Student loan crisis a bonanza for colleges

It's that time of year again. The traditional May 1st deadline approaches and colleges are sending out their offers in the form of an "award" letter - a far less frightening word for parents to accept than "invoice." Basically, the award letter is nothing more than this is what we're giving you and this is what you must give us before your student graces our halls with their presence. However, what makes this year different is the between-the-lines tone of doom and gloom.

Sadly, most families accept the initial award letter as if it were sent by a higher power. Most will not even question offers from their school's financial aid office and simply grin and bare it, ignorant of the fact that unappealing financial aid award letters can be appealed - more often successfully than not!

I've been cranking them out for years, and so far my batting average this year is 1.000! Disregard the blind leading the blind comments from anyone who warns you that colleges will withdraw aid if a student has the audacity to appeal their so-called generous offer. This could not be further from the truth. If the appeal is politely written, the worst the school will do is deny the additional aid requested.

Some schools have been getting away with financial aid murder for years! Recently, an Ivy League school, whose new payment policy is to ask for only 10% of a family's income, reneged on their promise to one of the families I counseled. When all was said and done, they wound up being overcharged $800 and were petrified at the prospect of telling the school it had made a mistake.

Believe it or not, it's even possible to get unsubsidized Stafford Loans subsidized by appealing, and that alone can save a student $1,000's in interest over time. Some of my appeal successes include:

· $33,000 in year two, when no aid was awarded in year one!
· $18,030 of aid even though the semester bill was only $15,252!
· $12,500 of need-based aid after I intervened for a family whose EFC was $95,226!
· $ 2,300 work-study award when the EFC was over $57,000!
· $ 2,000 grant increase PLUS a free laptop!

A few guidelines that have always served my clients well:

· Never call the school. It's far too easy for them to turn you down explaining in their most sincere tone of voice: "We're terribly sorry, but we have no additional aid to offer."

· The student always writes the appeal letter, as they are the ones who received the award.

· Students who live in the South and go to Northern schools should ask for a winter clothing allowance - even available at the Ivy's!

· Always ask for "help," not money!

· Never bluff and tell a school you received more aid elsewhere when you actually didn't. That strategy far too often sneaks up behind you sooner or later and bites you in the bluff!

· Always ask for maximum loans and a Federal Work-Study Award.

· Even if your EFC is more than the cost to attend, aid can be available. The one rule that always applies is: if you don't ask, you don't get!

· Consider Professional Judgment for unusual circumstances.

Adding to the problem:

In 2007, President Bush signed the College Cost Reduction Act (H.R. 2669) which increased the Pell Grant. However, it also increased Stafford Loan amounts thus benefiting colleges and lenders. As there are far more Stafford borrowers than Pell recipients, the rich got richer at the expense of poor and middle class families.

Currently (April, 2008), the student loan crisis is taking another turn. Once again the big winners will be the colleges who stand to benefit from student borrowers. If proposed legislation is passed, freshmen starting in 2009 will lose $8,000 over 4 years; loan money that used to be free money they would have gotten as financial aid from the college.

What is missing from this equation is a federal grant, perhaps the ACG or SMART, made available to families who qualify for need-based aid but whose income is too high to qualify for a Pell Grant. What is painfully pervasive is the greed of the colleges, the lenders, and the federal government.

Reecy Aresty is a noted financial advisor, lecturer, and critically-acclaimed author of, How To Pay For College Without Going Broke. He is the creator of The College Information Network™, which includes: TheHighSchoolBlog, TheCollegeBlog, PaylessForCollege, and TheWayToCollege. In a career spanning three decades, his successes in admissions and financial aid trench warfare have made it possible for thousands of families to send their kids to the college of their choice for less than they ever imagined. His innovative appeals have turned unappealing award letters into millions of dollars of additional aid.

Reecy presents free seminars from coast to coast and is available for television, radio and newspaper interviews. He will share trade secrets, insider information and reveal to your audience what our colleges, universities, and the federal government don't want them to know: how private scholarships benefit colleges; the tax refund waiting for eligible college families that's theirs for the asking, and so much more. He can be reached at 561-477-9639 or Paylessforcollege.com.