Amy Laitinen, who heads the higher education programme at New America, a nonprofit, nonpartisan think tank based in Washington, D.C., testified that “schools define aid in different ways, leaving families to guess” whether they’re comparing grants with loans.

“Our analysis found 136 unique terms for the unsubsidised federal loan, including 24 that did not even use the word ‘loan,’ Laitinen said.

She said one of the most glaring examples involves a college that sent an award letter that told a family their out-of-pocket cost would be zero, but it failed to clearly label a $27,000 Parent Plus Loan as a loan – listing instead as “P-plus.”

Some witnesses called on Congress to require colleges to provide students with a standardised aid offer that clearly shows how much they’ll need to pay – much like the forms that American banks must provide to people before they take out a home loan.

“While banks must provide home mortgage borrowers with a standardised disclosure form listing key costs and figures, colleges are not required to give students a standardized aid offer,” lamented Preston Cooper, a senior fellow who focuses on the economics of higher education at the American Enterprise Institute, a nonprofit, nonpartisan public policy research organisation based in Washington, DC.

“Instead,” Cooper testified on Nov. 6 before the U.S. Senate Committee on Health, Education, Labor & Pensions, “colleges are free to present information on financial aid, student loans, and net prices in highly misleading ways.”

Other experts – reached by QS Insights outside of the scope of the hearings – offer similar takes.

Michael Itzkowitz, Founder and President of the HEA Group, a higher education policy and analysis organisation, said, “Right now, it's sort of the wild, wild west of how institutions present the true cost of obtaining a higher education.”

“We truly need consistent and transparent information upfront, so students know exactly how much their higher education will cost,” said Itzkowitz, who served as the Director of The College Scorecard, a federal database that provides certain cost and performance metrics on American colleges and universities.

Some of the most damning testimony came from Lee S. Wishing, III, Vice President for Student Recruitment and Chief Marketing Officer at Grove City College, a private, nonprofit college that serves about 2,200 undergraduates in a town about an hour’s drive from Pittsburgh, Pennsylvania.

Wishing described a “misleading tuition pricing practice” known as “unfunded discounting,” which he said represents the “best kept open secret in higher education finance.”

“It's just remarkable to see how the whole industry knows this is happening,” Wishing testified on Sept. 16 before the House subcommittee on higher education and workforce development. “Everybody knows but the students and the parents.”

Through the “scheme,” Wishing said universities without large endowments set their tuition prices well above their actual costs.

This is done to create a potentially inflated perception of value; to entice students with “scholarships” that make them feel valued; and finally, “and most importantly,” Wishing said, to get students to “unwittingly fund their classmates' scholarships.”

To illustrate how the scheme works, Wishing offered an example of a university that sets its tuition at a sticker price of $65,000, even though its actual cost to educate a student is only $35,000.

The institution could offer every student a $30,000 scholarship without losing any money, Wishing explained, but instead offers some students a smaller $20,000 scholarship, forcing the student to pay $10,000 more than the school’s breakeven cost.

“This extra $10,000 is then used to give a more desired student, perhaps one with a high SAT score or special talent, a larger scholarship, say $40,000,” Wishing explained. “Essentially, students who receive smaller scholarships are subsidising those who get larger ones.

“Yet, the scheme seeks to make the subsidisers feel good about their unwitting overpayment,” Wishing continued. “The goal: Nearly every student gets a trophy and feels happy.”

Mark Kantrowitz, a student financial aid expert and author of “How to Appeal for More College Financial Aid,” corroborated Wishing’s testimony.

“It's part of the high cost/high aid model, where providing a ‘merit’ scholarship is just marketing to convince the student to enroll, even though the net price is higher than they can really afford,” Kantrowitz told QS Insights.

“The only way to address this is to require clear information about the net price, so the families can compare real college costs on an apples-to-apples basis,” Kantrowitz said. “That way, families can discover that an in-state public college is often their least expensive option, even without financial aid.”

Congress has made prior efforts to get institutions of higher learning to provide a more accurate net price picture, but experts say those efforts have fallen short.

Since 2011, the Higher Education Act of 1965, the Great Society law that provides federal student aid to U.S. colleges and universities, has required institutions that receive federal aid to post a net price calculator on their websites. The idea was for students and their families to get an estimated net price based on their financial circumstances.

The problem, said Laura Perna, a University of Pennsylvania education professor who did a study of net price calculators, is that the net price calculators are not standardised. This in turn allows institutions to manipulate the data that the calculators spit out to students and their families.

Professor Perna found that some institutions were not clearly differentiating between grants and loans. And occasionally, the net price calculators were not working at all.

“Institutions have a responsibility to help students understand how they might pay the cost, but you've got to be honest about [how] a grant is a gift and a loan is something that will help you in the short term, but you have to pay it back with interest,” Professor Perna said.

Professor Perna told QS Insights that when she has her students look at colleges’ net price calculators to check if they’re working and, if so, are they straightforward, the same misleading information and variation her study found “still come up, no matter what institutions people pick.”

Diane Cheng, Vice President of Policy for the Institute for Higher Education Policy, a nonprofit research and policy organisation that focuses on access and success for students, said the US Department of Education’s Financial Value Transparency framework is a “major step forward.”

Among other things, the framework will provide new programme-level data on costs, debt and earnings.

“This framework will empower students to make more informed choices than ever before, drive institutional improvement efforts, and pave the way for evidence-based policy decisions,” she said. “Currently, students considering a given programme can’t find out how much they’ll need to cover in tuition, fees, books, supplies, and equipment for the full length of that programme or how those costs compare across different institutions.”

Cheng said such comprehensive programme cost data are not available from the College Scorecard, College Navigator, or other federal online tools meant to help students and families make more informed decisions about where to attend college.

“Colleges have already reported programme-level costs and other data for the Financial Value Transparency framework and we urge the Department of Education to release that information as soon as possible,” said Cheng.

She also expressed support for the bipartisan “Understanding the True Cost of College Act,” which she said would require all institutions to provide “transparent and comparable information about college costs and the financial aid options available to cover them.” The proposed law would also standardize financial aid offer forms and develop standard definitions for award letters.

“Students and families deserve clear, timely information that helps them make fully informed decisions about where to enrol and how to pay for college,” Cheng said.