When PLUS Is a Minus

Admissions counselors raise concerns over some colleges packaging PLUS loans in financial aid award letters, possibly misleading families about cost of attendance.

October 6, 2016
 

Federal PLUS Loans help parents cover the difference between the financial aid a student receives from their college or university and the full cost of attendance. They're also not a sure thing -- parents must be deemed eligible based on creditworthiness and be willing to borrow for their child's education.

But some colleges are lumping the loans in with other forms of aid in award notification letters to students and parents, college advisers complained in September at the annual meeting of the National Association for College Admission Counseling. That’s concerning to financial aid professionals, because including PLUS with other forms of financial aid can make a family’s total cost look smaller than it actually is.

Students and parents may also assume they automatically qualify for PLUS loans, which require a credit check and are not guaranteed like other forms of financial aid, said Stephanie Szczepanski, the assistant director of admissions at Saint Louis University. Szczepanski, who is based in Chicago, is the chief delegate at the Illinois Association of College Admission Counselors.

NACAC’s Illinois delegation introduced a motion last week asking the association’s Board of Directors to work with the National Association of Student Financial Aid Administrators on a policy that would recommend institutions’ financial aid offices exclude PLUS from original financial aid offers. The group's admissions practices committee agreed to accept the motion and present it to NACAC's Board of Directors. Both organizations represent college financial aid administrators, while NACAC also includes the high school counselors who work directly with students and parents on the admissions and financial aid processes.

“All the Illinois delegates wanted was to have that conversation started, to say, ‘Let’s put something together and explore this so that it's a little bit clearer to families,’” Szczepanski said.

Justin Draeger, NASFAA’s president and CEO, said the organization hears concerns about how PLUS loans are packaged in award notification letters every few years. Presenting PLUS loans without enough clarity can suggest that there is no remaining need for aid when that is not the case, he said. That can be a problem when a parent doesn’t qualify for the loan.

Draeger said NASFAA doesn’t believe aid notification letters are a matter for federal regulation but rather a ground-up approach by financial aid professionals. Many of the financial aid administrators represented by the organization have strong feelings about having the ability to choose how they package financial aid, including scholarships and loans, in award letters. But NASFAA has written into its code of conduct that members must make clear to families what kind of aid is being offered.

“They just need to clearly indicate in a standardized way what is a grant and a scholarship versus what is a loan,” Draeger said.

Rachel Fishman, a senior policy analyst with the education policy program at New America, said understanding the mix of available scholarships, grants and loans available to students is confusing enough. When you add into the mix a loan a parent signs for, a student’s available financial aid can be even more difficult to grasp.

Fishman said it’s difficult to say whether packaging of PLUS loans with other financial aid is becoming more of a problem recently. The Illinois delegation at NACAC declined to name specific institutions that had done so this year.

She said a standardized award letter would go a long way toward addressing the issues raised by lack of clarity over PLUS loans.

“I know a lot of colleges want to be able to have control over their aid packages, especially because each student has unique circumstances that will not fit on a standardized award letter. But the fact that we don’t have a standard award process makes it really difficult for students to navigate understanding their award packages,” Fishman said. “For students applying to multiple schools, it makes it really difficult to understand how financial aid packages compare.”

NACAC’s staff is still gathering information on the issue in response to the motion at its annual meeting. David Hawkins, the association’s executive director for educational content and policy, said he couldn’t assess the scope of the problem without having more information.

Like NASFAA, the association does not support federal regulation of award letters. But it supported the release of an award letter template released by the Department of Education. The association’s main priority is not how financial aid packages are presented but that they make clear what is a scholarship or grant and what is a loan.

Hawkins said NACAC staff will gather more information about the PLUS loans complaints and present findings to the association’s board at its November meeting.

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