If a student gets accepted Early Decision, is it unethical for the college to include loans in their financial aid package? It seems like the college would be forcing the student to borrow money under kind of bad terms – not quite as bad as a loan shark, but still not the best terms, since the student’s salary can be withheld to pay off the loan.
What kind of loans are you talking about? Many schools package the Direct Loans as part of their need based aid financial aid packages and yes…for ED too!
If the school included Parent Plus Loans, this means the have determined you are not eligible for as much need based aid as you thought…and your parents have the option of taking this loan.
Of course, if the school is not affordable, you can decline the ED acceptance.
Is this a school that guarantees to meet full need? What is your family income? Do your oarents own a business…or are the self employed? Do you own rental properties?
How much need based aid did you expect to receive?
The Direct Loan for freshmen is $5500. When that is added to your other aid, is your need met?
Of course, if this school does not guarantee to meet full need, it is very possible you received a need based aid award with a gap to pay.
ETA…are you talking about Georgetown? The school meets full need for all. Their aid packages are based on family income and assets…and yes, if you’re are above a certain threshold, you will be granted loans. Sounds like you THOUGHT you would get more need than you did.
You posted this two years ago. What did you end up doing then? Are you a U.S. citizen?
No, it is not unethical to include student loans in our financial aid package. Actually most schools have a self help portion of your package where you will have a student contribution from summer earnings in addition to a student loan. There are very few schools that have no loan policies in their financial aid packages.
You can always refuse the loans; you just have to come up with the money to replace that part of your aid package. If you hget outside scholarships some scho will apply it toward your student loans.
Unethical? I don’t get it. Are you saying it’s unethical for schools to not provide a free education?
To the OP…are you complaining about loans NOW? Your past posts indicate you matriculated in college a couple of years ago. Did you end up at Georgetown, taking out loans (as you indicate in those posts from 2012 and 2013)?
Yes, your family contribution has to be paid…and that family contribution cannot be funded with need based aid.
I’m not sure I understand your current question.
If you have a high family contribution, you have a couple of choices…
- Family pays by using savings, current earnings, and/or loans.
- Choose a school that is affordable.
My little sister is applying ED, and my family is burdened by Georgetown loans for my education. So, the question is really is for her. Georgetown likes to say they offer financial aid based on need, but of course that includes loans which only increase the cost.
@Madison85 Maybe it is unethical to provide an education that would require most people to borrow over $20,000. Maybe, ethically, schools should be reducing their costs, or, at least keeping costs in line with the cost of living. Free tuition would be great! But unlikely if school’s do not have the fiscal aptitude to keep tuition rate increases equal to cost of living increases.
Georgetown offers Direct Loans which are not unreasonable. If your family needs to take out parent plus loans, it’s because you were not eligible for need based aid in as high an amount as you anticipated.
If your little sister applied ED, she very likely got her admissions decision, and aid amount already.
As stated above, your parent income and assets determine your need based aid award. If you have things like a business,rental properties, high income, or high assets…or a combo of these, your need based aid might not be as you hoped.
If finances were such a huge concern, why did your sister apply ED? Doing so prevents her from comparing net costs, and financial aid amongst a number of schools.
If you have a simple income situation, the net price calculators should be accurate…but not for divorced families, folks with real estate in addition to primary residence, business owners, or self employed…or international students. Do of those things apply to your family?
If not…what does the NPC say?
Keep in mind, your sister’s aid will change when you are no longer in college.however, if you are still at GT, you might see an increase in your aid…unless your family income is in the $300,000 a year range, and/or you have significant assets.
Are you taking loans out in excess of the Direct Loans? If not, I’m not sure what your complaint is.
Why is ok for your parents to be “burdened” with loans for you, but not your sister? Why is it now unethical?
A “students” salary is not withheld to pay off the loan. Where did you get that idea?
@thumper1 The general problem I have with these types of loans is that they function as a kind of slush fund for colleges to increase tuition at a much faster rate than the cost of living increases. If no bank were willing to lend money for this purpose, then colleges would be forced to keep their costs at a reasonable level. This desire of colleges to use a family’s or a student’s potential for borrowing money to support cost increases well above the cost of living I think verges on unethical behavior.
@inacrappymood you are totally wrong. The reason colleges can charge as they do is that families…like yours…have shown a willingness to take out college loans. And some families are ver willing to live beyond their means. But really a place like Georgetown would have given you ver substantial need based aid IF you had been eligible for it. You apparently were not.
But really that’s not even a problem in my mind. You had a choice for sure. You could have gone to college elsewhere. You didn’t have to go to Georgetown.
What IS your parent income? Did you get any need based grant money from Georgetown? How much annually are your parents taking in loans?
If these loans are really beyond their financial means…why are the doing this?
@mom2collegekids If you read again what I wrote you will see I never mentioned burdening others with my costs. I didn’t suggest that either other families or even the colleges themselves should pay for my education. What I did say is that colleges should lower their costs so they are in line with the cost of living. I don’t think that is unreasonable.
When a student graduates and eventually finds themselves employed but is not able to pay they student debt, the owner of the loan may garnish the former student’s salary. This is not true for other types of loan debt.
@thumper1 It is not just me. What is the average amount of debt for US students? And, it is not just Georgetown. There are state schools that are almost as expensive as Georgetown. However, there was a time when even the most prestigious schools did not increase their costs faster than the yearly cost of living increased. At some point, colleges made the decision that raising tuition to a level that the market would bare, a level that would require enormous borrowing by the population, was a good idea. Was that decision ethical?
Excuse me…if you default on most any kind of loan debt, you will find yourself in trouble financially. If you default on a mortgages you can lose your house. Default on a car loan…the car will get repossessed. Default on credit cards, and you bet they will come after you…via a collection agency.
