What Would You Do? Exploring Ethics In Debt Conversations

Exploring Ethics

This new series, Exploring Ethics, aims to open discussion between NASFAA members about how to apply the association's Ethical Principles and Code of Conduct through case studies. 

If you have an ethical situation you'd like us to explore, please email your question to [email protected]. The information you send will be used solely for the purposes of an anonymous case study. If you would like to provide a written reaction to a future case study, please email [email protected] to volunteer. 

In this study, we examine how to talk with families about smart borrowing in the midst of institutional enrollment pressures.

The Ethical Dilemma: Talking Frankly About Debt

Financial aid administrator Greg is meeting with the Martin family, whose daughter Anne has hoped to attend USA University for as long as she can remember. When she was accepted, Anne's parents assured her they would do everything possible to help make that dream a reality, and are asking Greg for guidance. Anne's test scores and grades are average, and even with a Pell Grant and other need-based aid, the Martins face a funding gap of roughly $25,000 a year and no substantial merit aid possibilities. While the Martins would gladly take on a large amount of debt for Anne's education, they don't appear to have the income to support it – and Greg knows that other nearby institutions would be much more affordable.

Greg routinely feels caught between families' desire to attend his popular university with their financial realities – as well as with institutional pressure to boost enrollment, yield, and retention figures. How can Greg balance the competing priorities of his institution's enrollment goals while still educating families about the realities of loan indebtedness?

Reactions from the Aid Office

We asked two NASFAA members to weigh in on why this ethical issue is important to address, and how they would handle it in their offices.

Christine McGuire, Associate Vice President of Enrollment and Student Affairs, Boston University:   "This is a relatively common scenario for a financial aid professional, regardless of the type of school they represent. How should we guide a family in making an enrollment decision that is a good fit financially? The role of the aid professional is to provide comprehensive information to assist the family in making the decision, including straightforward details about indebtedness. Greg should be transparent about each type of aid provided and the obligations the aid entails. However, it is not Greg's role to decide what is the best choice for a family. The obligation is to disclose all of the relevant facts, but a financial aid counselor is not a financial advisor. 

In addition to being straightforward and thorough about the options, Greg should also be attuned to the emotional nature of the conversation. If he has shared news that funding is limited or not available, there may be an emotional reaction to this information. This can be uncomfortable for everyone, so the natural reaction of a counselor may be to keep talking and sharing lots of facts and figures. Often, the emotionality of the family can cloud their ability to process the information Greg is sharing with them. Greg's excellent financial aid counseling may be more effective if the family is given space and time to process the information. If possible, Greg should recommend that they take a little time to review the important information provided and then reconnect later to answer follow-up questions. The choice to enroll belongs with the student and their family. Patience coupled with excellent information can assist in better decision-making, and Greg will have served his school well by providing high quality service."

Ted Malone, executive director of the Division of Financial Aid, Purdue University: "One of the overlooked aspects of college selection is financial fit. While I do not think it is Greg's place to tell a student, 'You should not attend,' it is his responsibility to discuss financial fit and the debt that will be incurred. In a case like this it should be a picture of four years of debt. Families often believe things will change, but at most schools that is not the case. Greg needs to make sure to give an accurate picture of what is most likely to happen with future aid. Yield is nice, but the real goal is graduation. As higher education is under increased scrutiny, we are evaluated not on attempts but on success. 

At Purdue, it is non-resident students who face this dilemma. We try to be open in all our publications that need-based aid for non-residents is very limited and loans will be a large part of the package. We do not package PLUS loans to these students and we title the unmet cost as 'amount to be covered by family.' Financial aid professionals are responsible for being clear, honest and showing the whole picture, but ultimately it is a decision that the family has to make."


Helping families to make informed financial decisions is inherent in NASFAA's Statement of Ethical Principles. The tenet to "Support student access and success" urges financial aid professionals to "understand the need for financial education and commit to educate students and families on how to responsibly manage expenses and debt."

In addition, the principle to "Strive for transparency and clarity" includes "provid[ing] our students and parents with the information they need to make good decisions about attending and paying for college."

How NASFAA Can Help

NASFAA works to help consumers understand college costs and make smart decisions about borrowing. Financial aid administrators can use the Resources for Students and Parents section of the NASFAA website to find consumer-friendly tips and information.

The Upshot

What did Greg do? He applied NASFAA's Statement of Ethical Principles by walking the Martins through the long-term implications of borrowing $25,000 over at least four years. Using a loan repayment calculator, he showed them how much their monthly payments would likely be. He also pointed out that, at College D, the family's overall debt and monthly obligations would be much lower. Although Greg's institutional leadership is intent on increasing enrollment and yield rates, they acknowledged that, in the bigger picture, it is more prudent to recommend admitted students who can't afford USA University to consider institutions where they're more likely to persist and graduate.

Add your own reaction to the comments section below, and explore more case studies in the Exploring Ethics web center

Publication Date: 3/16/2015

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