5 Big Financial Aid Lies

Are you serious with that article? Now I may have only worked in the Financial Aid industry for only 5 years, but my job and the job of every other Financial Advisor/Counselor/Director, is to make sure all of our students are taken care of and to provide the best customer service possible and GUIDE them through the Financial Aid Process. Does financial aid, grants, scholarships, loans always pay for everything?...NO it doesn’t!

Did you happen to interview different types of Financial Aid professionals and the different types of institutions (Proprietary, 2-year public, 4-year public, and 4-year private institutions)? Or did you just interview parents of students and students themselves because of their frustration? Did you interview any of the current Lenders in the FFELP Student Loan industry who are being forced out of the financial aid industry by the federal government since they are tkaing over the student loan industry?

The EFC, yes can be a bit hard to understand, but I think it's pretty easily explained once the parent asks "What does this mean", when they ask us. Is the EFC always reasonable...No, but again this is a number off of an application created by the Dept. of Education.

As far as the TEACH Grant is concerned, I don't agree with it. But understand, students who qualify for this are required to do an entrance counseling that states all of the requirements for the grant. So students who complete the application process should know up front what ALL of the requirements are for this. I agree with one person who responded that, for freshman and sophomores in college, not a good idea, until that student is 100% sure they want to be a teacher. I have had many graduate students though that have benefitted from the Teach Grant. Do I like the stipulations of it turning into a loan if the conditions are no met...NO, but again, this is Financial Aid Award that was created by the Government. If the student does not like the terms of the teach grant, then they don't have to accept the award.

The Interest Rate of a PLUS Loan and the 3 or 4% Origination fee has been on every single piece of PLUS Loan literature I have given to a student or parent and is on the application and website, so I don't know why that comes as a surprise to people.

There are rules for merit based scholarships and the Admission counselors/Financial Aid counselors explain these rules, which are also usually located on the schools website, school catalog, and course catalog.

The one thing I find that students and parents do not do is planning ahead for college. Whether it's saving money for college or having an idea how much school even costs. I have had many parents and students just come to expect a free education through scholarships and grants. It does not always work that way. Our society has been brainwashed to think college is an entitlement. College is a privilege! There are ways to make it work. If you have any questions contact Arne Duncan.

Geoff of MO 1:56PM April 07, 2010

I am a student and a financial aid employee. I receive financial aid myself. I know first hand that all of this information is readily available through our school websites, our office, all of the paperwork the students are given and have to sign, ed.gov, and a ton of other resources, including the public and college libraries.

While there are a few advanced students at our institution who are not yet 18, the majority of our students are adults. We work hard to make them see that they have a responsibility to research their options, know what they're getting into and read the paperwork we send them. We have FA nights, student orientations, College Goal Sunday events, etc.

And despite all this, most of our students haven't even read their Master Promisory Notes for their loans and don't know the difference between a Pell Grant and a FAFSA. It's not that they don't have the information available; it's simply that they won't take responsibility.

And as long as we're willing to coddle them, they won't.

NaShea Brown of AZ 12:49PM April 07, 2010

You make some good points but overlook an obvious one: where will the additional money that the "system" needs come from? This is not a problem that we have with financial aid officers; this is a problem that we have because there is a shortage of money. And I know of only three sources of money: 1) government (which means more taxes on taxpayers); 2) philanthropic entities (who claim to have about 30% less to give away than they did a couple of years ago); 3) and individuals (students who benefit from the education and training). The reason that students and families pay more than the "EFC" is that there is not enough money in the financial aid system to cover all needs, let alone expectations. Increasingly students and families expect colleges and universities to give them more money, but institutions have to draw from the same three limited sources as well: government, philanthropy, and individuals. I'm afraid that the future is going to require a return to two fundamental truths: 1) we need to contain costs; and 2) we all need to sacrifice and pay for that which we value.

Shirley Ort of NC 12:24PM April 07, 2010

I think 99.9% of Financial aid administrators would agree that the federal formula that determines EFC is outdated at best, broken at worst.

However, I find it interesting that so many students and families do not research financial aid and then are surprised when they receive their first award letter. Most colleges & universities have financial aid web pages that explain the difference between grants, loans, work study, scholarships, etc. Yet, I've talked to hundreds of families over the years (probably thousands) who are completely surprised and angry about their award letters. Financial aid folks do financial aid high school nights, there's now financial aid TV. Oh, "but nobody told me!"

As to the terms & conditions of PLUS and other loans, READ the disclosure statement!

Nice article--journalistic excellence to be sure.

Sam Collie of WA 11:40AM April 07, 2010