In a recent data report, Clear Disparity, CampusLogic revealed consumer research insights that show the confusion and lack of clarity that exist around financial aid award letter structure and terminology. The very document that should help students and families make one of the biggest financial decisions of their lives is, in fact, unclear to those who need it the most.
In the previous blog, a significant insight revealed that there is a wide disparity between what experts and consumers believe to be confusing. The industry has been solving for the issues that industry veterans think are problematic, rather than addressing the issues that actually challenge consumers. Read more about this insight here. The complete data report, Clear Disparity, is available here.
Consumers find things unclear for different reasons. The CampusLogic data report shows that based on household income, age, and race, student and parent survey respondents found different parts of the award letter unclear.
Breaking it Down
Respondents who did not understand what a number represented were more likely to select Expected Family Contribution (EFC) or Grants and Scholarships; those not understanding why a number was relevant most often selected Cost of Attendance (COA).
Respondents who did not understand what a word meant were more likely to select EFC or Loan Options; those not understanding why they needed to know something disproportionately selected the Supplementary School Information (SSI) block.
Respondents who found wording too vague disproportionately selected COA (20%) and Net Costs (12%) areas of the award letter.
Here’s what CampusLogic learned from the survey respondents:
The data from CampusLogic’s survey revealed that the specific things student and parent respondents reported as unclear was different based on household income, age, and race:
- Respondents reporting household earnings of more than $100,000 are more likely to identify amounts in the EFC block as unclear (33.9% - 39.3 % versus 29 % overall) but less likely to find amounts in the COA block as unclear (16.5% - 12.5 % versus 23.2 % overall).
- Respondents reporting household earnings of less than $25,000 ($50,000) are more likely to identify amounts from the Loan Options (Net Costs) sections of the letter.
The survey findings also show that, at least in the case of word confusion, respondents of different ages report finding terms unclear for different reasons:
- 18- to 24-year-olds were more likely to report not understanding what a term meant.
- 39- to 45-year-olds were more likely to report that a term was too vague or that they did not understand why they needed to know it.
Additionally, response patterns differ when controlling for race and ethnicity:
- Black, Asian, and Hispanic respondents were all more likely than white respondents to find Net Costs numbers unclear.
- Hispanic and Asian respondents were more likely to find Loan Option amounts unclear.
- Both black and Hispanic respondents were more likely to identify wording in the Grants and Scholarships blocks as unclear.
- Asian respondents were three times as likely as other groups to find the Work Options section unclear.
- Overall, Hispanic (26%) and Asian (29%) respondents were also less likely than white and black respondents to indicate that nothing was unclear (35%).
The data in CampusLogic’s report 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.
In addition to income, comprehension of financial aid award letter information varies across age and race, providing a clear argument for the need to personalize each and every award letter. Although personalized award letters may seem like a daunting task starting from where we are today, we will be much closer to driving financial success for every student when clear guidelines are established that allow for better comparability and comprehension for consumers at an individual level. This includes standard language, definitions, and calculations, while still allowing for highly personalized content that meets the unique needs of students and families.
Read more about CampusLogic's in-depth data report and find out what Amy Glynn, VP of Student Financial Success, has to say in her blog about critical actions that need to be taken by policymakers, institutions, and advocates in order to drive change.