Colleges Confuse Students With Letters Offering Aid That’s Debt

[FarCenter]

Susan Romano read her son Zach’s financial-aid letter from Drexel University, and her eyes jumped to the line highlighted in yellow: “$13,442 expected payment” for the first year at the $63,000-a-year school.

“At first, I thought it was great,” said Romano, 48, an insurance claims representative from Huntington, Pennsylvania. “The more I read it over and over, the worse it got.”

It turned out the college’s “offered financial aid” included $42,000 in loans to be taken out by the family, including a “suggested” $36,178 in parental borrowing or private loans.

“A loan to me is not financial aid,” Romano said. “It is money I have to pay.”

http://www.bloomberg.com/news/2012-04-24/colleges-confuse-students-with-letters-offering-aid-that-s-debt.html

Anyone dumb enough to confuse a student loan with student aid should not be going to college.

[Mass]

1. This university is really to be avoided

Not only is their yearly cost exorbitant, but parental/private loans are not financial aid, contrarily to Stafford and Perkins loans.

I wished students in HS had some personal finance classes. Except if you have a lot of money or you get a full scholarship, I do not really see why you would choose to go to this college. My son will graduate this summer for a major state university in MA with half of the debt this person is suggested to take for Drexel.

[saras]

5. The system is working like it's supposed to. Why would they teach anything to disrupt it?

I had a "personal finance" class in high school. It only lasted a year because it offended so many important businesspeople.

[coalition_unwilling]

2. Um, student loans are a subset of student aid. So who's the dumb one? - n/t

[FarCenter]

12. Scholarships, grants, campus jobs, internships, co-op jobs, etc. are aid. Loans are debt.

They are only aid to the extent of the benefit of the lower interest and/or the deferral of interest accrual compared with conventional loans, discounted by the penalty for not being dischargeable in bankruptcy.

You need to do the time value of money math to compare them with e.g. taking out a second mortgage on your house.

[coalition_unwilling]

13. Oh, FFS, you stretch ingenuity beyond its natural limits with your

Jesuitical equivocations. So deferral of interest and lower interest rates are not 'aid'??? Whatever.

[pnwmom]

3. These letters are designed to hook people, by giving the first impression that students are being

offered more in grant money than they really are.

By the time many families figure out the truth, their student has had a chance to get his or her hopes up -- especially in first generation families.

Also, why is it that when the 4-year totals approach or even exceed the cost of a home mortgage, parents aren't provided with detailed information on the terms, including the total payout -- as they would for a home loan?
__________________________

“You have to be savvy enough to know the fine print exists, and then you have to be eagled-eye enough to find it hidden in the letters and on websites,” said Debbie Greenberg, a counselor with College Bound St. Louis, which coaches low- income students about admissions and financial aid. “You also have to have access to a computer.”

SNIP

The format for aid packages varies by school, making them difficult to compare, and some students have little more than a month to decide. Loans and grants offered by the federal government are lumped together with the school’s scholarships, and the statements often don’t include information on interest rates.

‘Manipulative and Deceptive’
The documents colleges send can be “manipulative and deceptive” because the true costs are hidden, said Greenberg, who has been a counselor for 15 years.

[marmar]

7. I agree....The hostility directed at the students in some of these posts is sickening.

nt

[Liberal_in_LA]

4. 13.4K expected payment at a 63K school. Yeah, she's going to have to come up with about 50K more

[aikoaiko]

6. If they don't want to pay or take the loans, the student can go somewhere else.

Like Harrisburg Area Community College for the first two years: http://www.hacc.edu/

Oh look...tuition and fees per semester are between 2K and 3K.

Even out of state students pay less than 4K per semester.

[exboyfil]

8. My state has the ignoble designation of having the lowest need based

grants in the country for their public universities (by a wide margin 9.9% versus 30.2% for the next lowest Alaska). Getting merit aid is very difficult as well (think 33 on the ACT). This is why my daughter and I have laid out a plan to get her freshman year of college done while still in high school. I am going to have to pay for some of the courses, but the majority will have to be paid for by the school district under Post Secondary Education Opportunity. At $22K/year for the University of Iowa my daughter will be able to pocket around $15k that would otherwise be spent if she graduates in 3 years. She also enhances her chances for scholarships in the engineering department because she is a known quantity (someone who has already done well on a significant amount of math and science work).

[stevenleser]

9. It has been that way for at least the last 30 years. Guaranteed student Loans are considered aid.

They factor it into the package they put together that gets you to the figure you need to pay tuition and other college expenses.

[Mass]

10. This is not guaranteed loans. These are personal loans.

[stevenleser]

11. Ahhh. See what happens when you read quickly. Thanks for the correction.

That IS, in fact Abysmal behavior by that school.