Helping Students Understand College Costs, Financial Aid, and Borrowing
Key Issue Overview
For many students and families, understanding what college will actually cost, how to pay for it, and what those options mean for whether and where to attend can be one of the most daunting parts of the postsecondary decision-making process. High sticker prices may discourage families who do not realize that their student is eligible for financial aid that would substantially lower their net price (e.g., what they will actually need to pay to attend). Financial aid information is often complex, and many students receive limited guidance to help them understand the full range of financing options and their implications. As a result, students may miss out on available aid, approach borrowing with fear or uncertainty, or make decisions without fully understanding the tradeoffs.
This section reviews interventions designed to help students and families better engage with college financing decisions. These include efforts to simplify and standardize financial aid offers, provide clearer information about student loans and repayment options, reframe the language used to describe borrowing, and personal finance education graduation requirements.
This collection of studies examines how interventions that provide financial education and accessible information about financial aid—as well as interventions that change the format and presentation of financial aid offers—influence students’ borrowing attitudes, borrowing behaviors, and college enrollment decisions. The interventions and policies studied include simplifying and standardizing financial aid award letters; providing clear information about federal student loans and repayment options; testing how the framing of borrowing options affects preferences; and implementing a high school personal finance graduation requirement.
Findings across the studies are mixed. Two studies evaluating the Financial Aid Shopping Sheet (Rosinger, 2017; 2018) found little evidence that simplifying and standardizing aid offers affected student borrowing or college enrollment decisions, although some subgroup effects were found in certain institutional contexts. In contrast, two studies aiming to reduce student loan aversion (Evans et al., 2018; Evans & Boatman, 2019) found that even small changes—such as a five-minute informational video or labeling a borrowing option as an “income share agreement” rather than a “loan”—can meaningfully reduce students’ student loan aversion and affect borrowing attitudes, particularly among students of color. A final study (Stoddard & Urban, 2020) found that adopting a state-level personal finance high school graduation requirement led to an increase in financial aid applications and federal student loan use and a decrease in private loan amounts.
Together, these findings suggest that while simplifying financial aid offers alone may not be enough to change enrollment or borrowing behavior, interventions that build financial literacy, improve knowledge of student loans and repayment options, or reframe how college borrowing is presented may better equip students to navigate college financing decisions.
Helping Students Interpret Financial Aid Offers
What the Studies Tested:
- The studies tested whether providing simplified and standardized financial aid information influences student enrollment and borrowing decisions. The intervention tested in both studies (Rosinger, 2017; 2018) is the federally created Financial Aid Shopping Sheet (now known as the College Financing Plan), a tool that presents financial aid awards in a standardized format. First introduced in 2012, the Shopping Sheet is a voluntary tool for colleges. It can be used by both institutions and students/families to support informed decision-making. The Shopping Sheet includes information about total cost of attendance (net grants), a clear distinction between grants and loans, and data about the college’s graduation and loan default rates relative to the national average. The theory behind the tool is that presenting financial aid information in a clear, standardized format will help students and families better understand their award letters, compare offers across colleges, and make more informed decisions about where to enroll and how much to borrow.
What the Studies Found:
- Overall, the studies found little evidence that adoption of the Shopping Sheet influenced college enrollment or borrowing outcomes. At the college level, adoption of the Shopping Sheet by community colleges (Rosinger, 2017) had no impact on the number of students enrolled, the proportion of students who borrowed federal student loans, or the average loan amount among borrowers. Similarly, at four-year colleges (Rosinger, 2018), there was no effect among the full sample on enrollment or average loan amounts. There was some evidence of a small (1 percentage point) decrease in the share of students taking out loans. At the four-year level, there was some evidence of small subgroup effects on borrowing rates and amount borrowed at colleges with lower graduation rates, higher percentages of Pell Grant recipients, higher enrollment of racially minoritized students, and higher student loan default rates. At the student level (Rosinger, 2018), admitted students who received the Shopping Sheet alongside their financial aid offer had no differences in enrollment or borrowing behavior than students who did not receive the Shopping Sheet.
Click the dropdowns below to read summaries of each study included in the overall synthesis. Unless noted otherwise, all reported effects are statistically significant at the p<.05 level. Studies are linked (see author name and publication date). When available, we link an open access version of the study. Explore our methodology
Study: Federal Policy Efforts to Simplify College-Going: An Intervention in Community College Enrollment and Borrowing (Rosinger, 2017)
Intervention: This study compared outcomes for community colleges that adopted the Shopping Sheet in its first year and community colleges that did not adopt the shopping sheet.
Context:
- The sample included 625 community colleges across the country. The study evaluated the impact on colleges of adopting the shopping sheet when it was first introduced in 2013 and measures outcomes through 2014.
