On another thread, the topic of student debt came up. As a necessary but often overlooked and underreported part of the student loan crisis, PPLs and the financial burden that they place on families must be acknowledged and considered by students’ families. More parents need to understand that regardless of verbal agreements, PPLs are the parents’ debt. Unfortunately, that message is often lost in the verbiage from financial aid offices, not at one particular college, but at many colleges and universities.
Parents, what has your experience been like with these loans? If you have recent or current college students and took out these loans, did you understand what you were agreeing to at the time that you signed the loan docs? If not, why? If yes, how did the financial aid officers communicate this information to you? What kind of disclosures did you receive?
TIA
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I doubt many parents talk to FA ‘officers’ about the loans. It’s all online and you fill out the forms and that’s it.
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Yes, the required “counseling” is on the FAFSA loan pages as modules to click through and acknowledge once the colleges send the total back for processing. There is nothing from the college.
There could be more info shared about the benefits of making payments or paying interest while they are in school.
And they could make it easier to decide how much to have in the loans - an amount bringing in the total COA with estimates or just covering tuition, room and board.
Some colleges have their own loans, I wonder if there is more information shared there.
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Before the “loan” issue came up in our house, each kid knew we had a college budget for them.
We gave them a ballpark number. If they chose a school, and the price was too costly, we discussed how they were planning on paying for it. They didn’t apply to schools that they knew were beyond their budgets.
We told them before 9th grade that we expected them to find summer jobs to start saving for their college expenses. They all had summer jobs after 9th grade.
We told each kid, “someone has to pay the bill”. We explained the terms:
Loans have to be repaid. Loans have to be repaid.
They didn’t like that they would be on the hook after leaving college.
Grants and Scholarships didn’t require repayment but may require top grades (Merit aid).
We were not willing to risk our retirement dollars to cover a large parent plus loan.
Remember that these are 18 year-old kids who don’t know that they will be making car payments, paying rents/mortgages and health insurance who should not be saddled for LIFE with large loan repayments just because they want to attend their “DREAM” school.
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I appreciate that, but I was more asking about how these loans are marketed to families and what counseling is available to families regarding these loans.
It sounds like it’s essentially pop up windows or websites via the FAFSA pages and at many schools, that’s it.
Hm. Glad I asked.
While schools benefit from having ways for accepted students to pay for college with PPL, the school gets no financial benefit so I think saying they ‘market’ the loans is incorrect. They are there if you want/need them. Students who take out Direct loans have to complete the online loan education programs before the loans are disbursed. Not a true ‘education’ IMO, but it is information.
Parents can do some research. Only one parent signs the loan documents so maybe there should be a discussion on which parent (grandparent, stepparent) should take the loan.
I call it marketing when my high school student, who is under the age of majority, gets candy-colored unsolicited emails from Sallie Mae that don’t use the words “loan”, “interest”, “term”, or “fees” just because he took a standardized exam and agreed to receive marketing emails from colleges.
If a family is getting information about these loans after filling out the FAFSA, I am just interested in learning more about how this information is disseminated to them before I have to enter the fray.
But Sallie Mae isn’t the financial aid officer from the college. You asked about the interaction the FA ‘officer’ (who might be a college kid processing forms) had with the parent. Sallie Mae is a private lender, and is marketing. You may also get postcards from SoFi, Discover, Bank of America about private loans directly to the student (some require a parent to co-sign). Those are different loans than Parent Plus loans.
For one of my kids, the Plus loan was on the NPC as a way to pay for school, but that’s because the NPC didn’t include merit or her other scholarships. I don’t remember it being on any of the paperwork after she was admitted (and billed).
For the other kid, I don’t remember the school even offering a Plus loan but I know I could have applied for one. Both kids got the ads from Sallie Mae, SoFi and Discovery all the time.
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I’ve toured probably 20 colleges with my high school students, and I haven’t seen a single college student working in the financial aid offices.
The only times that I have seen current students or recent graduates working with prospective families is in giving tours and on student panels in admissions sessions.
