The College Financial Aid Office

Students and parents sought a trusted source – such as personal counseling – to help them understand college financing, with specific help to identify low-cost loans. They indicated that the Internet was helpful, but insufficient for this purpose. Many students expressed the same thought that a senior at a private four-year university in Boston voiced when she advised others to “form a relationship with your [financial aid] counselor and suck up a little bit.” Many students and parents explained how they borrowed student loans that were recommended by the college, either by the type of loan or the lender. Several students told stories about how they applied and took the student loans that the schools’ financial aid offices suggested, without examining other options.

Parents and students expressed how they wanted to be told what to do. A firstyear student at a for-profit New York business college explained how she borrowed the loans her counselor had suggested:
Because they knew basically how much I needed to take out, what I needed it for, they basically gave me the information I was looking for. My main concern was how long they would give me to pay it back [and] what my monthly payment [would be]. So when I spoke to my financial aid counselor, she explained all the questions that I had.

Not surprisingly, these parents and students were unaware that they had choices, or that the choice of lender mattered in terms of the cost of the loan. This perceived lack of choices could be because they were taking Direct Loans, or that the choices among federal Stafford loans in the Federal Family Educational Loan (FFEL) program did not vary in a way that mattered to the participants. Most students trusted that the school informed them of the best or only options for which they were eligible. Students explained how they obtained loans from lenders without understanding whether they had obtained a federal or private student loan.

read Mandatory Federal Student Loan Counseling

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