Research Design: Difference-in-Differences
Findings:
- Community college-level adoption of the Shopping Sheet had no impact on student enrollment, the share of students borrowing federal loans, or the average loan amount among borrowers.
Subgroup Findings:
- No statistically significant effects were found when impacts were examined separately by colleges’ graduation rates or when focusing only on colleges with high loan default rates.
Study: Can Simplifying Financial Aid Offers Impact College Enrollment and Borrowing? Experimental and Quasi-Experimental Evidence (Rosinger, 2018)
This published article included 2 separate studies. The first examined college-level impacts for four-year colleges that adopted the Shopping Sheet. The second measured the student-level impacts for admitted students from one regional comprehensive public four-year university that received the Shopping Sheet with their financial aid offers. Here we summarize findings from the first study. See entry below for a description of the second study.
Intervention: This study compared outcomes for four-year colleges that adopted the Shopping Sheet in its first or second year and four-year colleges that did not adopt the Shopping Sheet in its first two years.
Context:
- The sample included 1,731 four-year colleges across the country. The study evaluated the impact on colleges of adopting the shopping sheet within the first two years after it was introduced in 2013 and measured outcomes in the year following adoption (2013-14 and 2014-15 academic years).
- The sample includes both public and private colleges, although the majority of adopting colleges were public.
Research Design: Difference-in-Differences
Findings: At four-year colleges, adoption of the Shopping Sheet led to
- Enrollment: No effects on number of students enrolled.
- Share of Students Taking Out Loans: Some evidence of a 1 percentage point decrease in the percent of students taking out loans (from a sample average of 62%).
- Average Loan Amount: No effect on the average loan amount among borrowers.
Subgroup Findings: When testing for subgroups effects by college characteristics (graduation rate, loan default rate, high Pell, high racially minoritized student enrollment, high selectivity)…
- Enrollment: No subgroup effects on number of students enrolled
- Share of Students Taking Out Loans:
- Some evidence of a 2-3 percentage point decrease at colleges with low graduation rates (results vary by model).
- Some evidence of a 2-3 percentage point decrease at colleges with an above average enrollment of students receiving a Pell grant (results vary by model).
- Some evidence of a 1 percentage point decrease at colleges with high loan default rates (results vary by model).
- Average Loan Amount:
- Some evidence of an approximately $200 decrease in average loan amount (from a sample average of approximately $6,200) for students at colleges with an above average enrollment of students receiving a Pell grant or above average enrollment of racially minoritized students.
Study: Can Simplifying Financial Aid Offers Impact College Enrollment and Borrowing? Experimental and Quasi-Experimental Evidence (Rosinger, 2018)
This published article included 2 separate studies. The first examined college-level impacts for four-year colleges that adopted the Shopping Sheet. The second measured the student-level impacts for admitted students from one regional comprehensive public four-year university that received the Shopping Sheet with their financial aid offers. Here we summarize findings from the second study. See entry above for a description of the first study.
Addressing Student Loan Aversion
What the Studies Tested:
- The studies tested whether targeted information and framing interventions could reduce students’ aversion to borrowing for college. Both interventions aimed to shift attitudes toward student loans by either providing information about student loans and benefits of borrowing (Evans & Boatman, 2019) or altering how borrowing options are labeled and framed (Evans et al., 2018). One study used a short informational video to provide information about federal student loans and repayment (Evans & Boatman, 2019), while the other examined whether students were more likely to choose a borrowing option when it was labeled as an “income share agreement” rather than a “loan” (Evans et al., 2018). Together, the studies explored how informational and psychological factors contribute to loan aversion among high school students.
What the Studies Found:
- The studies found that both informational and framing-based interventions can influence students’ attitudes toward borrowing. The short, in-class video (Evans & Boatman, 2019) led to a 5-percentage point reduction in student loan aversion and increased knowledge of student loans. The study measuring labeling effects (Evans et al., 2018) found that students were 11-12 percentage points more likely to prefer a borrowing option when it was labeled as an income share agreement rather than a loan, even though the two options were financially equivalent. This labeling effect was especially pronounced among Black and Hispanic students, suggesting that terminology alone may shape students' willingness to consider borrowing for college.
Click the dropdowns below to read summaries of each study included in the overall synthesis. Unless noted otherwise, all reported effects are statistically significant at the p<.05 level. Studies are linked (see author name and publication date). When available, we link an open access version of the study. Explore our methodology
Study: Understanding How Information Affects Loan Aversion: A Randomized Control Trial of Providing Federal Loan Information to High School Seniors (Evans & Boatman, 2019)
Intervention: This study tested whether a brief in-class video could reduce high school seniors’ aversion towards college loans. The five-minute video included information about federal student loans and highlighted the advantages of income-based repayment. Students’ borrowing attitudes and perceptions were measured through a survey and compared between those in the treatment group who had watched the loan information video and those in the control group who watched a five-minute video on how to read a financial aid award letter.
