When high school senior Lily, a proud member of the Texas A&M class of 2027, received her financial aid offer for the fall, she was caught off guard. “I was offered loans and grants, and at first glance I knew I wanted to avoid the loans if possible and accept the grants first, but it was confusing to me,” The 18-year-old told me. “The process didn’t really explain the difference.” Navigating the financial aid process is a daunting task for young people like Lily. All too often, they struggle to decode vague and unstandardized financial aid offers in order to understand the costs of university. When you don’t speak college admissions, it can be overwhelming trying to figure out what “Direct Unsubsidized Stafford” means and whether it differs from a “Direct Subsidized Loan.”

Financial aid offers should clarify, not confuse. But all too often, they present an incomplete or misleading picture of a student’s financial aid status. If students are to make informed decisions about their education, then they must be able to understand their offer letters. The lack of standards in this area allows universities to present financial information however they want, even if it is misleading.

The Government Accountability Office reported in 2022 that roughly 29% of colleges bundle all types of aid together on their financial aid offers. These offers do not differentiate between loans, which must eventually be paid back, and scholarships and grants, which are gift money. Instead, they group all types of aid under a vague heading of “awards” and leave it up to students to discover that some of their package must be repaid with interest—or worse, is not guaranteed at all, as in the case of Parent PLUS loans. In fact, 31% of colleges include PLUS loans as part of their aid offers, and 21% do not include any information on how they differ from ordinary student loans. These letters fail to mention that parents with an adverse credit history will not qualify for PLUS. Unlike the strictly capped Federal Direct Unsubsidized loans, PLUS loans taken out by the parent are capped at the total Cost of Attendance. Thus, parents of college students may be able to borrow tens of thousands of dollars yearly without the ability to repay.

Given the potential for parents and students to accrue heavy debt and incur the stiff penalties for default (such as wage and Social Security garnishment), it is crucial that loans not be listed as financial aid awards. This practice only serves to inflate the perceived value of a student’s financial aid package. For unexperienced students and families, it is all too easy to conflate these “awards” with gift aid. As a result, students and parents are led to take on unnecessary debt and commit to schools that they cannot afford.

This frustrating system has been the status quo for far too long—it’s time for colleges to be held to transparency standards. In Texas, a potential solution involves updating the Texas Higher Education Coordinating Board’s criteria for state authorization to require a financial aid transparency format for student letters. One excellent formatting option is the Department of Education College Financing Plan, which follows best practices. If colleges would prefer to create their own templates, they may follow the guidelines set forth in the NASFAA (National Association of Student Financial Aid Administrators) code of conduct.

Transparency formats are key to protecting the thousands of students choosing a Texas college. Empowering families to make informed enrollment decisions will facilitate student flourishing in Texan higher education.