<p>I was accepted into a school and am very excited, but I honestly don't know if I can attend. The financial aid package lists federal subsidized loans, federal unsubsidized loans, work study, pell grants and perkins loans. I can't say I fully understand everything, but I did read that unsubsidized loans are not need-based. Anyone can get one and they must be paid back with interest. How is this financial aid? I would really like to go to college, but I don't know how I could afford it. Is it worth it to go into debt?</p>
<p>Because schools like being able to claim that they’ve “met the need” of their students. They also love the cash when folks stretch and take the loans.</p>
<p>The whole practice is kind of deceptive and foul-smelling.</p>
<p>They are financial aid because a student who has no credit history & no other way to borrow a low interest fixed rate loan with excellent repayment terms is allowed to borrow that loan from the federal government.</p>
<p>Except that these loans really aren’t low interest. They’re well over 10X the rate of simple interest, which is shockingly high. That’s not aid, that’s usury.</p>
<p>But you’re definitely correct in the sense that the students wouldn’t even qualify for these loans on their own hook; still, that’s hardly what people think of when they hear the term “financial aid.” </p>
<p>It’s all part of the deceptive marketing campaign, in my opinion. It drives up the price for everyone by artificially raising demand. But the worst part is that it’s wrecking the lives of the unaware folks who fall into the trap. Yes, they should know better; but it doesn’t mean they should be taken advantage of.</p>
<p>The alternative is between $2000 and $5500 less in available assistance to college freshmen.</p>
<p>I do agree that these loans can be valuable if used judiciously and responsibly. But from the stories here (and in the media), we can see that they represent a problem.</p>
<p>You are very familiar with the entire FA process and its terminology, but most folks aren’t. You understand responsible use, and I gather that you work in FA for a public U. So you probably see the very best side of this industry, but there is also much abuse out there.</p>
<p>But let me ask: Does it give you pause when you see the same misconceptions recurring each year? I submit that this is the intentional result of marketing, right down to the deceptive terminology of “aid.”</p>
<p>You can and should turn down the unsubsidized loans and take all the subsidized, interest free stafford loans till graduation. Yes, it is a marketing ploy, welcome to america. And yes, all the loose money is filling seats and paying the college payrolls. Everyone has a choice.</p>
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<p>[Student</a> Aid on the Web](<a href=“http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp]Student”>http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp)</p>
<p>I dunno, but I don’t find that usurious.</p>
<p>Sally Mae, on the other hand, doesn’t even tell you what the interest rate is until you apply. We applied, with my husband as cosigner, and were offered a 9+% loan. My husband has excellent credit…</p>
<p>MisterK:</p>
<p>Sure loans are nothing more than self-help since they have to be paid back. But the federal government is also part of this “deception” including the President himself who extolled the virtues of his increased “aid” packages. Thus, I suggest you write to your Congressperson or Senator.</p>
<p>I feel that federal loans are capped at reasonable amounts annually, and they require that the student complete entrance counseling to borrow them. I am not at all happy with the fact that students read the information, take the test, and still have absolutely no clue that they actually have to PAY THEM BACK … or that there is interest …</p>
<p>Yes, I work in financial aid at a public U. We work very hard to provide many sessions for students that explain financial aid, loans, repayment, budgeting, responsible borrowing, etc, etc. Few students attend. The sessions are really good, and they are very informative, but we can’t make anyone attend. My colleagues & I talk to students and parents at high schools, we talk to students & parents at our school. We impress upon them the fact that they should only borrow what they actually need to borrow. Yet we have sophomores who are at the $57,500 undergrad limit. We have juniors who have no idea how much they have borrowed. We speak with graduating seniors about repayment, and they often say, “I plan to get a hardship deferment.” When we explain about the interest accruing during the deferment period, they tune us out.</p>
<p>It takes two to tango. The loans can be very helpful for students. However, they must listen and heed what they are hearing.</p>
<p>Private loans are another story. I have received solicitations from lenders for private loans for my kids that really bothered me. Some families do borrow responsibly & private loans serve a purpose. I do think that all borrowing should be done wisely.</p>
