Clear Disparity: Many Consumers Find Both Dollar Amounts and Wording Unclear

In this blog series, CampusLogic highlights significant insights from Clear Disparity, an in-depth data report that focused on responses from students, parents, and financial aid professionals regarding confusion surrounding financial aid award letters. Key learnings reveal that financial aid award letters are often a source of confusion for consumers who need information to make informed borrowing and financial decisions regarding higher education. 

In the previous blog, a significant insight revealed that students and parents who stand to benefit most from clearly presented options about higher education financing choices are the ones who seem to struggle the most with financial aid award letters. Read more about this insight here. The complete data report, Clear Disparity, is available here

More than $240 billion in federal and state aid is available annually to students to support their higher education pursuits. Financial aid award letters are the primary way students and families receive crucial information about eligibility and access to this funding. That means that understanding this information—the full impact of aid and student debt on one’s near and distant future—is crucial to students making informed decisions about where to attend, how much to responsibly borrow, and if they can adequately fund their full education.  

Significant Insight

Many consumers find both dollar amounts and wording unclear. Of 1,000 students surveyed (a majority of whom have gone through the financial aid process four or more times, once per year of attendance), 74% reported confusion over a number or word used on the award letter—even when a glossary appeared on the same document. Consumer comprehension is worse than originally thought. 

Breaking it Down 

Respondents were asked to complete an online survey, during which they clicked on specific areas of the U.S. Department of Education’s College Financing Plan they found confusing. Heat map visualizations indicated a majority of respondents found at least one aspect of the award letter unclear, with many indicating confusion with both dollar amounts and wording. Nearly 3 out of 5 indicated at least some part of the award letter was unclear, and 94% of financial aid experts reported that they believed students would find some part of the award letter unclear. 

Here’s what CampusLogic learned from the survey respondents: 

  • Almost 60% of students identified some amount on the award letter as being unclear, and almost 70% identified some wording or phrasing as unclear. 
  • Nearly 60% of parents identified some wording or phrasing as unclear. 
  • Approximately 64% of the student and parent survey respondents indicated some dollar amount within the Expected Family Contribution (EFC) (30%), Cost of Attendance (COA) (23%), and New Costs (11%) sections of the letter was unclear. 
  • Approximately half of the student and parent survey respondents indicated some amount within the EFC (35%) and the School Information Block (14%) was unclear. 
  • The majority of consumer confusion around amounts on award letters is centered around the EFC and COA.
  • Approximately 30% of respondents identified EFC amounts as unclear while another 23% identified COA as unclear. 
  • Respondents who indicated they did not understand how a number was calculated disproportionately selected Net Costs (15%). 
  • Amongst those indicating that they did not understand why a particular number was relevant, a disproportionate number (27%) selected COA. 
  • The majority of consumer confusion around wording is concentrated in EFC, Supplementary School Information (SSI), and Loan Options areas of the letter.
  • Approximately 35% of respondents identified EFC wording as unclear while another 14% identified some SSI (Loan Option) wording as unclear. 
  • Those reporting that they did not understand what a word meant were more likely to select the EFC section of the template (40%) 
  • Those reporting that they did not understand why they needed to know a word most often selected some aspect of EFC (24%) or SSI (19%). 
  • Those reporting that wording was too vague disproportionately selected COA (20%) or Net Costs (12%). 

Next Steps 

Significant changes need to be made in how we are displaying cost and financing information—as well as how that information is being communicated to consumers. More thought should be given to what is presented to students, when it is presented, and how it is presented. Comprehension doesn’t improve by throwing all the information we think consumers need to make decisions at them all at one time. We need to think about what individual students need. 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 regarding 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? By thinking of ways we can improve clarity and better communicate essential information, we will be better serving students and parents, and we will go further in driving student financial success. 

Read more of this blog series for additional insights gleaned from CampusLogic’s in-depth data report. 


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