Report: Financial Aid Process Is Too Confusing

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The last two presidential administrations have focused significant attention and energy on trying to simplify the process by which would-be college students apply for and receive federal financial assistance, given the prevailing view that the complexity of the system deters some young people from higher education.</p>

<p>A study to be released during an event on Capitol Hill today shows just how large the information gap is. The report from the College Board's Advocacy and Policy Center, "Cracking the Student Aid Code," finds that many parents have little understanding of how much it costs to attend college and of financial aid options -- and that the knowledge deficit is biggest for those who already have the least access to higher education: students from Latino families and from low-income backgrounds.

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<p>From News:</a> The Financial Aid Information Gap - Inside Higher Ed</p>

<p>It would be a step in the right direction if EFC were renamed. That term alone is soooo misleading to families. It leads them to believe that all schools charge some kind of sliding scale based on “expected family contribution”.</p>

<p>My personal gripe is the labeling of loans as “financial aid” and the “actual cost” as being the total cost less those loans and any other aid.</p>

<p>A car isn’t “free” if you take out a loan for its whole value, and to suggest that college costs should be treated differently makes no sense. $40,000 is $40,000, whether you write one check or pay for some of the total (plus interest) later.</p>

<p>Despite this, it’s not uncommon to see claims like, “On average, our students pay just $16,000 after financial aid is figured in.” Totally bogus.</p>

<p>You could not be more spot on.</p>

<p>We would not fall for someone selling a $200,000 house saying “it will only cost you 20%, and the payments you will be making every month for the next 30 years are a form of financial aid.” But that pitch seems to work with college.</p>

<p>It really needs to be redone. Loans should be removed from the “financial aid package” since it’s really not helping the student financially.</p>

<p>While I don’t find the FAFSA that difficult to complete, it relies on data from tax returns which are an annual source of confusion for myself and I am sure many others. Simplify the tax code and filling out the FAFSA will be much easier.
Oh, and, yes, I completely agree with the above posters regarding the term “EFC” and how loans are considered part of the financial aid package. Please…</p>

<p>This was posted on the Parents Forum:</p>

<p>“THERE IS NO OTHER PLACE IN THE ECONOMY where somebody is allowed to borrow far beyond their ability to repay, where the loans are actually unforgivable, where the lenders have NO RISK. This has created a windfall for banks who lend and a windfall to colleges who collect and raise tuition.”</p>

<p>I find it applicable to the discussion here. Banks and colleges have a vested interest in keeping it confusing. That way, more people get duped into signing up for outrageous loans!</p>

<p>Despite this, it’s not uncommon to see claims like, “On average, our students pay just $16,000 after financial aid is figured in.” Totally bogus.</p>

<p>Agreed! It’s really just like a down payment…with later payments to come.</p>

<p>Agree 1000%. I also want to add that virtually no attention is paid to what your FA will look like for years 2, 3 and 4. Parents are so focused on the freshman year package. Schools make vague claims that if your income remains consistent your package should remain fairly stable. Nonsense! My experience thus far is that our income has gone up slightly - but the COA did as well. Yet, our 2nd year package contained $5000 less in grant money and more in loans. Can’t hardly wait to see this year’s package! LOL.</p>

<p>What I want to know is what will it take to stop the madness!!! Both the fin aid process and the rise of costs. I look at kids born today and wonder ***!!! It’s hard enough for us. What will it be like for them???</p>

<p>rvmom–
That has always been one of my fears. You have to buy four years worth, and you only really know the price of the first. Then they have the ability through FA calculations to set the price for years 2-4 and you are pretty well stuck. Certainly your subsequent years’ FA awards come out after your could feasibly mount an effective transfer application campaign. My personal concern is compounded because S2 and S1 will overlap in undergrad for only one year, then all of the EFC will shift to S2. I intend to ask the schools for a pre-read based on only S2 in school, but I fully realize that they are not bound to a pre-read.</p>

<p>With S1, his aid has been a 4 year guaranteed merit that covered about 40% of tuition, that had more stability/certainty.</p>

