A352

An Act concerning student financial aid and supplementing P.L.2009, c.197 (C.18A:3B-43 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares that:

a. New Jersey has a strong ongoing commitment to improving affordability of higher education and ensuring greater transparency in student financial aid offers within the State.

b. To make an informed financial decision about a student’s education, a student is required to be aware of the total cost of attendance, the direct and indirect costs, and the difference between grant aid and other financing options.

c. Vague student financial aid offers make it difficult for students and their families to compare offers and make an informed decision on which institution of higher education to attend.

d. First-generation, low-income, and minority students are disproportionately affected by vague student financial aid offers.

e. According to the report, “Financial Aid Offers: Action Needed to Improve Information on College Costs and Student Aid,” issued by the United States Government Accountability Office (GAO Report) in November 2022, student financial aid offers from institutions of higher education lack the transparency necessary for a student to make an informed decision on which institution to attend. The GAO Report found:

(1) 91 percent of institutions of higher education do not include or understate the net price of attendance in their aid offers;

(2) 55 percent of institutions of higher education do not itemize key direct and indirect costs in their student financial aid offers; and

(3) 24 percent of institutions of higher education do not provide a student with the total cost of attendance.

f. The GAO Report identified 10 best practices that institutions of higher education are recommended to follow in order to provide clear and standard information in student financial aid offers.

g. Through an analysis of financial aid offers from a nationally representative sample of institutions of higher education, the GAO Report found that 63 percent of the institutions studied followed five or fewer of the best practices and none of the institutions followed all 10 of the best practices.

h. The Legislature recognizes the GAO Report’s recommendation that the 10 best practices are necessary to improve the clarity of student financial aid offers and provide students with the key information needed to make informed financial aid decisions.

i. In the interest of ensuring students are equipped with the necessary information, it is altogether fitting and proper for the Legislature to require institutions of higher education comply with the 10 best practices within the GAO Report.

2. a. The Secretary of Higher Education shall review the best practices for providing clear and standard information in student financial aid offers, including those practices contained in the “Financial Aid Offers: Action Needed to Improve Information on College Costs and Student Aid” report of the United States Government Accountability Office, and issue guidelines for use by an institution of higher education or a proprietary institution licensed to offer academic degrees that conforms with the best practices. The guidelines developed by the secretary shall, at a minimum, ensure students receive information in student financial aid offers from institutions that:

(1) clearly identifies and differentiates between direct costs and indirect costs of attendance at the institution;

(2) provides the total cost of attendance and estimates the net price of attendance;

(3) establishes standardized terms and definitions and identifies differences for key information on costs, grant aid, work-study, and other financing options;

(4) explains a student’s right to accept or decline aid in the offer;

(5) requires that all student financial aid offers include the contact information for the representative of the institution who the student can contact for additional assistance; and

(6) prohibits the use of the term “award” in student financial aid offers.

b. The guidelines shall comply with the most recent version of the United States Department of Education’s “College Financing Plan” and the provisions of the “New Jersey College Student and Parent Consumer Information Act,” P.L.2009, c.197 (C.18A:3B-43 et seq.), and section 2 of P.L.2019, c.201 (C.18A:3B-6b).

c. Notwithstanding subsections a. and b. of this section, the secretary shall ensure the information required to be provided in student financial aid offers is not duplicative of or in conflict with federal requirements regarding student financial aid offers.

3. This act shall take effect immediately.

STATEMENT

This bill requires the Secretary of Higher Education to issue guidelines incorporating the best practices within the United States Government Accountability Office’s report, “Financial Aid Offers: Action Needed to Improve Information on College Costs and Student Aid” (GAO Report) for use by institutions of higher education and proprietary institutions licensed to offer academic degrees.

The purpose of this bill is to address the transparency issues identified in the GAO Report. The GAO Report found: 1) 91 percent of institutions of higher education do not include the net price of attendance in their aid offers; 2) 55 percent of institutions do not itemize key direct and indirect costs in their student financial aid offers; and 3) 24 percent of institutions do not provide a student with the total cost of attendance. The GAO Report further identified 10 best practices for transparency in student financial aid offers, but stated that nearly two-thirds of institutions of higher education studied in the report followed half or fewer and none followed all 10.

Under the bill, the guidelines to be established by the secretary are required to ensure students receive information in student financial aid offers from institutions that: 1) identifies the direct and indirect costs of attendance; 2) provides the total and net costs of attendance; 3) establishes standardized terms for student financial aid offers; 4) explains a student’s right to accept or decline an offer; 5) requires the contact information for the representative of the institution who the student can contact for additional assistance related to the offer; and 6) prohibits using the term “award” in student financial aid offers. The guidelines developed under the bill are also required to comply with the provisions of existing State law concerning financial aid transparency and the United States Department of Education’s “College Financing Plan.” The secretary is required to ensure the guidelines are not duplicative of federal requirements.

It is the intent of this bill that by directing the secretary to create guidelines that incorporate the 10 best practices identified in the GAO Report, New Jersey’s institutions of higher education will provide its students with the key information necessary to make informed decisions.