College Uncovered: Buyer, Beware

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Congratulations! You got accepted to college. The next notification you’ll get: a financial aid offer, telling you what it will cost.

Those financial aid offers are notoriously indecipherable and misleading, making it difficult to make college cost comparisons or even know how much you’ll owe. Often crafted in a way that make a college look more affordable than it is, they’re full of technical jargon and abbreviations. Loans are described as ‘awards.’ The offers will list an ‘expected family contribution’ of zero, not accounting for those parent or student loans, which, in fact, eventually require a substantial family contribution.

In this episode of College Uncovered, The Hechinger Report and GBH show you what to look out for and secrets to taking back control of the financial aid process, and getting the best deal.

Listen to the whole series

TRANSCRIPT

Scroll to the end of this transcript to find out more about these topics.

Sound of college applicants: Oh my God, guys, I’m just not realizing how much I want to go to Brown. I’m so scared.

Oh, it’s okay baby.

Oh my God. Oh my God. What the actual frick. …

I got in! I got in!

Kirk: Congratulations. You just got into college.

Jon: Right. Now good luck paying for it. Figuring out the financial aid process is hard enough, and this year it was even worse, thanks to the government’s bungled rollout of the Federal Application for Financial Student Aid.

Kirk: Yeah, that’s the dreaded FAFSA form. It was released months late and with mistakes. For example, it didn’t account for inflation. And this is a form that millions of students depend on to get the financial aid they need. So the impact this could have on college enrollment is devastating. But figuring out how to pay for college has always been, let’s say, uncomfortable.

Caroline Miller: It’s kind of like having a financial colonoscopy.

Jon: That’s a parent going through the financial aid wringer for the first time. And she makes a pretty good point.

Caroline Miller: My name is Caroline Miller. I live in Anchorage, Alaska, and I have a senior in high school and we are in the waiting process.

Kirk: You can hear it in her voice how stressed out she is about all of this.

Caroline Miller: It’s awful. It is so anxiety inducing. Sometimes it just wakes you up at night, just wondering. We aren’t exactly financial gurus. We’re just hanging on by our fingernails. And we were very nervous about getting it wrong. I wonder why we all do this. I really do. I kind of sometimes think, why didn’t we just direct him towards a trade?

[College Uncovered theme music]

Kirk: This is College Uncovered from GBH News and The Hechinger Report, a podcast pulling back the Ivy to reveal how colleges really work. I’m Kirk Carapezza with GBH …

Jon: … and I’m Jon Marcus at The Hechinger Report.

Kirk: Colleges don’t want you to know how they operate.

Jon: So we’re here to show you.

In our first season, we helped you navigate the college admissions process. Now we’re back to guide you through the even more confusing territory of financial aid. On the way, we’ll expose a lot of secrets that you really need to know, and some of the shady ways colleges make their prices seem much lower than they actually are.

Today on the show: ‘Buyer, Beware.’

Kirk: So paying for college education is likely to be among the most expensive purchases that people ever make. Even when you buy a house, every fee and charge has to be broken down for you. But figuring out how much you’ll ultimately have to pay for college can be like deciphering a foreign language.

Jon: The whole point of this episode is how complicated and confusing financial aid is.

Kirk: First, we’ll show you about the first step in this process, which is when the college is supposed to tell you how much financial aid you’ll get. Then we’ll show you what they do and the language they use to make that much harder than it needs to be.

Jon: But hang in there, because in our next episode, we’ll tell you some secrets about financial aid that most families don’t know, and that can help you get the best deal.

Kirk: Okay, so after that acceptance that you worked so hard for — and, again, congrats — comes another message from the college. And this one might not be so welcome. It’s when you find out how much financial aid you’re getting, taking you from the high of getting in to the low of realizing how much it’s all going to cost. Emily Meyer has already suffered through that with two of her kids, and now she has a third one on the way to college.

Emily Meyer: It’s an exciting process. And then it’s, like, a heartbreaking process, because you don’t want to get in somewhere that is a dream school and you can’t go because you can’t pay for it.

Jon: Meyer lives just outside Saint Paul, Minnesota. And when her oldest went to college, her family got no financial aid. That’s because after raising her kids alone, she had just gotten remarried and her new husband’s income put them in a bracket that required them to pay the full price.

