<p>I have read a number of posts, as have many of us, of kids with low EFCs being offered packages with a lot of loans. Which brings me to the title of this thread. </p>
<p>I personally know a couple of kids whose parents are financially devastated by a number of events in the last several years and they, along with the kids owe upwards to $100K in loans. The schools have to know that a family with a low EFC is not going to be able to help the kids pay back the money. They also have to know what kind of money graduates can make in the first few years out of school. </p>
<p>Any thoughts? Any of you in the field have any comments? This looks to me like a disaster in the making.</p>
They say they don’t have the budget to meet the need of every student (unless they do).</p>
<p>
Debt is already a disaster for our country. Students coming out of school with hundreds of thousands of dollars in secured debt are going to struggle for a while.</p>
<p>If colleges don’t have the money, what is their other option? They could deny admission simply based on someone having too much determined need, but that would close off such families from using alternative ways to pay for college…grandparents, NCPs whose incomes weren’t considered, lots of equity in the primary residence, assets not counted for “auto 0” kids, etc. </p>
<p>There are kids with 0 EFCs that actually have funding sources for colleges. So, when they get their FA packages with big gaps or big loans in them, their “source” covers those gaps/loans.</p>
<p>Of course, not all kids have these other funding sources, but colleges don’t know who does and who doesn’t. so, many are “need blind”, accept students, provide whatever aid they can, and let the chips fall where they may. Colleges know that a good number of these high need and gapped students will decline, but colleges also know that some will come thru with alternate ways to pay. I guess that’s enough for them.</p>
<p>Most kids do not have these other funding sources. Very few do. I don’t know ANY that do. What happens is that the kids take the loans and defer then until they graduate and then can’t pay on them.</p>
<p>I know a half dozen kids in this situation. One that I know well has taken out $90K and has BA in Philosophy. Works at a coffee shop, fighting to get 30 hours a week. Mom who co-signed on some of the loans has nothing either, trying to get herself back on her feet after a divorce, and 5 more kids to support. We are takjubg $90K here. </p>
<p>Doesn’t anyone see the insanity in letting this happen?</p>
<p>The bottom line is that colleges can’t afford to give all students grants. So the choice is to offer loans or simply reject the student under some murky criteria of what amount of loans would be too much. (Can you imagine the howling here if students got rejection letters stating “you can’t come here because you shouldn’t take out the loans we’d have to offer you”?) To me the real question is how students and parents justify making stupid decisions. No one is forcing any student to attend a school with a financial aid package heavy on loans. People frequently take on car payments they shouldn’t, but no one tsks tsks the BMW dealership.</p>
<p>^^ It’s insanity for sure, but I don’t think the college has much culpability in the situation you mention. Don’t you think the kid and the family should have made better decisions to either (a) major in something that has more employment options or (b) go to an affordable college?</p>
<p>Most colleges are need blind. They can accept the student and let them find their own way to get the money to attend. By coming up with these packaged loans that are not dischargeable and have higher than market rates, looking as though this is the way it should be done, is really a low thing to do. I am seeing a lot of families and kids who are being wrecked with this. Ruined credit, hounded by bill collectors and only a foot out of college without a decent job yet, with family that couldn’t afford this on the line too. This is really not right.</p>
<p>Just out of curiosity, what is your solution? Here are the possibilities I see:</p>
<p>(1) The school doesn’t admit anyone who would have to take out large loans
(2) The school admits such students, and says “btw, we really don’t think you should take out large loans to come here so you should probably go somewhere else”
(3) The school admits such students, but cuts the student off if the student’s loans get too high
(4) The school only allows kids to major in fields that have good job prospects and pay rates
(5) The school meets full need for every student</p>
<p>Why blame the colleges? Do we blame the car companies when someone takes out a loan for a too expensive car? Shouldn’t college bound kids be capable of making a decision of how many loans to take out? The colleges are not blind-siding them. The students get the financial aid package before the acceptance deadline. A college education, like house ownership, is not a right.</p>
<p>Yes - it’s unfortunate to not be able to chose a school due to financial constraints, but every applicant should have a financial safety. One does not have the right to a $200,000 education. Aim slightly less selective to get merit aid, go to a state U, go to a community college for a year or two.</p>
<p>I think the college is providing an alternative for the student. It’s not a good alternative, but maybe to some students it’s better than not going at all. It’s incumbent upon the students and their parents to figure out their tolerance for debt and their ability to repay it. I do think that students should be given some information on loans, cost of repayment, dangers of debt, etc. before they take out student loans - kind of like the courses some first time homebuyers are required to take in certain programs in order to get a mortgage. I remember how easy it was to get a student loan when I was in school; fortunately I educated myself on student loans in general and the terms of my loan in particular, and knew that I would easily be able to afford to repay the loan in a reasonable time after graduation. I think the runaway cost of college is a much bigger problem than the amount of loans in a financial aid package.</p>
<p>The BMW dealership or a financial institution don’t give a big loan to someone who’s credit score and income don’t justify it. If they do they assume the risk when the buyer declares bankruptcy.</p>