<p>UT - exactly - you are agreeing to a 4-year very expensive product while only knowing the cost of the first year. I literally worry daily about this issue. Compounding the worry is the timing. Most schools do not provide a FA award letter to their returning students until June. The first semester payment is due August 1. I have a rough idea of the amount - but say I am off by $1000 or $2000 or more - I have 7 weeks to come up with the money. All I can say is that this process is too stressful and too uncertain.</p>

<p>Without loans in a financial aid package, you will have even bigger gaps … it’s not like eliminating loans as “aid” is going to net anyone more free money.</p>

<p>I’m interested in knowing how people here … understanding that changing the process is not going to increase any free money … think the process should be. How should the application process for aid look? How should schools give you the information about your aid (or lack thereof)?</p>

<p>kelsmom - I would like to see a chart for each college clearly posted on their website. You locate your EFC on the chart - and it tells you what your package will be. How much grant money and how much in loans. At least that way - there is none of this nonsense about having to wait for an award letter - it’s right there - you can decide whether or not to apply and whether or not to attend based on this info. </p>

<p>I understand that there will be some on-line calculators in the future.</p>

<p>I realize it is not this simple - award packages also take into account things like preferential packaging and institutional methodology - but for right now - there is such a lack of timely information and transparency in the process.</p>

<p>*Without loans in a financial aid package, you will have even bigger gaps … it’s not like eliminating loans as “aid” is going to net anyone more free money.</p>

<p>*</p>

<p>Very true…the colleges can’t just go to the money tree and come up with funds.</p>

<p>So… instead…why not get rid of the phrase “financial aid”? It also is misleading…people think it means “free money.” I don’t know what would be a better phrase, but certainly something else would be better.</p>

<p>BTW…when schools say that they give away XX million in FA, are they including Parent Plus loans? Or are they just including grants, fed aid, fed student loans, state aid?</p>

<p>I also wish when colleges reported those numbers, they would list Pell Grants separately.</p>

<p>To do what you suggest, rockvillemom, schools would have to cut their grant programs. They cannot possibly promise to give everyone a certain amount of money no matter what time of year they apply. Money runs out … </p>

<p>I understand the idea behind what you want. It’s just not realistic. What you would get would be a “base” package, and then everyone would be upset when they find out the next guy got more than they did.</p>

<p>No, Parent PLUS is not included in the financial aid numbers (it isn’t “student” aid, technically).</p>

<p>kelsmom - I understand what you are saying - but here is an example. My older son applied to Michigan 2 years ago and was accepted. At the time, our EFC was about $15,000 and the cost for freshman year about $44,000. His award was a $4000 student loan and I guess the possibility of private parent loans on top of that. We are OOS. Had there been something on the website - a simple calculator - that showed us that an OOS family with that EFC would have gotten an award in that range - he would never have applied! I feel like we wasted time - wasted the app fee - wasted money visiting the school. Had we known up front how pitiful the FA would be - this school would never have been on the list.</p>

<p>And that’s really what my focus is - people are applying to expensive schools with the belief that they will receive sufficient FA to attend. And in many cases - they are not and probably could be told that upfront. I think many colleges are misleading with their FA statistics and give the impression that their institution is affordable for most students.</p>

<p>Even if they could not do an accurate calculator - how about a few pages on the FA website giving examples of typical packages for different income levels - so you could see some sample FA packages for your income level and EFC - would that not be possible?</p>

<p>Perhaps it should be called “personalized pricing”–we decide on the price that is the absolute maximum we think we can extract from you, and that is what we charge you.</p>

<p>How would we respond if we went to buy a $50k sports car, and they said “you have been saving and planning for years, so you pay $50K. That guy over there has lived an impecunious lifestyle, so we are charging him only $10k for the same car.” Oh, and don’t forget, you get to buy one of these cars each of the next three years.</p>

<p>Buying college is a weird, weird system.</p>

<p>I feel like I’ve just been given a Valium and a shot of Scotch.</p>

<p>My wife and I have been laboring through the process of FA and thought maybe we were too stupid to understand the way things work or that we were being too critical of the lack of upfront, SOLID information. Now that I see others are as vexed, it helps lower my BP.</p>

<p>We don’t expect miracles…just full disclosure.</p>

<p>Thanks!</p>