Context: The analytic sample for this study included 648 students from six high schools in Jefferson County Public Schools in Louisville, Kentucky. The intervention was administered to seniors in January 2016.
- The sample was racially and economically diverse, with over a third identifying as non-White and almost half eligible for free-or reduced-price lunch.
Research Design: Randomized Controlled Trial
Findings:
- Knowledge:
- Both the treatment and control videos improved student knowledge in their corresponding areas: treatment group students who watched the loan information video had increased understanding of student loans, while control group students who watched the financial aid video had increased knowledge of financial aid.
- Loan Aversion:
- The treatment video caused a 5-percentage point decrease in the “loan aversion for education” survey measure (corresponding to a 30% reduction from the control group baseline).
- The treatment video also led to a marginally significant decrease in the “general loan aversion” scale, though the result is only significant at the p<0.1 level.
- There is suggestive evidence that the treatment video may have increased college enrollment by 3-4 percentage points, with the effect driven by enrollment at four-year colleges.
Study:Framing and Labeling Effects in Preferences for Borrowing for College: An Experimental Analysis (Evans et al., 2018)
An identical version of this paper was published in the Research in Higher Education journal, but is behind a paywall.
Intervention: How does labeling a college financing option as a loan versus an income share agreement affect high school seniors’ borrowing preferences? In this study, the authors surveyed students about their preferences for two financially equivalent college financing options. Some students were shown only descriptions of the options, while others saw the same descriptions labeled as either a “loan” or an “income share agreement.” The study tested whether these labels affected students’ preferences.
Context:
- The sample for this study was 1,657 high school seniors from eight public high schools in Texas, Kentucky, Tennessee, and Massachusetts. The intervention was tested during the spring semester of the 2014-15 school year.
- All participating high schools enrolled 500 or more students and had at least 10% of their student population represented in each of the following subgroups: White, Black, Hispanic, and low-income.
- The authors also tested this intervention on community college students and adults, though this summary focuses solely on the results for high school seniors.
- The study team administered surveys to all seniors present on the survey day, achieving a response rate above 80% at each school. The outcome data for the study came from a hypothetical question on the survey about which of the two financially equivalent options they would prefer in order to finance a $10,000 one-year education program.
Research Design: Randomized Controlled Trial
Findings:
- The authors found a large labeling effect: High school seniors were presented the options labeled as a “loan” and an “income share agreement” were 11-12 percentage points more likely to choose the “income share agreement” option compared to students who saw only unlabeled descriptions.
- The authors also examined framing effects using a non-experimental design by analyzing responses from students in the control group. When presented with only descriptions, respondents preferred the loan framing to the income share agreement framing.
Subgroup Findings:
- The labeling effect was stronger among Black and Hispanic students, with both groups approximately 20 percentage points more likely to prefer the income share agreement label compared to students in the description only control group.
Personal Finance Course Graduation Requirement
What the Study Tested:
- The single study in this category (Stoddard & Urban, 2020) tested whether implementing a statewide personal finance high school graduation requirement influences the financial aid and borrowing behaviors of students who enroll in a four-year college. Using data from 1999 to 2011, the study compared students who graduated high school in states with a personal finance graduation requirement—whether delivered as a standalone class or embedded within an existing course—to students from states without such a requirement.
What the Study Found:
- Graduating from high school in a state with a personal finance graduation requirement increased students’ likelihood of applying for financial aid and taking out federal Stafford loans and slightly decreased their private loan amounts and likelihood of carrying a credit card balance. There were no effects on likelihood of receiving grants/scholarships or taking out a private loan; the amount of federal loans borrowed; or the likelihood of working while in college. Subgroup analyses found some variation in outcomes across income- and race/ethnicity-based subgroups.
Click the dropdowns below to read summaries of each study included in the overall synthesis. Unless noted otherwise, all reported effects are statistically significant at the p<.05 level. Studies are linked (see author name and publication date). When available, we link an open access version of the study. Explore our methodology
Study: The Effects of Financial Education on Student Financial Aid Choices (Stoddard & Urban, 2020)
Intervention: Personal finance graduation requirement. This study estimated the effect of requiring a personal finance course during high school by comparing the financial aid decisions of students who graduated from states with a personal finance graduation requirement to those who graduated from a state without such requirement.
Context:
- The study sample consists of college freshmen who attended a not-for-profit four-year college immediately after graduating high school. The study compares the financial aid decisions of students who graduated from a high school in a state that had a personal finance graduation requirement to students who graduated from a high school without a personal finance graduation requirement and uses data from between 1999 and 2011.
