@LaContenta,
Every year I was “offered” loans.
Every year, my children were offered loans.
No one forces you to take them.
Some people don’t have the money or didn’t save the money, but it’s available.
It’s an offer to borrow money IF you need it.
No one forces you to take the loans. They are there if you choose to accept them.
If you are bummed about not receiving a full ride, then you need to understand that the schools just don’t have those kinds of funds to offer full rides anymore. Students tend to fund their educations via the Bank of Mom and Dad.
Plus, there is something about investing in your own education. If you didn’t save any cash for your college expenses, you can’t expect anyone else to do it for you.
You are under no obligation to accept the packages presented to you.
Do, what you like, and, as your moniker indicates, continue to be contented.
As many here have already said, loans are financial aid. You may not like it, but it is true. Many higher SES families may not understand it, but it is true.
Look at it this way. America is almost unique in the world for having a federal agency that allows people to buy houses without a substantial downpayment. Without this program, many families that own (are buying) their homes would not have been able to qualify for the mortgage. That is an undisputed aid in homebuying. The ability to qualify for that low-downpayment mortgage aids someone to becoming a homeowner.
Loans are very much aid, for many purchases. The fact that it has to be paid back does not disqualify a loan from being aid.
What you want to say is “loans are not scholarships and grants.” That is true.
That’s what I’ve been saying all along. Loans are not scholarships and grants, and it is deceptive to market them with the same name – “financial aid package” – as loans and grants.
@EconPop, absolutely agree!
My father was in the service, and he never finished high school. At that time, he worked menial jobs with poor pay. He had a car that broke down a lot and he didn’t qualify for car loans.
When I was offered the loan for my school, my parents did not want me to take it, fearing that the debt would swallow me in the future. I didn’t have a choice, but was grateful for the loan.
I had Work Study, but that aid didn’t come immediately; it came as I worked. With work-study, at my university, we were prioritized for the on-campus jobs so I appreciated that convenience.
It’s a LOAN. You don’t even have to take the full loan. I think I took half of the loan.
If you can’t afford the school, don’t take the loan and go somewhere else.
Complaining about the “label” doesn’t help those who need the loan to get over the hump of expenses.
Asked and answered … loans aid…i.e. help or assist…students in affording college costs because approximately 99% of students can’t borrow money on their own.
One way some loans are ‘free aid’ is that some of the loans, for some of the students, are subsidized, where the government is paying the interest while the student is still in school. That is real money, a real benefit.
Currently, student loans are not accruing interest. That’s real money to the student too. Aid. A benefit.
Many schools include ALL types of aid under the financial aid category on the website. For both of my kids with the acceptance letter there was a ‘financial aid’ statement which was really a list of ways we could pay for college. On the page were federal grants, school grants, state grants, department scholarships, athletic scholarships and the loans that were being offered. The loans being offered included loans to the student (subsidized and unsubsidized) and parent plus loans that I could accept if I wanted or needed to. My choice. They weren’t disguised as anything but loans, but they were offered through the financial aid office.
We accepted what we wanted, declined the rest, all through the financial aid office. On the financial aid form. What department do you want to handle the loans?
Loans are a type of aid, but to group them with “free money” aid is taking advantage of people’s hopes. For example, a student receives a “financial aid award letter” which will include loans. Obviously, it’s not the loan portion that is awarded. The grants and scholarships, if any, are the things being “awarded.” However, grouping them all together is another way one can be mislead.
LaContenta- I get your point. Truly, I do. But people have a responsibility to read the documentation that comes with any sort of transaction that involves money. Do you buy an airline ticket and not understand that flights get cancelled due to hurricanes? (if not, you should). Do you buy a car and not understand that SOME drivers get 30 miles to the gallon, but if you are hauling a trailer loaded down with cement blocks you will get fewer miles? Do you buy a cellphone without reading the service contract that comes with it (i.e. do you understand that acquiring the phone is step one, but paying for a service is step two?)
