Confusing Financial Aid Letters Leave Students, Parents Adrift

Raised in foster care from the time he was 14, Marquell Moorer was determined to go to college, keeping up his grades and working part time at Dairy Queen to save up money for it.

By the end of his senior year at a high school in Milwaukee, he’d done so well that letters of acceptance started pouring in from not one or two, but 12 colleges and universities.

Moorer was still riding high when another wave of letters started to arrive: the ones outlining how much financial aid he would or would not be offered by each school.

And those proved a lot less clear cut.

“They’ll tell you they’re going to give you all this money, but it turns out to be a loan,” he said. “They’ll tell you the award and they’ll let you know the tuition, but not the activities fees, travel, books — how much you need to live. They’ll include work-study in their financial aid awards, but they don’t tell you you’re not guaranteed a job.”

Financial aid offers from some universities and colleges, which have been landing in mailboxes around the country, are worse than frustrating. Many critics say they’re misleading, crafted in a way that makes them look more appealing than they are, and they can be hard to compare with offers from competing schools.

With no parents or friends who had gone to college, and scant support from his high school, Moorer was lucky: He found a coach from an organization called College Possible, which helps low-income students navigate the obstacle course of admissions and financial aid.

“Even with my coach, it was difficult to figure out,” said Moorer, now a sophomore at Augsburg College in Minneapolis, double majoring in business marketing and communications. “For a student who is first-generation and doesn’t have a coach, it has to be very, very frustrating.”

That’s because, among other reasons, universities and colleges need to fill seats at a time of declining enrollment.

“Students and families don’t necessarily question much,” said Christine Roque, advising manager at uAspire, another organization that counsels low-income students about how to pay for higher education. “They think, ‘The college must have my best interests in mind,’ and they don’t necessarily see them as businesses. There’s that sense of trust.”

The most misleading of these letters sometimes begin with words such as “Congratulations” but go on to outline financial aid that consists almost entirely of loans that have to be repaid. Loans are described as “awards.”

The letters will list an “expected family contribution” of zero, not accounting for those parent or student loans, which, in fact, eventually require a substantial family contribution.

Other problems: work-study money promised as part of a financial aid package, even though work-study jobs or earnings can’t be guaranteed. And while that, and the total amount of financial aid a university or college is offering, might be listed, the ultimate cost of tuition, room and board and other expenses often is not, complicating the process of understanding how much families actually will have to pay.

Some letters are packed with technical jargon and abbreviations that even families with experience in financial matters are unlikely to understand, such as “Unsub Staff” to refer to unsubsidized Stafford federal loans. One alludes bafflingly to something called “credit-based alternative loans.”

When Bob Giannino, uAspire’s CEO, showed some of these financial aid offers to the organization’s board of directors — which includes venture capitalists, Ph.D.s, a top executive at a global bank and a partner at an international accounting firm — “they were all flummoxed,” he said. “So imagine if you’re the first in your family to go to college, maybe English is your family’s second language. It’s a pretty huge challenge.”

Not every university does this. Duke, for instance, gets good grades for requiring its financial aid recipients to sit down with a counselor every year to make sure they understand the process. It even flies in some low-income applicants who have been accepted to the university, to meet with financial aid advisers.

“It’s up to the school to be honest about what the cost is going to be,” said Alison Rabil, Duke’s director of financial aid.

Not being straightforward about it, critics say, only worsens the trillion-dollar student debt crisis, forcing families to borrow even more to fill the gaps they thought had been closed by their financial aid package. In some cases, these critics contend, unanticipated costs drive students to drop out.

That’s to say nothing of other little-known practices that affect what students get. When some colleges and universities learn that students have won scholarships from outside organizations, for example, they reduce their own promised financial aid by an equivalent amount, according to a 2013 report by the National Scholarship Providers Association.

Repeated attempts to improve financial aid offer letters have made little difference. Sen. Al Franken, D-Minn., introduced a bill two years ago to create a standardized letter so students could compare financial aid. It was referred to a Senate committee, where it stalled.

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SOURCE: The Hechinger Report / NPR – Jon Marcus

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