When the College Cost Transparency Initiative (CCTI) began in 2022, leaders of 10 higher education institutions formed the task force “to improve the clarity, accuracy, and understanding of student financial aid offers by producing a set of guiding principles and minimal standards to be used when communicating aid offers,” according to CCTI. CCTI aims to help educational institutions communicate with students and their families about college costs in an accurate and understandable manner. What began as small cohort of participating schools has rapidly gained momentum with hundreds of public and private schools presently involved as partner institutions.

In order to join CCTI, colleges’ financial aid letters must meet the Principles and Standards provided by CCTI. Through the use of “standardized, plain language,” among other requirements, every financial aid offer must include:

• An estimate of the total Cost of Attendance, including a breakdown of costs to be paid by the school and costs paid by others;
• The type and source of all financial aid separated into the following categories: grants and scholarships that do not require repayment, student loans and financing that must be repaid, and student employment or work;
• An estimated net price for the student (derived by subtracting grants and scholarships from the total Cost of Attendance);
• Information, either on the financial aid offer or by an easily identified and accessible weblink, explaining whether the financial aid is being offered once or on an ongoing basis, and if the aid is renewable, any requirements that must be met for renewal;
• Unambiguous labeling of any “loan” with the use of that word; and
• Commonly understood terms and definitions, using the CCTI glossary of terms.

As highlighted by this author in "Colleges Work to Make Financial Aid Award Letters Clearer", common concerns that CCTI stands to eliminate include describing a federal loan as an "award” that suggests no repayment is required, gross variances in the calculation of out-of-pocket across institutions, and financial aid offers that fail to explain what work-study means and how it differs from other types of aid. As certain commentators in this article explain, the purpose of CCTI is not to preempt legislation. Instead, voluntary, advance involvement in the initiative through CCTI may help to inform the regulatory process – a process that is already underway via proposed federal legislation that would require Title IV recipient institutions to use standardized terms, formatting, and cost components in financial aid-related communications.

Use of CCTI Principles and Standards also supports risk management under student borrower defense to repayment regulations. Under these regulations, borrowers may seek to have their student loans discharged if a school engaged in certain misconduct relating to the making of a federal loan or the provision of educational services. Included among the kinds of misconduct that qualify for borrower defense discharge are misrepresentations and omissions relating financial charges and taking out loans. To the extent that any such claim by borrowers could arise from financial aid communications they did not understand, institutions’ adherence to CCTI Principles and Standards should help colleges avoid such claims while also supporting students’ understanding of their financial obligations.