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ED to Release Model Financial Aid Award Letter Tomorrow, Systems Implications Not Yet Resolved

The U.S. Department of Education held a conference call this afternoon to announce that it will release its model financial aid award letter (i.e., the financial aid "shopping sheet") tomorrow. As discussed on the Consumer Financial Protection Bureau (CFPB) website, "Know Before You Owe," the goal of this model letter, which ED and CFPB jointly developed, is to provide students and families with financial aid award information of a standard type and format across institutions so they can easily and effectively compare potential financial aid packages and choose the one that best fits their needs and circumstances. Adoption of the model format will be voluntary, although ED is encouraging all institutions to participate and those which commit to the Principles of Excellence for Educational Institutions Serving Service Members will have to adopt the model format as part of that commitment.

During the question-and-answer session, a research university representative asked about the status of ED's engagement with the software developers of financial aid systems on having the model format incorporated into their applications. The representative noted that many institutions rely on such systems to generate their financial aid award letters, implying that the rate of adoption of the "shopping sheet" would probably depend in part on when institutions would have the option of generating award letters in the model format using their existing systems. An ED representative indicated that the department is actively engaged in discussions with the relevant software developers about incorporating the model format into the developers' update cycles for their applications, and that those discussions would most likely accelerate now that the standard format will be available starting tomorrow. However, ED did not provide any information on firm commitments or timelines from any of the developers.

On the positive side, U.S. Secretary of Education Arne Duncan spoke about this issue at an Association of Public and Land-Grant Universities (APLU) event earlier this month and indicated that the department is asking institutions to commit to using the "shopping sheet" starting with awards to be made for the 2013-14 academic year. Thus, software developers and higher education institutions still have some time to respond. Colleges and universities also retain the right not to adopt the standard format, although the Secretary's remarks as well as the ED representatives' comments on today's call make it clear that institutions choosing not to use the model letter will face criticism for a "lack of transparency and accountability" in their financial aid processes.