<p>blue: I used to write to my elected representatives. Never got anything back but noncommittal form letters.</p>
<p>A few years ago, I had the very unexpected experience of sitting close to a very well-known member of the US house, recently departed, for a long and relaxed dinner. Because I’m somewhat of a government junkie/CSPAN addict, I was filled with questions.</p>
<p>Skipping right to the relevant question: “Does writing to your representative make a difference?” When I asked this, he winced visibly. It was a long and interesting answer, but the short version: “No.”</p>
<p>My favorite question: “When you got to Congress, what were the things that you found to be most surprising? What did you learn?” Another extremely interesting answer.</p>
<p>Don’t have the time now to do justice to that great conversation.</p>
<p>kelsmom - I appreciate what you’re saying, and you’re certainly doing things the right way. Normally I would say “let people live with their own bad decisions”, but deception is a big part of the overall machine. Also, these bad decisions affect everybody, even folks without loans - because it artificially drives up prices.</p>
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<p>Great use of an unexpected opportunity, and thanks for asking him the question. The wince was because he didn’t want to flat-out lie by telling you that he listens to his constitutents. OTOH, he didn’t want to tell you the truth: His real constituents are the entities which fund his campaigns, primarily gigantic corporations and commercial interest groups.</p>
<p>I guess there’s (at least) two separable issues here: 1) how much and what kinds of aid does College X offer, and 2) does the College represent that fairly and accurately on their web site. D just got accepted to Hamilton. There are some people on that thread who are quite surprised by how generous the FA package was and others who are shocked at how little they got. Perhaps both groups don’t fully understand the whole concept of the EFC, but I can tell you looking at ours that Hamilton did exactly what they said they were going to do: they took the total cost and subtracted the EFC and a few thousand they figure the student should have in savings by now. They then offered a few thousand subsidized loans and work study and the rest was a grant/scholarship. Hamilton is one of those places that says they meet 100% financial need. Maybe some people stop there and just assume that means it’s going to be free ride. But they (and all the other 100% LACs my D applied to) do make it clear on their web sites exactly what that means. Some even show sample FA sheets with a couple of different scenarios. So, IMHO, people complaining later just haven’t bothered to read the institution’s own definition of this. Now…having said all that, for the institutions that don’t make the 100% need claim, it really is a crapshoot. Had experience with both Syracuse and NYU and it’s not clear to me how they arrive at their FA packages. But my point is that they don’t really make any promises one way or the other either. On the Syracuse site it just says “we give out X dollars a year to students in financial aid” where X is a really really big number, but they don’t claim how they’re going to dole that out for any one individual. So here again, buyer beware. D applied to Syracuse anyway knowing this, and sure enough their package wasn’t as good as Hamilton’s. </p>
<p>On another topic, since kelsmom works in Financial Aid…we’ve heard that it’s sometimes possible to contact the university to get them to up the aid, at least a little. Is this worth a try? And if so, do you recommend the contact be by phone, email or written correspondence, and should it be initiated by the parent or student? Thanks.</p>
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<p>There is a limit to the amount of SUBSIDIZED (meaning they do not accrue interest while you are in college) loans a school can award you. </p>
<p>The total Stafford loan amounts for four year currently would give you TOTAL (after four years) of $27,000. Many students take these loans to help themselves through college.</p>
<p>I agree subsidized loans and unsubsidized loans can be helpful to students and have reasonable rates compared to private or Plus loans. My son used both and I helped him pay the interest and some principle since it was cheaper than me taking one out. </p>
<p>I had a very logical son who read all fine print, but many don’t. I work with a young woman who was complaining about Sallie Mae and trouble paying her loan. They had said she owed more and her payment was insufficient. Bottom line, after some questions, she had a private loan, interest had gone up, she kept sending the old amount and didn’t send the new monthly payment, that wasn’t Salliemae’s fault, she SIGNED for this, she knew the interest rate wasn’t fixed, you have to be mature enough to follow through on your commitments.</p>
