On October 25, 2011, the Department of Education and the Consumer Financial Protection Bureau released the attached “Financial Aid Shopping Sheet,” a model financial aid award letter that a college or university could send to prospective students who have been awarded financial aid. Use of the one-page form would be voluntary. The model form is part of the Department’s financial aid disclosure reforms, as mandated by the Higher Education Opportunity Act (HEOA), as well as the Bureau’s “Know Before You Owe” consumer financial education initiative.
The model form suggests that schools disclose the following to a financial aid recipient at the time financial aid is awarded:
- The annual cost of attending the school, with tuition, room and board, books and supplies and transportation and other costs broken out;
- Total non-loan grants and scholarships offered to the student;
- The annual amount the student is left to pay;
- Loans and work-study options available to the student;
- The estimated amount of student loan debt that would exist at graduation, as well as estimated monthly payments on such debt; and
- Comparative data regarding the annual costs borne by the student vis-à-vis other students at the school and students at other four-year private and public schools, the retention and graduation rates of the school, and the federal student loan default rate of the school’s students.
Although the model form was introduced as a “thought starter,” not a formal proposal, it is likely that formal rulemaking on financial aid award letters is forthcoming. Section 484 of the HEOA requires the Department to develop a model form; the Bureau has decided to make consumer loan disclosures one of its first priorities; and President Obama has announced his intent to issue a series of executive orders addressing student loan debt, such as the “Pay As You Earn” student loan payment reduction plan announced on October 25. This rulemaking could make the disclosures described in the model form mandatory.