As millions of high school students across the country weigh their college acceptances, deceptive financial aid letters are making the process all the more complicated.
Some schools are overstating how much money prospective students will actually be held accountable for by including student loans in their accounting of financial aid, Bloomberg News reports. For example, Drexel University sent one accepted student a letter with "offered financial aid" that consisted mostly of student loans including a large amount that was expected to be borrowed from private lenders.
Student loans are quite different from financial aid. Whereas grants and scholarships are given to students to subsidize the cost of college, loans are required to be paid back with interest.
The Education Department is attempting to make this process clearer and aims to release a model financial aid letter by September, but only Congress can mandate that colleges follow suit, according to Justin Hamilton, an Education Department spokesman interviewed by Bloomberg. Hamilton told Bloomberg that he hopes colleges will view it as in their own best interest to write their financial aid letters in a "common form."
Total outstanding student debt in the U.S. now exceeds $1 trillion, and the Consumer Financial Protection Bureau has dubbed student loan debt "too big to fail." The average student loan borrower owes $12,800 in student loans, according to the Federal Reserve Bank of New York.The Consumer Financial Protection Bureau launched the College Cost Comparison Tool earlier this month in order to make it easier for families to compare college costs.