to pay over the course of the school year. The proposed layout is said to better help parents and students understand what their costs will be, and to more properly inform their decisions to take out loans.

The guidelines to be included in each letter are:

  • How much one year of college will cost
  • Financial aid options to pay this cost, with a clear differentiation between grants and scholarships, which do not have to be repaid, and loans, which do
  • Net costs after grants and scholarships are taken into account
  • Estimated monthly payments for the federal student loans the student would likely owe after graduation
  • Vital information about student results, including comparative information about the rates at which students enroll from one year to the next, graduate, and repay their loans without defaulting on their obligations.

So far, 10 schools, including Vassar College and the University of North Carolina at Chapel Hill, have agreed to include this info in an "easy-to-read place" on correspondence starting with the 2013-2014 school year. The hope is that more schools will voluntarily adopt this format, making financial aid information uniform across all colleges and universities.