People need to take a modicum of responsibility for their own financial health, and part of that is reading comprehension. No bank disperses a loan without a mountain of forms to read and sign. Read, ask questions.
This is not taking advantage of people’s “hopes”. This is basic financial literacy. Don’t sign unless you understand. And don’t buy an airplane ticket if you think it’s a rock solid guarantee that your flight is going to take off. No, you cannot sue the airline if your flight gets cancelled due to bad weather.
I agree students need to take responsibility like adults should. However, I also believe schools should stop marketing loans as awards. It is not just the student that is responsible here. The school is an educational institution, and we don’t like thinking of it as a business that needs to fill seats to survive. My sense is that schools are happy to “award” things if it means they can attract more students, and let the student figure out if it means the “award” will eventually crush the student with debt.
The loan IS awarded and does have a financial benefit to the student. As I said, it may have the interest subsidized and that can only be done through filing FAFSA (with the second A being for Aid) and review by the financial aid office of the school. Loans are considered financial aid, administered by the financial aid office at the school. If you want to rename that department, you need to start a campaign. After many, many years of calling it the Expected Family Contribution (EFC), a name everyone considered misleading, they are changing it. If you think calling a loan ‘financial aid’ is misleading, campaign to have it changed. I’m not confused but if you are, campaign to have it changed.
Maybe you should suggest they rename the letter “Grants, Loans, Scholarships”, and change the department to “Student Grants and Loans” but it won’t change the fact that the school will bill you $xxx and expect you to pay it with whatever funds you want – grants, loans or scholarships, or writing them a check.
Most educational loans are subsdized. And so is federal work study. They may not be the most desirable forms of financial aid, but they are financial aid. There’s always a cost to borrow money. For subsidized loans, that cost is reduced by the amount of the subsidy.
That said two years ago when our son received his financial aid award letters, I was surprised to see how differently private and public schools presented the aid.
Private schools bundled need-based discount, loans and work studies together as if it were the same thing and highlighted the “price” in bold after all those elements were applied.
Public schools on the other had very well delimited sections explaining the various elements. And the “price” highlighted was the price before optional loans, etc.
I felt that the financial aid award letters from the private schools were misleading.
Yes, I was going to say something like this. Not sure if it was just privates, but when I did many NPCs there would be a chart or graph showing “Your Cost” as being the amount after the $5500 loan. So I get what OP is saying. “My Cost” is that number PLUS a loan.
My DD would definitely only pay attention to that bottom line. I don’t know how else it should be presented, maybe as a subtotal, then proposed loan, then cost after loan.
I guess it’s all in the wording. It’s financial aid to the extent that most young college students wouldn’t be able to get those kinds of loans otherwise. It’s the same concept with purchasing a house. It would take a lifetime to save $300,000 and your kids would be grown-up, defeating the purpose of the house purchase anyway. The solution is a home loan. Yes, it costs more in the long term, but the house appreciates in value. The mortgage is a form of “financial aid” and it costs in the long run, but the aid makes it affordable as the value increases. I hope that wasn’t too confusing
The award letters we received from public schools were like that. There was a clear cost before loans (after grants/scholarships/stuff you do not have to pay back), and then a section explaining how to pay part of that true cost using optional loans, and then the leftover cost should the optional loans be taken. Those letters were clearly designed with the intent of being transparent.
Conversely the letters from the private schools, at least in my opinion, wanted people to only see the fake price, which was in order of 10K per year below the true price thanks to loans and work studies.
I feel that mandating a standardized way of reporting awards would make sense, like the way credit card companies are required to explain their fees and what it will cost in interests if only minimum payments are made.
I had one who went to a public school and one at a private school. I had no trouble figuring it out. I had no problem understanding the term ‘loan’. ‘Student debt aid’ would have thrown me.
The statement from the public school was much shorter as there weren’t nearly as many sources of aid on it - 2 scholarships from the school and the loans. The daughter at the private school had 9 sources of aid, including the loan. Really, if someone is giving me money, I’ll take the ‘complicated’ list of 9 sources.
