<p>I know this is a duplicative thread, but I'm hoping that CC posters who work in college financial aid can answer this. Why are financial aid packages that are nothing but the opporunity to borrow money called "awards"? And why would an institution write in a letter than it is pleased to offer a student what is bascially money coming from another entity, i.e., a bank or the federal government? The school isn't really offering anything, is it?</p>
<p>my thoughts exactly.</p>
<p>It’s an award to the school and financial institution. 6-8% loan gauranteed by the government that you can never default or wipe away in a bankruptcy while fed fund is around 0%. They can just borrow from the government for almost nothing, lend it out and just sit and collect free money. Is there any better business model than this? It is not hard to understand why people earn millions working for Wall Street firms. Then they actually make it sound like they are doing you a favor. What a racket?</p>
<p>It’s fraud as far I am concerned. DD received her “award” from NYU a few years ago where they showed they had given her a great award that met the cost of attendance. She was so excited until I pointed out that it required us to provide 99.9% through our funds or loans. They were actually awarding her only $750. It was so deceptive.</p>
<p>These loans are called “awards” because that wording makes it more likely that the parents will accept the idea that they and/or their kid should take out those loans so that the kid can attend this particular college/university.</p>
<p>If the award letters only included scholarships and/or Pell grant money, most of them would be blank.</p>
<p>This is a practice that colleges should be ashamed to participate in. And the whole smelly racket contributes largely to why parents are so frustrated and confused by the financial aid process.</p>
<p>For freshman year, the letter from older DS’s college said “We are pleased to offer you the financial assistance listed below.” </p>
<p>The list, which had the heading “Aid Program,” had the three outside scholarships that DS had won, and that would have applied to any college. So, hardly something that the college itself was offering. The amounts of the three scholarships were added up, and the total was listed as “Total Aid Award.” Again, all of this aid came from outside scholarships that DS had already won.</p>
<p>The last item on the list, after that: “Eligibility for Additional Borrowing (PLUS or private loan): $42,478.”</p>
<p>Sigh.</p>
<p>I’m glad other people share my feeling on this. I know there are people who work in college financial aid offices who post here. I’d love to hear their take on this.</p>
<p>ptc,</p>
<p>The person to ask would be kelsmom. You usually can find her in the Financial Aid Forum.</p>
<p>I’m in this camp. It’s ancient history for us, as DS graduated in 2009. But I remember the excitement when he received an <em>actual</em> award of $22K in merit aid scholarship from one school, followed by my combination of amusement and disgust to receive a “full tuition award” from another school - $11K in grants and over $30K in loans. </p>
<p>Really.</p>
<p>as was said before, if they didn’t treat loans as gift aid, it would be much harder for colleges to market themselves as “meeting full need”.</p>
<p>There are a very few schools that minimize loans when meeting full need. I think Pomona (very competitive admissions) is one of them. </p>
<p>The variety of terminology does get confusing. You even see this at some high school award ceremonies. There’s a mish-mash of merit and need-based aid, and sometimes it’s hard to tell the difference. Some might say this doesn’t matter, but I think it can give parents of younger kids a skewed view and false hopes about what “scholarships” are available out there.</p>
<p>It does give some parents and their kids a skewed understanding of the finacial aid system. A friend of mine was going through the college application process with her oldest child at the same time that I was. Her D is extremely bright and we were not surprised to hear that she got so much in awards from her first choice, top teir school that it brought the cost down to what we were going to pay for the state flagship. A couple of years later, the subject came up between us and I learned that most of that “award” was in loans! I was astonished that they had fallen for that. </p>
<p>When we get our “awards” from our kids schools, we don’t consider loans to be aid at all.</p>
<p>Well, I could only speak for our case. The subsidized Perkins and Stafford loans in DS’s package are a gift - because the interests are paid while DS is in college. </p>
<p>We are very grateful we get these loans. They make it possible for us to afford two kids in college at the same time.</p>
<p>Colleges should not say they are meeting full need with “parent plus”, University Loans or private loans. The only loans that should be included are perkins and stafford.</p>
<p>There really are not many truly “meets full need” schools out there. And even if you only applied to schools that meet full need, what you will eventually pay will vary greatly by school.</p>
<p>Good question as this has mystified me as well.
Of course, I’m also mystified as to why parents would think that their child was given a ‘full ride’ when they received an award letter that was filled with loans.</p>
<p>
</p>
<p>Wow, DadII, I’m surprised to hear that your son qualified for a Perkins. According to the Perkins loan website at [Federal</a> Perkins Loan](<a href=“http://www.perkinsloan.net/]Federal”>http://www.perkinsloan.net/), these loans are only for students with “extreme” need.
</p>
<p>You’ve posted many times here on CC that your income is greater than $100K. Even with 2 kids in college, I would have guessed that a Perkins loan was out of the question. I guess your “specific circumstances” were very convincing. Lucky you!</p>
<p>
</p>
<p>The above sentence is the KEY to the Perkins loan eligibility at a specific school.</p>
<p>Perkins loans awarding is actually determined by the COLLEGES. The Perkins is typically awarded to the lower income students from THAT college and this is at the discretion of the college to determine.</p>
<p>Thumper, thanks for the clarification.</p>
<p>Yes, there are not that many colleges that have Perkins loans. The colleges have to get them and pay some premium for them, also the SEOG, so it is an award that the colleges give out at their discretion. </p>
<p>Some universities like Cornell and Emory have their own rules as to who has to take out loans and who does not. Cornell, for example, does not give out ANY loans to their neediest students. They get pure grants to meet 100% of their need. So if you get loans from Cornell, even subsidized ones, you are not among their most neediest students though you can qualify for aid even with an income of $100K. I, for one, could have been in that situation. My college son was accepted at Cornell. This coming year, I am going to have 2 in college, and if the younger one had picked a top cost college, our family would have qualified for need. Not much, but some. And if the one were at Cornell, it would be very possible that the need would have been met with a loan of sorts, very likely subsidized Staffords or even Perkins since only the least needy that qualify for aid get loans at all from that school. (All this a moot point personally since my son chose a school that gave him merit money and the younger one is going to an OOS public and we are under the need line with those costs)</p>
<p>Addressing the point of this thread, I don’t think it is right for colleges to claim awards that can be used anywhere as THEIR financial aid package. But they do. Especially galling are the outside scholarships. That would burn me. But Parent PLUS loans should not be put in packages either since they are not auto awarded. When you look at the financial aid data on colleges, PLUS is not included, nor are any outside loans, so when you try to figure out which college has kids that are most “loaned up”, you can’t find that information anywhere. Other than the colleges that are low cost or give out no loans in their fin aid packages, you will find that nearly all colleges have the similar loan levels for their kids.</p>