When you take any kind of loan, it is your responsibility to understand and adhere to the terms of the repayment.
Otherwise…don’t take out the loans.
Again…no student MUST attend a $60,000 college. nO one is ever forced to take loans. Anyone can choose a less expensive opion for college…and there are plenty of colleges out there that are lower cost.
I don’t know what you are talking about. If the loan is from the government (student loan) the government can attach things like tax refund checks or other government checks without getting a judgment as another creditor would have to do. However, you haven’t had to qualify for those student loans either like you would if you took out a loan for a car or a credit card. The government does NOT attach your wages if you are delinquent on a student loan. To do that, it would have to sue you and get a writ of garnishment, just like any other debtor. It can only attach government payments (tax refund, SS, disability) without court action.
There is nothing unethical about a student loan. The government, through the school’s financial aid office, offers to lend you the money. You don’t have to take it, you don’t have to go to that school. That’s the OFFER. Turn down the loans if you don’t want them.
Loans are highly regulated. They aren’t unethical, they aren’t usurious (far from it; most state’s usury limits are 45% interest, although many require a license to lend above 12%; student loans are below 5%, Plus loans below 8%), they aren’t unfair. Don’t take them if you don’t want to pay them back.
While it’s true that college costs have increased far faster than inflation, and at least some of that is due to ready availability of loans, it’s important to remember one fact - no one forces any family to take out loans. Yes, a significant number of schools will include loans in their aid packages. Nothing unethical about that as long as it’s clearly stated (I have seen some aid offers that were misleading about where the money was expected to come from).
A school like Georgetown is always going to be on the high end of costs, regardless of where the average cost of colleges lies. It’s much the same as buying a car - many people need a car, just like many need a college degree. But just because the bank will loan you enough to buy a Lexus doesn’t mean that’s the best choice. It might be better to buy a Toyota - or a Kia - and keep debt manageable, than to take out loans you will regret later on.
If more families exercised common sense, and refused to take out unmanageable amounts of loans, colleges would be forced to reduce costs to attract students. It’s the “I’ll do anything to see my kid get the most prestigious degree possible” mentality that allows colleges to continue to increase costs.
And when costs are lowered, what programs, jobs or facilities are going to get cut? As it is, the sticker price at most colleges does not cover the actual cost of educating the student. At public schools, tax dollars are used, and at private schools (and publics) alumni and other donations help cover the cost.
As others have already pointed out, yes it is true for other types of loan debt. A creditor can always go to court and get a judgment, and if the judgment debtor fails to pay, wage garnishment is usually an option for the judgment creditor (depends on state law).
Tax dollars provide heavy support at BOTH private and public schools.
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My little sister is applying ED, and my family is burdened by Georgetown loans for my education. So the question is really for her.
If you read again what I wrote you will see I never mentioned burdening others with my costs. I didn’t suggest that either other families or even the colleges themselves should pay for my education.
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I READ WHAT YOU WROTE. I never said that you wanted to burden outsiders. I’m saying that that you seemed FINE with BURDENING YOUR family for YOUR education when it was time for that decision to be made.
… Now you seem upset that loans will be needed for your sister’s education.
So, what’s going on? Are your parents now saying that they can’t borrow for BOTH kids and suggesting that you now go someplace cheaper??? What are your parents saying??
Colleges cannot limit costs to inflation because their costs are different. The cost of some “goods” can seem to parallel with inflation. The cost of other “goods” do not and cannot.
However…These schools, like Gtown, are not making a profit, so HOW can they reduce their tuition??? All they can do is give MORE FA, and that would mean more money from outsiders.
No one is forced to attend a pricey private. You’re welcome to attend a cheaper instate public.
Privates can (and should) do what they want. it’s a luxury to attend a private univ.
A luxury car company should charge whatever they want. I shouldn’t go to Mercedes and complain that their cars are too expensive ad that they offer loans to pay. Instead, I should go to the Toyota dealer and buy what I can afford.
If your family can’t afford G’town THEN GO TO A CHEAPER school!
What school accepted your sister ED? Will Gtown give you MORE aid with 2 in college??
@thumper1 What you are saying is true. However, I guess you are not aware that student loans are treated differently than other types of loans, in that the loaner has the ability to garnish the borrower’s wages. You may think this is fair, but then ask yourself, why is this not true for other types of loans? Why does Chapter 11 bankruptcy exist? If something horrible happened to you, and you were not able to pay your mortgage, you would have the option of declaring bankruptcy and starting fresh with no loan obligation but probably with little chance of borrowing again. You could still get a job and your mortgage would be forgiven. However, if in addition to your mortgage you had student debt, that debt, and only that debt, could be subtracted from your measly wages.
Again (responding to your “again”), although no one is forced to do these things, neither are colleges forced to up their tuition way faster than our cost of living goes up. Colleges chose to use the borrowing potential of families to support whatever goodies they wanted to add to their campuses.
You speak of the students’ responsibilities. What about the responsibilities of colleges to keep costs affordable?
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When a student graduates and eventually finds themselves employed but is not able to pay they student debt, the owner of the loan may garnish the former student’s salary. This is not true for other types of loan debt.
student’s salary can be withheld…
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at that point, the student is no longer a student. So a student’s salary is not being withheld.
How much are YOU borrowing? Did your parents cosign loans for you? Didn’t you ask your parents to cosign loans for you?? Sounds like you wanted to go to Gtown and your parents wouldn’t pay their EFC, so you begged them to cosign loans so that YOU could pay their share.
Why did you ask your parents to cosign loans if you were afraid that you wouldn’t be able to pay those loans back?
BTW…if you don’t pay, the banks will go after your cosigning parents.
If so, why are you complaining now?