Every year, incoming and current college students have to file a FAFSA in order to determine their potential and continued eligibility for federal financial aid. Students may also have to file institution-based financial aid applications every year, along with institution-based or outside scholarships. Offer letters are key tools used by colleges and universities to notify students of their eligibility for federal, state, and institutional financial aid. Students and families use these letters to determine what the cost of attending that particular institution will be.
Recent research such as the “Decoding the Cost of College” joint research report by New America and uAspire, and the National Association of Student Financial Aid Administrators Issue Brief on Financial Aid Award Notifications have determined that offer letters are often hard to understand, and can lead students and families to misinterpret financial aid packages. Consequently, students and families end up borrowing more loans than they should, the students decide not to attend a particular institution, or the greatest consequence is that many students do not realize the true cost of attendance, which can lead to negative outcomes like not being able to afford to finish.
As Federal Student Aid’s Virtual Student Federal Service Intern, I have been compiling research on the financial aid offer communications, student-centered approaches to financial aid policy, and statistics on underserved college student populations. I became interested in the financial aid awareness project because I am a first-generation, low-income student of color from the city of Chicago, and financial aid was one of the biggest factors in my decision to either attend my state school or to attend the University of Pennsylvania.
This past month, I had the opportunity to chat with Matt Sessa, Executive Director of Student Registration and Financial Services, and Paul Richards, Director of Communications at the Division of Finance, at the University of Pennsylvania about their efforts to improve UPenn’s financial aid communication.
Q: Could you tell me more about Penn’s recent offer letter redesign?
A: Matt and Paul worked with administrators across campus that were not even involved in Penn financial aid, particularly departments that worked directly with students such as the Vice Provost for University Life and the Admissions Office. They also created a working group dedicated to revising the offer letter. By working with several departments that were not part of the financial aid sector, Matt and Paul were able to tackle the offer letter rewrite from different angles and utilize other departments to check for understanding and readability. The redesigned offer letter rolled out for Penn Early Decision Students of the Class of 2023.
Q: Are first-year students at Penn well-prepared to understand the offer letter?
A: Matt and Paul state that being well-prepared to understand the offer letter at Penn varies for students, and that the student population they are most concerned with are first-generation students. Research by PwC and the National Association for College Admission Counseling shows that first generation and low-income students often lack critical knowledge about college costs and financial aid options. However, financial aid administrators at Penn are proactive in their efforts to help first-year students understand the letter by taking the assumption that students may not be well-prepared. These efforts include holding financial aid workshops for applicants and accepted students, breaking down financial aid terminology on the financial aid office’s website, and providing each student who receives an offer letter with booklets (Information for Financial Aid Recipients and Financial Resource Guide) providing core financial aid information such as the cost of attendance, how financial need is assessed, grants and scholarships, loans, and why a student/parent may need to take out a loan.
Q: What is key to students’ understanding?
A: Matt and Paul believe that understanding what makes up the cost of attendance and being able to distinguish between direct and indirect costs of attendance are the most important components to making financially-oriented educational decisions.
Q: Who governs the content of the offer letter at Penn?
A: Student Registration and Financial Services are in charge of the content of the offer letter, but they often collaborate with other administrators and departments on campus that work with students.
Q: Is Penn clear about next steps within the offer letter?
A: Because Penn covers full demonstrated need with grant funds and does not include loans in its financial aid packages, students are not required to take next steps to accept their financial aid package. However, students are advised to talk to their financial aid counselor, or with Student Registration and Financial Services if they want to request a new package, also known as a reevaluation. The letter does offer some directions in obtaining a work-study position.
Q: Have you ever considered adding a budget component to the offer letter?
A: Matt and Paul state that it is best not to overcrowd the content of the offer letter, and in regards to budgeting, there are two booklets (Information for Financial Aid Recipients and Financial Resource Guide) paired with the award letter that have sections dedicated to budgeting such as payment options, payment plans, loan options, etc.
Paul also notes that in the past, the Penn administration has seemed to vilify taking out loans. Instead, the administration is moving towards being more upfront with students about loans and normalizing the language around them in their communications materials so students will be less afraid to take out a loan when they feel it is necessary to help with their expected family contribution.
Q: What would you suggest to other institutions that want to redesign their offer letters?
A: Matt and Paul state that the three most important things for students to know are their cost of attendance, payment options, and their repayment price.
Paul suggests that financial aid administrators look at other offer letters that they like and copy that — redesigns don’t have to be new or creative as long as students can easily understand them. Paul also notes that there is a ton of research out there featuring best practices to offer letter designs and wording.
Matt adds that collaboration between administrators across the university, especially from the admissions office, was the most helpful to the redesign.
In closing, Matt and Paul allowed me to share an example of the new offer letter below that Penn has begun to provide to its students this past year. I also include an example of an offer letter prior to the revisions (2015).
* The numbers used below are not representative of any particular student’s financial aid package *
University of Pennsylvania Financial Aid Notice (2018-2019)
2015 Financial Aid Notice Design
As compared to Penn’s older offer letter, the new offer letter provides explicit breakdowns of a student’s cost of attendance, financial aid resources, net cost, and expected family contribution. The new offer letter also provides definitions of financial aid terminology included in the letter, which makes the letter overall easier to understand and interpret for students and families. I believe that the new offer letter is more beneficial to helping students better understand their offer letters, delineate their true cost of attendance, and make financially-backed educational decisions.
Sabrina Aponte will earn a Master of Science in Social Policy at the University of Pennsylvania School of Social Policy in May 2019 and hopes to work in urban and youth policy analysis and research.