<p>That’s the difference, families are offered loans they can’t handle on the theory future earnings will pay it off. Sometimes it works out, too often it doesn’t. Is there truth in lending on these loans showing how much and how long it will take to pay them off? There is no risk to the lender which allows them to offer these loans to unqualified applicants. If these loans weren’t offered, more would be forced to choose the more realistic options of commuting to less expensive schools or CC or attending part-time and working.</p>
<p>I’m tired of people taking out debt (college loans, mortgages, car loans) and then blaming the lender when they can’t re-pay. They took out the loan it is their responsibility to make sure they can pay it back. </p>
<p>There are alternatives like cheaper schools, majoring in something that actually makes your employable, gap year, etc. But people assume that everyone should go to college and that it is always a good investment.</p>
<p>I just finished talking to a young lady who borrowed $9500 this year (freshman, parent PLUS denied). She is living at home & using the money for tuition. Her EFC, even adjusted for loss of income, is too high for any grants. She wants to live in the dorm next year, which would more than double her costs. I can’t tell her what to do - she is free to take out a private loan if some lender approves her - but I STRONGLY advised against it. I showed her the gory details. She has some reasons for wanting to stay on campus, and I totally understand them, but facts are facts. I encouraged her to go to her CC for her general ed credits. She has a low GPA and doesn’t have any idea what major yet. She said her mother told her university or no school at all.</p>
<p>I suggested that she take the financial information I gave her to her parents. They need to have a very honest talk about the fact that this is what is available … and go from there.</p>
<p>I cannot tell her she can’t return to school simply because I feel that she’s borrowing too much already. I cannot turn her away from the dorm (although they will if she doesn’t have an alternative loan in place). I cannot make her parents understand that a CC is better than no school at all. I cannot make people understand that money doesn’t magically rain down from the sky if we wish hard enough.</p>
<p>I don’t mean to marginalize this situation, because it really did break my heart. BUT … people must ultimately take responsibility for their actions.</p>
<p>There are colleges at virtually every price point. In NYC, some one who is truly low income would most likely qualify for enough TAP and Pell that would make CUNY affordable even if they started at the community college.</p>
<p>If I had a $1 for everytime I have advised a student to no look down their nose at community college because it is a finanically feasible option for many families, they tell me that they *** deserve more*** because they have worked hard. The harshe reality is that college unlike K-12 education does not come free. If you cannot pay your tution and fees, you cannot attend.</p>
<p>At the end of the day, no one iis putting a gun to anyone’s head and telling them that you must borrow $100k to attend college where there are so many less expensive options available.</p>
<p>*Most kids do not have these other funding sources. Very few do. I don’t know ANY that do. *</p>
<p>Oh, I agree that most don’t have other funding sources. The problem is that some DO…so unless colleges (who can’t meet need) just unilaterally reject all those with low EFCs, colleges have no other choice but to accept those who have the stats, and hope a few can find a way to pay - not necessarily with large loans.</p>
<p>Colleges are not requiring anyone to take out large loans. The student can reject a bad offer.</p>
<p>The only schools that need to be ashamed of themselves are schools like NYU…high ranked schools with good endowments who haven’t figured out a way to make themselves affordable to low income people. Other schools don’t have the luxury of having a large endowment.</p>
<p>*What happens is that the kids take the loans and defer then until they graduate and then can’t pay on them.
*</p>
<p>No. Most times kids don’t go to those colleges because no one can/will co-sign their loans. </p>
<p>Are you suggesting that more/most schools become need-aware and start rejecting based on demonstrated ability to pay?</p>
<p>That’s been a topic of discussion on the parents forum for awhile. The letters might not say that, but the admissions policies at some schools do. Which can be a good thing. Is it better for a school to be need-blind in admissions, but not meet full need, or for a school to meet full need but not be need-blind in admissions? What does “meets full need” mean, anyway? Etc etc etc.</p>
<p>Part of the problem is that the colleges and universities do make it look possible:</p>
<p>$X in scholarship
$Y in federally determined loans
$Z in work-study
AND
$A-W in Parent Plus Loans</p>
<p>If they were only permitted to list the figures for their own institutional scholarships, and the federally determined money, then more families would see the gaps for what they are.<br>
Putting parent loans (and other alternate loans) right in the text of the award letter makes it look very much like this is what one is expected to do. </p>
<p>Leaving parent loan figures out of the award letter would mean that if a family did not have alternate resources of their own, but still wanted junior to attend that institution, they would (most likely) contact the financial aid office. This would allow a competent financial aid officer to advise them about parent loans, and to encourage them to do serious investigation before signing up for those loans. </p>
<p>The other thing we have to remember, is that only three short years ago, people had very different notions of what were acceptable levels of loans for students to take on for their educations, or their home purchase. Many of the recent college graduates who are now struggling with debt were advised to take on those student loans in the belief that the price of their education didn’t matter because they would certainly get a “good” job and be able to pay it all off.</p>