<p>So my junior son comes home with the "abc's of college planning" from school. Guidance handed it out. Of course minor misinformation is in the book, but what bothers me is the section about financial aid.</p>
<p>The book shows a Parent Plus Loan as part of a Financial Aid Award and then states that the student would have no unmet need.</p>
<p>Example:</p>
<p>COA - 23335
EFC - 1550
Need= 21785</p>
<p>Grant - 3340
Stafford 3500
Parent plus 14945</p>
<p>COA - 23335
EFC - 1550
FA Pkg- 21785</p>
<p>Unmet need - 0</p>
<p>Says "Our example indicates that the financial aid matches the students need, so the unmet need is 0"</p>
<p>I think this is wrong - I always thought that Parent Plus Loans should not be included as part of a Financial Aid Package, but I can't actually find that in writing anywhere. I know that it isn't included when determining FA packages in the common data set questions. But is it written say like on the Fafsa website or Parent Plus Website? If so, can someone pass on because I want to send an email to Guidance that when they have Junior Night, a new example or two should be shown to the parents.</p>
<p>Parent PLUS loans are often a part of the financial aid package, because they are a federal loan available to assist parents in paying for college costs. While many schools do not include them in the package, many do.</p>
<p>When it comes to “meeting need,” however, the PLUS is not a part of that equation. If it was, ALL colleges that participate in federal aid programs would be able to say that they meet 100% need. In addition, because PLUS loans depend on good credit, they are not guaranteed; therefore, they cannot be considered a sure thing.</p>
<p>The guidance counselor is misguided. To include the PLUS in the scenario you cite is irresponsible, IMO.</p>
<p>By the way, the example is outdated. In the 08-09 award year, the maximum loan allowed for freshmen was increased to $5500 (of which up to 3500 can be sub). In addition, this EFC would mean the student would get a Pell grant.</p>
<p>The example SHOULD be: COA=23335 EFC=1550 Need=21785</p>
<p>The package would be as follows in your example:
School grant=3340
Pell grant=4000
Subsidized Stafford=3500
Unsubsidized Stafford=2000</p>
<p>23335 COA-1550 EFC-3340 grant-4000 Pell-3500 Sub loan-2000 unsub loan=8945 gap</p>
<p>The family would be responsible for the $1550 EFC + the $8945 gap. Since many budgets have padding for personal expenses, etc. it may not actually cost the family that much. For example, a commuter school may have a budget for expenses that is quite a bit higher than a typical student living at home might actually need. If the student lives in a dorm, though, the budget might be pretty close to actual expenses.</p>
<p>NOTE: Just realized that “grant” of 3340 might not be a school grant - it’s probably the Pell grant for a 1550 EFC several years ago (outdated info again). In this case, the gap would really be 8945+3340!!</p>
<p>Here’s the thing … no one is expected to borrow $60k. The package is what it is; take it or leave it (I would leave this one!) But when it’s presented as if the PLUS “meets need,” families who don’t know what we know think all is well … and then BAM! Reality sinks in. I think info like the OP cites is a huge disservice to families.</p>
<p>It’s very dishonest to claim it “meets need” since EVERY college could give nothing and put a Big Ole Plus loan in to cover COA and say it met need. Few Pell families and other families can afford to repeatedly take out Plus loans.</p>
<p>It’s more honest to gap then to do this.</p>
<p>There have been families here that thought they HAD to do the Plus loans if put in the package.</p>
<p>One single mom here on CC thought she had to take them, so she took them out for child #1. child #1 had NO student loans in his package…the only loans were Plus loans. Then child #2 comes along and mom can no longer qualify for child #2’s Plus loans because the earlier Plus loans are still outstanding. Child #1 has no student loans, and child #2 is stuck with no way to pay for college because student loans won’t cover all. Crazy!!!</p>