For financial questions, the admissions staff has always directed me to an adult member of the staff in that department.
I’m just writing this so that anyone reading this thread doesn’t get confused- you don’t likely need to worry about current students having anything material to do with your student’s applications or FAFSA/fin aid decisions.
There are students who answer the phones in some financial aid offices, but they do not give answers to specific questions about YOUR financial aid situation. But they can answer questions like “what financial aid application forms are required” or “when are the deadlines for submissions for financial aid applications?”
Of course that info can be found on the websites…
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Doesn’t your underage kid get candy colored offers from your local Mercedes Benz dealer stating- in bright, big print- “It costs less than you think to get behind the wheel of a Mercedes”?
My own kids got their first lesson in how to calculate depreciation when the first of those mailers showed up at our house. Also- how to calculate a lease vs. buy spreadsheet.
Use the mailers as a teachable moment and then put them in recycling. I live in a mixed zip code (fancy neighborhoods, public housing, and everything in between). Taught my kids early on that just because someone is targeting our zip code to sell us something doesn’t mean that A- we can afford what they want us to buy
B- we WANT or need what they want us to buy
C- it is a “personal invitation” (even when it says “personal invitation for Blossom to go on a cruise-- it costs less than you think!”)
It’s NOT personal. Trash the mailers if they upset you.
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It’s not a mailer.
It’s email.
So I block, show him how to block, then they come from another address, and on and on it goes.
Of course I used it as a teachable moment, but I’m tired of these predatory businesses invading my space repeatedly. Take a hint, Sallie Mae. Get off my lawn.
Schools struggle with how to message the availability of Parent Plus loans. If the school uses the federal College Financing Plan letter, this is how financial aid is mandated to be messaged (by the Department of Education): https://www2.ed.gov/policy/highered/guid/aid-offer/2023-24annocollfinanplanugrad.pdf. Because it doesn’t really explain everything, schools may include their own award letter, which would likely include the amount of Parent Plus “up to which” the parent may borrow. My personal preference is to clearly state that the parent doesn’t need to accept the whole amount offered - they can just borrow what they need. Loan counseling is required for student borrowers, but not for parent borrowers. That’s a federal rule. Parents have to sign a master promissory note, which explains the terms of the loan.
Some schools will offer the amount of Parent Plus upfront, because they have a large population that borrows these loans. Other schools will provide the information on request. The danger in doing that is that parents may not realize that they can borrow a federal loan if it’s not spelled out for them.
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Plus loans were not included in either of my kid’s financial aid letters.
However, just like we’d borrow to pay for a car, we chose to take out Plus loans as a way to even out our cash flows.
I don’t view debt as an evil-- intead it is just a tool that lets us do what we want to do.
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Considering we’ve only bought two new vehicles ever (and paid cash), we’ve never received a mailer from any car manufacturer. Val packs and aarp for us!
People in their 60s with union jobs and with hundreds of thousands of dollars in parent plus loans that they signed on to without understanding interest capitalization is a socially derelict outcome on the part of the colleges offering them.
PPLs are the payday lending of higher ed funding, with less regulation, funded by general federal revenue.
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Do you believe that people have a responsibility to understand the terms of contracts they are signing? Or to pay attention to the mandatory loan counseling required of those taking out student loans and/or parental loans?
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When the ‘counseling’ explains PPLs as equivalent to car loans, that is misinformation. It is unrealistic to expect these people to see though that misinformation, bear minimum. Non-finance professionals don’t understand interest capitalization typically.
Don’t get your feelings hurt if you work at a college or set these policies. People in those positions have no reason not to take advantage of people like the ones in this article.
These aren’t difficult concepts, not to mention there are literally hundreds of online calculators that calculate loan payments once a person puts in the amount of the loan and the interest rate. Ignorance is not a valid excuse to stop paying one’s loans.
You must have me confused with someone else.
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I know from reading some public college Facebook posts that many have no idea about loans, it’s scary.