Thursday, May 17, 2012

What’s the Difference Between a Con Game and a College Student Aid Offer – One Involves Misleading the Victims and Leaving Them Drowning in Debt, the Other is a Con Game

Tricking the Students Before They Get That College Education

Unless your father is Mitt Romney or one of his wealthy friends, when you go to college you will need financial aid.  The reason is simple, the cost of college is now astronomical.  For example, here is a student getting ready to go to Drexel University at a rather substantial cost.

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

The above quote raises several issues.  Why, for example, would anybody pay $63,000 a year to go to Drexel U.  And why would somebody be excited about still having a bill of $13,442.00 after financial aid.  But those are not the questions to be raised here.  The question to be raised here is what exactly do colleges call financial aid? (see answer for Drexel U. at the end of the post).

This is not an easy question to answer, and colleges make it deliberately so.

The format for packages varies by school, making it difficult to comparison shop: 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.

Yes, you are reading that correctly.  Colleges regard loans as financial aid.

Salenia Shaw, a high school senior Greenberg has been advising, was directed to a website for details of her aid package from Bradley University in Peoria, Ill. After subtracting grants from the cost to attend, they realized Shaw and her mother would need to take out $17,000 in loans for the first year.

And here is another thing that happens.

A letter from Butler University, a private college in Indianapolis where the total cost of attending for the 2012-13 academic year comes to $47,168, initially appeared to offer Jamrozik more money: The figure highlighted was $28,100. Yet after crunching some numbers, he and his coach determined the family would actually need to take out $28,000 in loans, more than double the amount for the state school. 

As for the colleges, well they are just trying to help.

 “It’s certainly not our intention for them to be confusing,” says Melissa Smurdon, director of financial aid at Butler. “There is a significant amount of information that needs to be conveyed.” Lynn Stichnote, director of student aid at Missouri S&T, acknowledges the letters can be “intimidating.”

No, of course not.  A college would never want to be confusing, that’s why they lump student loans in with what they call financial aid.  Of course, the aid is coming to the college, the students are just the ones left with massive debts.

Oh, and what about that financial aid from Dexel U. that left with student with only $13,442 a year that she had to come up with.

It turned out the college’s “offered financial aid” included $42,000 in loans to be taken out by the family. “A loan to me is not financial aid,” says Romano. “It is money I have to pay.”

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