- States differ substantially in their personal finance graduation requirement policies. In some states, students most complete a stand-alone personal finance course, while in others, the content is embedded within existing courses such as economics or math. For the purposes of the study, “treatment states” were defined as those with a documented graduation requirement mandating that all students complete a personal finance course; states that only required schools to offer a personal finance elective were not included in this group. The paper provides a detailed overview of the variation in these policies and includes both a map and table showing how each state was classified.
Research Design: Difference-in-Differences
Findings: Graduating from a state with a personal finance graduation requirement led to…
- Applying for Aid:
- 3 percentage points increase in likelihood of applying for aid
- Types of Loan / Aid:
- 5.3 percentage points increase in likelihood of taking out a Stafford (federal) loan.
- No statistically significant difference in the likelihood of taking out a private loan or in receiving grant/scholarship aid.
- Amount of Loan:
- $152 decrease in average private loan amount.
- No statistically significant difference in average amount of Stafford (federal) subsidized or unsubsidized loan.
- Other Financial Behaviors:
- 2.1 percentage points decrease in likelihood of carrying credit card balance (based on survey measure).
- No statistically significant difference in likelihood of working while in college (self-reported).
Subgroup Findings: Graduating from a high school with a personal finance graduation requirement led to the following subgroup effects. Reported effects are those that are statistically different from zero and from the full-sample effects listed above:
- Family Income:
- Students from higher-income families experienced a $272 decrease in average private loan amount.
- Students from lower-income families had a 4.6 percentage point decrease in likelihood of working while enrolled.
- Race/Ethnicity:
- White students experienced a $231 decrease in average private loan amount
- Black students experienced a $261 increase in average subsidized Stafford (federal) loan amount and a $452 increase in average unsubsidized Stafford (federal) loan amount.
- Hispanic students experienced a $302 increase in average subsidized Stafford (federal) loan amount.
- Embedding Financial Literacy into High School Curriculum: Financial literacy instruction can prepare students to make informed college financing decisions. Does your district offer a required personal finance courses or integrate financial literacy concepts into classes taken by all students? Does the curriculum cover college-specific topics, such as comparing net price and sticker price, understanding types and availability of financial aid, and evaluating student loan options?
- There are free online resources available, including worksheets and interactive online games, that can be used to teach financial literacy topics with minimal additional staff capacity needed.
- Supporting Counselors and Staff to Deliver Accurate Financial Guidance
College financing regulations, requirements, and opportunities change frequently and can be confusing to navigate. Are your counselors and other relevant staff receiving updated training on FAFSA changes, federal loan policies, and state aid programs? Could you partner with a local college’s financial aid office or state higher education agency to provide professional development or answer more complex questions? - Ensuring Community Aligned-Messaging: Students and families interpret financial information and opportunities through the lens of their identities and lived experiences. Is your financial aid messaging, programming, and outreach grounded in the values and cultural norms of the community?
- Addressing Student Loan Aversion by Providing Information: Many students are hesitant to borrow money for college, even when doing so could make college possible. Providing clear information and strategic framing may help reduce this fear. Are students and families receiving accurate, accessible information about federal student loans, their potential benefits, and repayment options such as income-driven repayment? Could your district offer brief, in-class videos or lessons that provide this information and reframe borrowing as a manageable investment in the future?
- Another valuable piece of information is helping students understand the potential return on investment from different programs and institutions, which has implications for their ability to afford student loan repayment. The Postsecondary Value Commission’s Equitable Value Explorer is a tool designed to help make this information accessible by showing institutions’ median returns to credentials relative to institutional net price and median wages for high school graduates.
- Using Language and Framing that Reduces Fear of Borrowing: How college financing options are labeled matter. One study found that presenting borrowing as an “income share agreement” rather than a “loan” helped reduce loan aversion. Have you reviewed materials for language that may inadvertently discourage borrowing? Is the language and framing used in your financial aid messaging approachable and supportive of informed decision-making?
- Helping Families Interpret Financial Aid Offers: Even with federal efforts to standardize how college present financial aid awards, families may still find it challenging to compare multiple awards and understand the nuances of different types of aid. Could your district offer workshops or one-on-one support to help families make sense of and compare multiple award packages? Consider partnering with a local college’s financial aid office to bring in staff who can offer expert guidance and answer questions at your school.
- A helpful resource to share with families is this guide to deciphering financial aid offers, which provides step-by-step guidance in student-friendly language. UAspire also offers free webinars to help students and families navigate key milestones, such as interpreting aid packages in the spring or preparing for financial aid steps over the summer, aligned with the financial aid timeline.