<p>Very few colleges are “no loan” schools with financial aid, we only had one not include them.</p>
<p>Debrums, I see a big.big difference between schools excepting a kid to have federal loans of say 5K a year and huge private loans.</p>
<p>So do I, she also had federal loans, but my point was just that students don’t always think about the ramifications of what they are doing and seem to blame the loan company. </p>
<p>We never had private loans offered in aid packages but I don’t see it harmful to include federal loans in colleges FA offers that say they don’t meet need without loans. It just shows how you can possibly do it. We had “full need” schools offer no loans, sub loans, sub loans and perkins loans and workstudy. I actually felt they shouldn’t include workstudy since it’s not “instant money” like loans, not guaranteed and the student gets paid the money. I always mentally subtracted that from the packages.</p>
<p>It can be said that loans at all are not really financial aid since they have to be repaid. When I look at competing packages, I look at the bottom line cost and l do not look at the loans available. The loans and work study are just ways that YOU can use to pay that bottom line. </p>
<p>Nearly all students are allowed to take the $27K in Stafford loans in their own names over 4 years. That is one way that the kids can help pay for their college. The loans are subsidized in that they do not accrue interest during the college years if there is otherwise unmet need. Otherwise they are available to pay the what the family needs to pay up to COA less other awards. </p>
<p>The standard formatting used by college guides when explaining financial aid packages does include the Stafford and Perkins loans as financial aid in form of loans. It also includes work study awards. They are usually identified as such. What the guides do not include are the PLUS and outside co signed loans. So when you are looking at schools and trying to see which ones offer the more generous packages and meet a good % of need or what the average % need met is or how many students do get 100% of need met, keep in mind which loans are included and which are not. </p>
<p>It’s a matter of opinion as to what is deceptive. I don’t think it is. Confusing, yes. My opinion, and it is just my opinion, is that it is deceptive when colleges stick in PLUS or private loan options in a financial aid package as though they are giving these loans out. I do not believe that including the Staffords, even the unsubsidized ones, is deceptive. The reason is because of the standard presentation that is out there for comparison bases does include those loans. It is comparing apples to apples. The oranges come into the mix when someone other than the student has to come up with the money. </p>
<p>The Stafford are a great option for those students whose families cannot come up with college money but do not qualify for PELL. Because of this almost automatic qualification to $5500 in Stafford loans, nearly every kid has to option of going to a local state school. That $5500 goes a long ways in paying for the tuition, books, expenses of commuting to such a school. So if mom and dad don’t have a dime for tuition money, a kid has that option available. There are ways that a student can"earn" off the loan, defer the loan and deal with the loan over time. Our neediest kids also qualify for PELL which is a grant, but the Stafford covers just about everybody. </p>
<p>Off hand, I cannot come up with a better solution to making college available to everyone. This pretty much does it and makes kids have “skin in the game” unless they are from the poorest families. It takes fickle parents out of the picture. This is the answer to the Dad won’t pay, or parents don’t have a dime or parents have it or won’t pay it conundrum.
I always look at the Stafford maximums as the most a kid should borrow. Uncle Sam is willing to back the kid for that much, so I’ll go with it. More than that, the bells start going off. It does set a standard that can be used as a baseline.</p>
<p>That is very true. Some parents don’t understand about workstudy though and how it is really pocket money for many students and not always available. </p>
<p>I agree that loans aren’t merit awards or grants, but if they didn’t include them, I think many parents would faint sooner from the shock of the bottom line. : ) If you are careful though, and thorough, you can sift through the mess. I remember, I think it was Bryn Mawr, my daughter saying, Wow, they gave me a lot…and then silience for about a minute and then …“not really”. Between the sub stafford, unsub stafford, perkins loan and workstudy, along with student contribution, etc. etc. we still had to pay more than another, but the bottom line seemed lower at first.</p>