<p>The problem isn’t the loans and it isn’t the institutions. The problem is the students and parents who REFUSE to read the award packets and REFUSE to follow the advise of honest and caring Financial Aid Adminstrators.</p>
<p>Federal regulations require that schools which offer Stafford Loans post those loan eligibilities on the award letter. Schools list them as LOANS. The Entrance Counseling, which is federaly required prior to any student being able to take out the LOAN, provides detailed information on repayment, estimates on repayment, default aversion, forbearance information, etc. Schools are FORBIDDEN from disbursing student loans unless the Entrance Counseling has been completed. The schools cannot be held accountable because the students REFUSE to read the information thoroughly.</p>
<p>When the student graduates, or prematurely withdraws from school, they are required to complete exit counseling that goes over the same information about repayment, forbearance, deferrment, default aversion, etc. Again, it is not the school or the system’s fault if the students are not reading the information thoroughly. </p>
<p>With my students, our award packages clearly explain the free funding and the loan funding. We clearly indicate how much each student needs to meet actual cost (not just the exaggerated COA). We even make them single out the loan money they are requesting…not just putting check marks by each line but an actual area on the award what asks them to list the loan amount they are requesting. I cannot tell you how many students and parents continuously take out the maximum loan amounts allowed under federal regualtions when they do not need the extra money.</p>
<p>We also have a policy in place where every student requesting a private loan is contacted to ensure they understand the ramifications. We point out the free aid and Stafford Loans they have already received and that this extra funding is not necessary. I had one student…with a 0 EFC. He was receiving FULL Pell and took all $12,500 of his Stafford Loans. Between the Pell and the loans, he had at least $7,000 more than he needed for actual cost. Within days of him receiving the first of his excess funds, he submitted a request for an additioal $10,000 in private loan funding. When I personally spoke to him and thoroughly explained what this would mean, he was dumbfounded. When I told him about the higher interest rates and extremely large loan payments he would be making, he sighed and said…oh well. When I explained I would send him an email detailing the information, and wanted him to “really think hard about this” he demanded I put him through to my boss. He told my boss I was being a “B” and demanded we process his $10k. The following year…same situation. Two years later, when he gets his exit counseling information and realizes he owes $25,000 in Stafford Loans and $20,000 in private loans, he went ballistic. Wonder why?? Especially since he only needed about $16,000 in Pell and loans combined to cover 100% of his cost. Its now 8 months later…he’s been in repayment for 2 months and is already listed as at risk for default by his lender. </p>
<p>This is only one of several hundred each year that I process who DEMAND the maximum allowed by the federal government. Add in my graduate students, who only need an estimated $20,000 for their entire MBA program or $12,000 for the entire MED program who demand the full $20,500 each year in loans. Some who have 100% reimbursement even whine and complain when their award package doens’t include the full $20,500 (because between the rembursement and the award, their full COA is covered).</p>
<p>Remember, they may be 18-22 but they are ADULTS. It’s time everyone starts holding them accountable for their own actions…and reading their financial aid paperwork is THEIR responsibility. Financial Aid Administrators can only do so much to educate the students…after that, it is THEIR responsibility. Maybe more parents can begin the harsh discussion before HS graduation…so they realize that they MUST read everything they get from the Financial Aid Office.</p>