There's Something Broken In America's Financial Aid System

"One need only see the tally for America’s student debt load — $1.2 trillion at last count, with an average $29,400 per college graduate — to realize something is badly broken in our financial aid system," Yahoo! Finance reports.

"What’s more difficult is deciding who or what is most at fault.

Most 17- and 18-year-olds aren't typically savvy enough to understand the implications of taking on thousands of dollars in loans. So shouldn't parents know better than to allow their kids to be saddled with decades' worth of debt burdens? Maybe, but adults who came of age at a time when it was actually possible to work one’s way through school without debt may be as ill-prepared to navigate today's landscape as their kids are. Since 1978, tuition has soared by more than 1,120% while the average family’s wages barely budged. ...

The last lines of defense between teens and decades of debt are generally college financial aid offices. ...

It’s not for lack of trying. Financial aid offices are required by law to make students undergo entrance counseling before they can receive financial aid. Any student who takes out federal subsidized, unsubsidized, Parent PLUS or Perkins loans has to complete either online or in-person counseling before they can get funds.

'I can guarantee that students are doing entrance counseling because schools face program reviews and audits all the time,' says Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators (NASFAA).

But somewhere along the way, the counseling endeavor has fallen short. In a 2012 report by NERA Economic Consulting and the Young Invincibles, a youth advocacy group, 13,000 college students who carried $75,000 or more in student loans — placing them in the top 5% of student debtors in the U.S. — were asked whether they remembered receiving counseling.  More than 40% said no.

Draeger wasn’t too surprised by the report’s findings.

'The timing of entrance counseling is not great,' he says. 'You’re doing it at the same time as you’re moving on to campus, enrolling in classes, buying books. There’s a lot going on competing for a student’s attention.'

Despite the fact that entrance counseling can be offered in-person, it’s not a requirement. Sending students a link to complete their counseling online fulfills the minimum requirement for colleges. And while some schools manage to go above and beyond that minimum, the majority of public institutions don’t have the personnel bandwidth or budget to administer a 30-minute session to each student individually. Over the last three decades, per capita state support for public higher education has declined by 30%, according to the AASCU. ...

In 2010, the NASFAA asked financial aid offices across the country what they would cut first when faced with budget cuts. The overwhelming response (90%) was one-on-one counseling with students. Part of the reason the student debt load has ballooned so quickly is that more and more students are applying for loans, further hindering aid offices' ability to deliver individual counseling."

NASFAA's "Financial Aid in the News" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.