Emily Meyer: Quite honestly, I was stunned. I was stunned at what college was going to cost us. I mean, we qualified for nothing. We qualified for zero. And I think that, to me, is, like, I want to just scream it from the rooftops, because I don’t think that people know that.

Jon: Man, you can really feel for these parents. But no matter how complex they think the application process is, financial aid is worse. First comes the pain of filling out the FAFSA. We talked a little bit about that at the top and how bungled it was this year. And that’s only the first step. The FAFSA is what’s used to determine how much federal aid a student might get, but most colleges also use it to decide how much institutional financial aid to give. By the way, just to make things worse, some private colleges make you fill out yet another form for that purpose.

Anyway, all of this information is used by colleges to send you a financial aid offer. It’s supposed to tell families what they’ll be paying, but it’s often just a jumble of jargon. Like when you see on the form that your expected family contribution is zero? Don’t buy it. You may actually have to take out thousands of dollars worth of loans to make it work. For some reason, colleges don’t consider loans to be part of your — quote, unquote — expected family contribution, even though you have to pay the money back with interest.

Kirk: Right. And those loans are often hidden behind indecipherable and meaningless abbreviations, or they’re misleadingly described as awards.

Jon: After going through this herself. Debbie Schwartz now advises other parents about colleges’ financial aid tricks. Schwartz lives in Pennsylvania, and she describes what goes through a parent’s mind when the financial aid offer shows up.

Debbie Schwartz: Is this free money? Is this a scholarship? Is this a loan? If it’s a loan, who’s providing the loan? What’s the interest rate?

Kirk: Schwartz charges $200 to $300 to help parents make sense of these offers. But sometimes even the people who do this for a living can be stumped. When Michelle Jean-Louis got into college, it looked to her like some of the schools were giving her enough financial aid to pay for all of her expenses.

Michelle Jean-Louis: I thought that meant that everything was covered, but upon looking at the offer letters, I would still have to pay $15,000 for room and board.

Jon: Jean-Louis’s offer referred to something called ‘expected costs.’ And then it referred to something else called ‘estimated costs.’

Kirk: Come on. Are you kidding me?

Jon: Nope. And both of those are somehow different from the ‘expected family contribution.’

Michelle Jean-Louis: There’s ‘federal subsidized loan’ and ‘federal unsubsidized loan.’ I wasn’t sure what that meant — if the ‘unsubsidized’ or the ‘subsidized’ meant that I wouldn’t have to pay them back.

Jon: A financial aid officer from her local university volunteered to help her out, and even he was confused.

Michelle Jean-Louis: It felt like we were figuring out at the same time, just because a lot of times on our Zoom meetings, he would be Googling things.

Jon: We asked Jean-Louis to take us back through some of the forms she got from all the colleges that accepted her.

Michelle Jean-Louis: They did not look the same. For example, the one that I’m looking at doesn’t really include any sort of glossary for what any of the terms met. But for another college, they included a glossary of what every word meant for their specific institutions, which I later found out is not uniform across the board.

Jon: She finally decided on Harvard, which offered her the biggest amount of aid. But the whole torturous process took a lot of the celebration out of getting into college for her.

Michelle Jean-Louis: I like to say that applying to college is not the hard part. It’s applying for financial aid. Most students go through this process blind, and a lot of times when you do sign these financial aid offers, you still don’t know what you are in for until you get to college and you get the bill.

Kirk: Okay, so just to be clear, Jean-Louis was smart enough to get into Harvard but still struggled with these forms.

Jon: Yeah, like I said, they can trip up even the experts. Anika Van Eaton is vice president for policy at uAspire, which helps the most vulnerable students go to college. She says it’s often Black, Hispanic and low-income students, and students whose parents never finished college, who suffer the most.

Anika Van Eaton: A lot of first-generation college students are doing this by themselves.

Kirk: Andrew Moe experienced this himself. He used to be director of admissions at Swarthmore and now works at Matriculate, which links up high-achieving low-income high school students with advisors who can help them get to college. But before that, Moe himself was the first in his own family to go to college, and he says he met with his college counselor maybe four times for the entire time he was in high school.

Andrew Moe: And that’s what our students face, right? And it’s really problematic, especially for low-income students, those with less social capital, like first-generation students, to really understand this and then compare financial aid award letters.

