@VANYU2021Mom – Because NYU does NOT promise to meet full need, they may prefer to label their grants in a way associated with merit aid. As they leverage their aid and provide generous aid only to a small fraction of their most desired applicants, the grant aid is by definition both need-based and merit based.
With the current high COA at most private universities, it is very possible to have an EFC that seems quite high but still is well below the COA – for example – I would consider a $45K EFC to be quite high – but if the COA for the college is $75K – then there is still $30K worth of “need”.
All parents are eligible to take PLUS loans regardless of need, and I have no issue with moderate and judicious use of those loans. I took PLUS loans for my kids to help stretch my dollars – but I was in the situation where I might have $10K available and needing to pay $15K, so using the PLUS loan as a way to compensate for a small shortfall. I would also not have a problem with a more affluent family doing the same thing, in larger amounts – for example, a family that can pay $60K out of pocket using PLUS loans to help get to the full COA of $75K. As long as the amount borrowed is moderate in relation to the family income, it should be manageable. I simply set an upper limit for myself as to monthly payment – I think I figured out that I should be able to meet a monthly payment of $500, and simply planned to keep my borrowing at level that would not result in higher payments.
The problem I have is when I see posts from students and parents who clearly don’t have the resources who are taking on unrealistically high debt. So when a student posts that the family EFC is under $10K, the NYU grant is $20K, and parents are willing to borrow the rest – that’s when my blood boils. Sorry, but there is no way that a family with an EFC that low can afford to borrow $50K per year – ($200K overall) – the math just doesn’t work out. Sometimes the parents opt to defer payments while the kid is in college, with the expectation that the child willl take over payments after she graduates - meaning that interest on the loans are running from day 1 – and so 4 years of accumulated interest is tacked on to the loan balance – and neither the parent nor student have any realistic way of paying back those loans.
In theory this concern would apply to any college-since the same system is in place for all – but this seems to be a much bigger issue at NYU than others. To start with, the majority of prestigous, elite colleges are far more generous with need-based aid-- NYU’s aid policies are more in line with universities that are less likely to be perceived as a “dream” colleges. If you remove the “dream” part from the equation, then parents are much more likely to make rational decisions about borrowing. And the reason for this differential is that other prestige colleges seem to have prioritized a commitment to need based aid, with a sincere effort to meet full need of all or most of their students; whereas NYU seems to have priortized expansion of its programs and facilities, including shifting many of its students who don’t make the cut for admission into its domestic programs into it’s international campuses. Fine for those who can afford it – but again we keep seeing posts from students who clearly can’t.
I really think it would be far kinder and more ethical for NYU to go to need-aware admissions and simply deny admission to high need students who are not within the priority admit group that NYU is willing to finance.
And I also think that the federal government would do well to cap the borrowing limit for Parent PLUS loans – at the time that program was extended to allow funding of full COA in 1993, the average total cost of attendance for colleges was under $8000 a year. See https://nces.ed.gov/programs/digest/d07/tables/dt07_320.asp
In 1998, total cost of attendance for NYU was still under $18K (from https://nces.ed.gov/programs/digest/d07/tables/dt07_320.asp)
Before 1993, PLUS loans were capped at $4000 per year – when the cap was removed I don’t think anyone could have anticipated the dramatic increase in costs that have continued through the years.