By Amy Glynn
Institutions, policymakers, and advocates need to do more than read CampusLogic’s recent data report. People who can need to step up and drive change. With 3 million students dropping out of higher education every year due to financial reasons—many taking debt with them but no degree—we need to be doing everything possible to drive student financial success. The findings and insights presented in the survey paint a very clear picture of consumer confusion around financial aid award notification information and the ramifications of decisions made therein.
Consumer confusion is the enemy of financial aid professionals—it’s what we work our entire lives to alleviate so that students can make informed borrowing decisions, at the right-fit institution for them, and be able to clearly understand the ramifications of their decisions moving forward.
Having spent more than a decade in financial aid, I believe the survey, resulting data, and key insights present a unique opportunity for driving student financial success. Below, you’ll find my recommendations on what the data means for your institution, and how to make it useful.
Comprehension of college costs and how to pay for them are worse than originally thought.
The data in the original report represents feedback from 1,000 students. The students surveyed included: high school students (19), current college students (381), current graduate students (149), and recent graduates (450). These numbers indicate that 98% of respondents have gone through the college shopping process at least once. Nearly 60% have been through the financial aid process four or more times (one time per year). Yet 74% of respondents reported confusion over a number or word used on the example notification.
Students who have been through the college shopping process and the funding process year over year still do not understand basic information like terms and figures, even with a glossary on the same document. Consumer comprehension is worse than originally thought.
The Hard Truth: What we are doing today is not good enough.
What Needs to Change: We need to make significant changes to how we are displaying cost and financing information—and how we are communicating it to consumers. More thought should be given to what is presented to students, when it is presented, and how. Comprehension doesn’t improve by throwing all the information we think consumers need to make decisions at them at once. We need to think about what the student needs. For example, why do we find it so necessary to present the Expected Family Contribution to students and parents? A made-up number generated by a complex calculation rooted in no sense of reality about what a family can contribute to a student’s education confuses everyone. Though important to institutions for the awarding formula, would we drive clarity by omitting it?
Students who need help paying for college are most confused by award letters.
The new data set provides—for the first time ever—conclusive information about consumer comprehension of financial aid award letters based on income, race, and gender. And it’s not good. The data shows that the students who are in greatest need of financial assistance to pay for college—coming from household incomes of less than $25,000—are more likely to be confused by both terminology and numbers on the award letter.
The Hard Truth: Institutional goals to improve access to higher education to first-generation and low-income students require more than hyped-up recruitment.
What Needs to Change: We can’t continue to leave first generation and low-income students to figure it out on their own, because they won’t. I recently heard someone say their students were familiar with the idea of a budget but had no idea how to create one. Crucial to teaching new concepts is giving students a chance to practice what they have learned. Our current way of communicating about cost and payment options is not structured in a way that supports the practical application of evaluating the financial fit of a college, or comparing. First generation students often either never enroll because it’s all so confusing, or they’ll enroll and drop out because they didn’t fully understand the implications of their decisions. We now have conclusive information about exactly where consumers are struggling. We have no excuse for not using the new information available to facilitate more impactful, understandable outreach and education efforts.
Investments (dollars, resources, time) in financial literacy tools aren’t proving ROI.
Guidance counselors, colleges, and access groups have been working diligently—investing time, energy, and dollars—to help educate students about college costs, financial aid, and financial wellness before during, and after college. Yet 74% of student respondents who already hold a credential report confusion with words and numbers presented within the template. Even within the tested template, approximately 11% reported confusion about Net Costs—even though the template includes a definition of the term and illustrates how the number was calculated. Again, even with this information, respondents are still confused.
The Hard Truth: Financial wellness initiatives (tools, resources) aren’t proving ROI, but the industry seems to keep funding them without asking consumers what they truly need—or are confused by.
What Needs to Change: There needs to be more research and testing to determine not only how to communicate with students and parents, but also, what is essential to communicate. More words will never equate to better understanding. Social media and our hyper-connected space have changed the way consumers interact with language, with what they need to make decisions. Further complicating this, many at-risk students have parents who need access to educational resources about college cost and affordability. Disseminating information doesn’t equal learning. The EDGE model in education suggests we Explain, Demonstrate, Guide, and Enable. Many current literacy tools in use today end at explaining. Instead, we need to arm students with resources that will demonstrate and guide them through new information and experiences, enabling them to better understand.
There is a glaring disconnect between what financial aid professionals think is confusing and what actually confuses students.
Only 1% of surveyed aid administrators said that there was nothing confusing on the tested template, compared to 21% of students and 28% of parents, respectively. Additionally, the tested template is one that was developed by the Department of Education and has resulted in 70% of respondents reporting confusion about wording and phrases.
The Hard Truth: We seem to care more about solving for what industry veterans think is the problem rather than addressing what consumers are telling us is problematic.
What Needs to Change: There needs to be significant research and consumer testing to identify better ways to present information to students and parents about cost and financial aid. We need to spend more time asking questions than making assumptions when it comes to the people who need to use these documents to make crucial decisions. Award notices have become a catch-all for information, now used to explain cost, funding options, loan terms, and renewal criteria, while also acting as a way to facilitate active acceptance. We need to go back to the goal of the communication and ask, “what is a student trying to do with this award notice?” Any content that doesn’t drive to that goal—or that blurs it unnecessarily—should be removed. I find myself wondering if part of the disparity between consumer confusion and aid professional confusion is related to generational disparity. Regardless, the need for more consumer testing and continual improvement should be undertaken at the industry level; it’s not a burden that should fall on institutions.
Variation in what is understood by different populations shows the need for personalized communications.
The data shows great variation in what causes confusion across income brackets. When looking at the grants and scholarships section, only 2.4% of students in the $15,000 to $25,000 income bracket reported confusion. Compare that to the 16% who were confused in the income bracket over $200,000. Students from higher income families are five times more likely to be confused by this single section than families in lower income brackets.
The Hard Truth: We can and should personalize each and every award letter, but it’s so daunting a thought we may not know how to start.
What Needs to Change: Clear guidelines should be established that allow for better comparability and comprehension for consumers at an individual level. This would include standard language, definitions, and calculations, while allowing for highly personalized content to meet the unique needs of students and their families.
It's Your Turn: Help Drive Change
If you take only one thing away from the recent data report and my recommendations, let it be this: the research conducted by CampusLogic strongly supports the notion that there is no one thing that confuses every student and parent. We have proof-positive that an individual’s background significantly impacts his or her ability to understand the information being presented on financial aid offers. This extends well beyond the aid offer to eligibility requirements, renewal criteria, and terms of the funding used. Higher education is likely one of the biggest expenses any individual will incur, and it has the potential to change the trajectory of an entire family. We owe students and parents more.