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Why Students Make Financial Aid Decisions They Regret

Posted on Jun 18, 2012 - 06:00 AM | Financial Aid | Comments (0)

How confusing is financial aid? Even those in the system understand why students make big mistakes and graduates have huge student loans.

According to Michael Reilly, executive director of the American Association of Collegiate Registrars and Admissions Officers, the financial aid process is difficult and cumbersome and “It takes a lot of initiative on a student’s part to understand how some of the processes work.” (From an interview with Associated Press).

Causes of Financial Aid Mistakes

Difficult system – Students and parents commonly make mistakes on financial aid application forms. They insert the wrong data or don’t understand how to take advantage of certain breaks built into the system. The FAFSA alone is longer than your 1040, and that’s only the first of many forms you have to fill out. Families also miss tight deadlines, which come fast and furious between January and May. These mistakes can lead to decreased and – in some cases – no financial aid.
Optimism over Realism. Students are told that with a college degree they’ll land a high-paying job that will make their student loan disappear almost overnight. Unfortunately, that doesn’t happen without career goals and a college strategy to back it up. Optimism gives you goals; realism lets you meet them.
Terms can be confusing. Not all terms are easy to understand. The financial aid process can be filled with government or college jargon.
Don’t understand how scholarships work. Students apply for outside scholarships that rarely improve their financial position when they’d be better off boosting their chances of getting college-provided merit-based aid.
Confusing financial aid offers and student loans. Financial aid offers are not clearly explained and new government efforts in this area may not help. Students fail to realize how much of their financial award is gift aid and how much is loans until it’s too late. Colleges routinely suggest student loans, calling them a “good investment” in your future. Students then take on more debt than they can pay back.

Making Financial Aid Transparent

Mr. O’Reilly also said that applying for financial aid is not yet transparent, but that “anything that can provide more transparency, I think, will expand the number of participants."

Which is exactly what our college prep and financial aid program does: it makes the entire process more transparent. You receive college-cost estimates that let you know your total cost of college, with a easy-to-read explanation of your financial aid. You also receive a financial aid handbook detailing the application process, difficult terms you’ll run across and more. Families can even have their financial aid forms filled out and reviewed, with additional help provided when it comes to appealing poor financial aid offers.

Mr. O’Reilly is right – getting great financial aid takes a lot of initiative. You’re negotiating a difficult and often dense system. That requires a lot of work on your part. Or if you hire us, on ours.

To find out how our college prep and financial aid experts can help you get more money for college, attend one of our FREE and informative web events. Don’t let the process confuse you. Get through the financial aid system with confidence.

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