Jon: So what happens to them?

Andrew Moe: There are some students that they take on this debt, or they see these bills and they drop out after a semester or after a year because it just becomes too much.

Kirk: Rachel Fishman says she saw this all the time when she used to volunteer as a financial aid counselor. So when she later started working at the think tank New America, she decided to investigate. Fishman collected more than 11,000 financial aid offers from nearly 1,000 colleges, and she found that they used a 136 different words to describe federal direct unsubsidized student loans.

Jon: Yeah, those are the most common kinds of loans that undergrads take out.

Kirk: Yup. And colleges called them things like ‘direct unsub’ or ‘d-unsub’ or ‘estimated federal unsubsidized.’ In two dozen cases, they didn’t even use the word ‘loan’ at all, making it seem like these offers were scholarships. But these are not scholarships.

Rachel Fishman: And then there were some institutions that were just doing a really, really bad job and making it seem like students were getting a full ride and doing some, like, confusing things with loans to make it seem that way.

Kirk: Seventy percent of colleges grouped all the aid together without specifying what was a grant and what was a loan.

Jon: We met up with Anika Van Eaton from. uAspire to look at a few examples.

Anika Van Eaton: Yeah, well, I actually see a few of the financial aid offers that I brought. So if you were to look at this, it looks like you’re getting a full ride. It looks like everything is covered. But actually the specific offer that I’m looking at includes the full complement of loans that the student would take out and actually $16,000 in a Parent Plus loan. So something that looks like a full ride actually includes about over $20,000 in debt.

Jon: To say this is confusing is an understatement. Yet colleges and universities persist in using these complex forms with wording families don’t understand.

So is it possible that that’s on purpose? That some of these colleges purposely make it harder for a family to realize they have to take out loans, or to hide the total cost?

Andrew Moe: Yeah, 100 percent.

Kirk: That’s Andrew Moe again. His organization helps smart, low-income students translate terms like EFC, which stands for ‘expected family contribution.’ EFC is one of those terms that doesn’t actually mean what it sounds like, since it usually doesn’t include the loans you need to take out. I think most reasonable people, Jon, would assume that a loan is part of the — quote, unquote — expected family contribution. But colleges don’t look at it that way, which can really trip people up.

Andrew Moe: And I had one really challenging example where a student sent me his letter. It had zero EFC — ‘zero estimated family contribution’ — literally written on the letter. And here he had about $40,000 in loans listed on the letter. And he wrote back and he said, ‘I think I just got a full ride.’ And I unfortunately had to tell him no. And it was written to essentially obscure what the actual cost is.

Jon: So a lot of families end up thinking they’ll pay less for college than they actually will. You put down your deposit in the spring, and when the bill comes in the fall, you find out, ‘Hey, I owe a lot more than I expected.’ A report from the Government Accountability Office found that half of all financial aid offers from universities and colleges made the total price seem lower than it actually was, and 40 percent did not include the price at all.

Kirk: So if you’re stressed out by just listening to us, describe all these obstacles that college has put in your way, you are not alone. So are a lot of other people. And in our next episode, we’re going to tell you about an effort to make colleges adopt a single standardized financial aid offer that’s much easier to understand.

Jon: And don’t forget: We’re going to give you some tips to make the process easier and help you get the best deal.

Kirk: This is College Uncovered, from GBH and The Hechinger Report. I’m Kirk Carapezza.

Jon: And I’m Jon Marcus. We’d love to hear from you. Send us an email to gbhnewsconnect@wgbh.org, and tell us what you want to know about how colleges really operate. And if you’re with a college or university, tell us what you think the public should know about higher education.

This episode was produced and written by Kirk Carapezza …

Kirk: … and Jon Marcus, and it was edited by Jeff Keating. Meg Woolhouse is supervising editor. Ellen London is the executive editor.

Mixing and sound design by David Goodman and Gary Mott.

We had production assistants from Diane Adame.

All of our music is by college bands. Our theme song is by Left Roman out of MIT.

Mei He is our project manager and head of GBH podcasts is Devin Maverick Robins.

College Uncovered is a production of GBH News and The Hechinger Report and distributed by PRX. It’s made possible by Lumina Foundation.

Thanks so much for listening.