Borrowing Money for School: An Exercise in Confusion and Mild Panic

I am lucky. I grew up knowing that my parents would pay for my college education. This was not easy for them. I have two sisters, and my parents were committed to sending each of us to college. They worked, and saved, and budgeted, and at times fought over saving and budgeting.

When I wanted to transfer from my affordable and respectable state institution to a fancy and expensive private school, my dad sat me down and explained the reality of that choice. I didn’t fully understand the impact of taking on a lot of student loan debt at that time, but I did understand that student loan debt, or any kind of debt, was Serious Business.

I paid attention. I made it through my bachelor’s degree with zero debt. I worked part time during the school year, and full time during the summers. Just as much as the fact of my going to college was always a given, so was the fact that if I wanted to attend graduate school, I would have to find a way to pay for it myself.

So, I did. I worked full time for a number of years, and when I found a program that I liked, at a school that was close enough to get to in the evenings after work, I applied.

I paid for it in part by taking advantage of my employer’s 50% tuition reimbursement deal, which they honored for a few terms until they realized that someone was actually using that benefit and cut off the funds. I also had some savings, and a small inheritance, and so paid cash for the rest. By spreading the classes out, one per term (except for the summers, when I inexplicably doubled up in a concentrated amount of time; I do not recommend this), I earned my master’s degree without a penny of debt.

Then, I went back to school for my doctorate. I did not need to borrow money to cover living expenses, but I did borrow to cover tuition. Having never borrowed money for school before, I took it upon myself to go to the financial aid office in person to make sure that everything was squared away.

I had already filled out the FAFSA forms. I had taken the FAFSA quiz that has questions along the lines of, “you know you have to pay this back, right?” The government offered me the full amount of unsubsidized loans: $12,500/year.

The catch was that I didn’t need $12,500 a year. Tuition was in the neighborhood of $4-6,000 per year, because 1) it was an affordable state school, and 2) I was only attending part-time.

I couldn’t figure out how to decline any part of the excess money, so I walked into the financial aid office of my school and introduced myself. I said I was new to that school, and to the student loan process. I asked if someone could please tell me how to borrow the money that I do need, and decline the money that I don’t.

Seems straightforward, right?

The lady behind the desk handed me a form and said to fill it out. There was a box at the bottom for me to handwrite my explanation as to what money I wanted to decline. This seemed rather unofficial to me, but after all, these are the people who should know, right?

I filled out the form. I again explained my intention. I was told that I had done what I needed to do, and to have a nice day.

Huh, I thought. That was easy enough.

About a month later, I received a statement from the U.S. Department of Education. The statement showed that I had borrowed the full amount offered, and that interest was accruing.

I went back to the financial aid office. I again explained my situation. I was again told that I had followed the procedure to only borrow X dollars and decline the rest.

“Except, the Federal Government is charging me interest,” I explained. The financial aid staff was confused. I had followed the procedure and they had logged my visit in the computer. If it said in the computer that I had done what I was supposed to do, then we were all set.

“Except, the Federal Government is charging me interest,” I said again.

I refused to leave the office until we got this figured out. It was an uncomfortable situation. The financial aid staff kept insisting my account was set up properly. I kept showing them the loan statement showing that it wasn’t.

Eventually, defeated, I left the office, confused, but unable to get anywhere.

Then, I received an email saying that if I did not settle my account within three business days, I would be dropped from my schedule.

Excuse me? What’s this now? Had I not followed the procedure? Did I not go, in person, twice, to speak to financial aid professionals to ensure that my account was set up properly?

Did I not fill out the form that I was told twice was all I needed to do? Did the financial aid staff not check the computer and see that my account was set up properly? And as the Federal Government was charging me interest, clearly something was paid to someone. If I didn’t have the money, and the University didn’t have the money, who had the money?  What on earth was going on?

I went back to the financial aid office. Again, I had to insist that my account was not, in fact, set up properly, only now I had the added component of the threat of being dropped from my classes, and I had no idea why.

I insisted on sitting down with a supervisor in the financial aid office. She checked the computer. She said what everyone else kept saying: my account showed that I had set everything up and so clearly had not borrowed the extra money. I showed her the loan statement from the federal government showing that the government had loaned me the full amount.

I showed her the email saying I was about to be dropped from my classes and now had only had two business days to work out what I had thought I had worked out weeks ago by going, in person, twice, to the financial aid office, explaining my situation, and asking for help.

Here’s where I fast forward to the conclusion: It turns out that when the Federal Government issues student loan checks, it sends the checks to the school. Then, students apparently, as if by magic or telepathy, have to know to show up at the Bursar’s office at a particular time of year to claim the check.

To this day, I have no idea how students learn they have to do this. I never got a letter or an email or a phone call. I went to the financial aid office in person more than once, each time explaining that I had no idea how the process works and asking for help.

Yet, somehow I was magically supposed to know I had to stand in a line at a particular office at a particular time, accept a live check and either sign for it and keep the money or sign it back over to the university, at which time they credit my account with enough of the funds to settle my bill, and return the rest to Uncle Sam.

This process left me speechless. No wonder so many so students rack up debt like someone is handing them free money. Because, someone is handing them free money.

It’s a good thing I was a woman of a certain age, who was raised to be extremely conservative with debt. There was no way I was going to borrow one penny more than I absolutely needed to cover my tuition. But would the situation have been different were I an 18-year-old freshman who didn’t grow up with my dad teaching me the importance of saving early and often?

I was acutely aware of the impact of debt and compounding interest, but I know that not everyone is. I can see the dollar signs adding up as one uninformed college student after another is handed a five-figure check with their name on it, knowing they don’t have to figure out how to pay it back for years.

To this day, I do not understand how students are supposed to figure out this process. Apparently, they do. That line at the bursar’s office was long. Does every student figure this out the same way that I did, through confusion and mild panic?

There were a lot of people involved in the financial aid office (and, not incidentally, the Dean’s office, when I called to ask why I was about to be dropped from my classes) who treated me as though I was doing something wrong. The woman in the Dean’s office was flat-out rude, acting as though my situation was entirely of my own delinquency for not paying my bills. Even when I explained the situation, still she was condescending and rude, as if I was lying about my circumstances.

If walking into the financial aid office and asking point blank for help understanding the process is not enough for a student to become educated, what exactly are students supposed to do? Circumstances like these make me angry at the growing student debt crisis in our country, because it’s clear that there is information that needs to be shared, yet the people in the best positions to share it are not doing so.

 

 

 

 

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