How Financial Aid Letters Often Leave Students Confused and Misinformed
by Marian Wang
from: http://www.propublica.org/article/how-financial-aid-letters-often-leave-students-confused-and-misinformed
ProPublica, Oct. 16, 2012, 11:55 a.m.
A student guide points out campus sites to prospective students and their parents during a college tour. The financial aid award letters that colleges send to prospective students can be confusing with grants, scholarships and loans all under one heading.
The financial aid award letters that colleges send to prospective students can be confusing: Many mix grants, scholarships and loans all under the heading of "Award," "Financial Assistance," or "Offered Financial Aid." Some schools also suggest loans in amounts that families can't afford.
Take Parent Plus loans, a federal program that allows families to take out as much as they need, after other aid is applied, to pay for their children's college costs. As we recently reported with the Chronicle of Higher Education, Plus loans are remarkably easy to get. With minimal underwriting and no assessment of whether parents can actually afford the loans, families can end up overburdened by debt.
Colleges often exacerbate things when their letters lay out, or "package in," large Plus loans to cover unmet need when student aid falls short. Just like the government, many colleges recommend loans without regard to family income or ability to repay.
The practice can leave students feeling misled. As we reported, Agostinha Depina, a 19-year-old college student, said that one of her award letters — from her top choice, St. John's University in New York — "made it seem like they gave me a lot of money."
After consulting a counselor, she realized that "it was more loans in the financial-aid package than scholarship money." St. John's did not return our request for comment.
"Financial aid award letters need to be more transparent around laying out aid that doesn't need to be paid back and loans that do," Education Department spokesman Justin Hamilton said in an email.
The department has laid out what it says is a better option. Earlier this year it created a model award letter [PDF], which separates "gift" aid — grants and scholarships from the school or the government — from "loan options." Parent Plus loans are included in a separate category — "Other options" — with no suggested dollar amount.
Parent Plus loans under "Other options" (p. 1)
The award letters many students are actually getting from schools look very different from the Education Department's preferred — but not required — layout. Here's one package from the Massachusetts College of Art and Design, a public school.
Massachusetts College of Art and Design (p. 1)
Notice that the student in this case — whose name we have redacted for privacy — was suggested a $16,800 Plus loan in the financial aid award letter, bringing the student's total estimated financial assistance to $33,200.
Conveniently, the figure matches the stated cost of attendance for that year. Not so conveniently for this student, it was beyond what her family could afford. (MassArt has yet not returned our request for comment.)
The language on award letters can also leave the wrong impression. The MassArt letter starts by saying the student will be "eligible to receive the following assistance" — even though getting the Parent Plus loan requires a credit check and applicants are sometimes denied.
Another award letter from Pace University, a private university in New York City, also packages in the Parent Plus loan to bring the total "offer of financial assistance" to just a few dollars short of the full cost of attendance. The student in this case also qualified for a federal Pell grant — need-based aid that typically corresponds to a household income of $50,000 or less. Pace still suggested a nearly $19,000 Parent Plus loan for just one year.
Pace University (p. 1)
Robina Schepp, Pace's vice president for enrollment and placement, said the school offers financial aid counseling and information sessions for parents and students.
Long Island University, another private university in New York, also packages in the Plus loan to match the estimated costs down to the dollar. An LIU spokesman did not comment.
Long Island University (p. 1)
Some colleges do consider parental income when they suggest Parent Plus loans. Ringling College of Art and Design uses an algorithm to determine the recommended loan amount. The school's letter notes that the listed amount is "an estimate of what you may wish to consider borrowing, and is partly based on your income." Parents, it says, "may apply for more or less."
Similarly, Drexel University — a private university in Philadelphia — packages in Parent Plus but "does take into account the ability of the family to contribute to the education cost for the suggested Plus loan amount," said Niki Gianakaris, a university spokeswoman. (Gianakaris said the school is also revamping its award letter to make clearer distinctions between grants, scholarships and loans.)
It's not clear whether these more conservative approaches to packaging in Parent Plus loans actually result in more conservative borrowing: At Drexel, the average Parent Plus loan was more than $24,000 in the 2010-2011 fiscal year. Meanwhile, the average parent loan at Ringling topped $26,000. That's much higher than the average Plus loan across all schools that year: $11,877.
As of late last month, more than 300 schools — representing about 10 percent of all undergrads — had adopted the Education Department's model letter.
Some members of Congress have tried to go further. Earlier this year, Sen. Al Franken sponsored legislation that would make it mandatory for all institutions of higher education to adopt a standardized financial aid award form. The bill is still in committee.
"Students and parents are not getting consistent, accessible and comparable information about college costs and their financial aid offers," Sen. Tom Harkin said in an emailed statement. Harkin is chairman of the Senate education committee and a co-sponsor of Franken's bill. "A concerted effort at all levels — campus, community, state and federal — is necessary to ensure that families have the information they need to make the decision that is best for them."
Monday, October 22, 2012
Several central Oklahoma sheriff candidates have filed for bankruptcy, records show
Several central Oklahoma sheriff candidates — both incumbents and challengers — have filed for bankruptcy in the past, public records show. Among the group are three current sheriffs, including the top lawman in Oklahoma's largest county.
Several central Oklahoma sheriff candidates — both incumbents and challengers — have filed for bankruptcy protection in the past, public records show.
Oklahoma County Sheriff John Whetsel announcing jail accreditation for the county jail facilities, Tuesday, September 11, 2012. Photo By David McDaniel/The Oklahoman Jail Accreditation
MULTIMEDIA
NEWSOK RELATED ARTICLES
The jurisdictions include Oklahoma, Cleveland, Logan, Lincoln, Grady and McClain counties, all part of the Oklahoma City metropolitan area.
Among the group are three current sheriffs, including Oklahoma County Sheriff John Whetsel.
In Lincoln and Logan counties, both the incumbent and the challenger have sought protection from creditors in federal court. Canadian County is the only one in the metro area where neither of the candidates has filed for bankruptcy.
Annual budgets for sheriff's departments, even in smaller counties, typically run well into the millions.
Canadian County Sheriff Randall Edwards, who is facing a former subordinate in next month's election, said being financially responsible is essential for a sheriff.
As elected officials, sheriffs are responsible for managing the finances and personnel of what is typically a county's largest agency — by far.
“Money is always an issue,” Edwards said. “You've got to work with the resources you have, just like with your personal money.”
Edwards, who is responsible for about $4.7 million each year to run his department, also said he feels like a bankruptcy doesn't disqualify a candidate from seeking office, depending on the circumstances.
“In some cases, given our economy today, if a person is forced into bankruptcy ... I don't think that ought to completely exempt somebody from being sheriff,” Edwards said. “There are circumstances beyond some people's control.”
More recent filings
The metro-area sheriff candidate who most recently filed for bankruptcy did so eight years ago.
Kelly Owings, an independent candidate for sheriff in Cleveland County, filed for bankruptcy protection in 2004.
Court records show Owings, 50, and his wife at the time had amassed $142,069 in debt by May 2004. The creditor with the largest claim was a mortgage company, who was owed $72,000 at the time of the filing.
Other debt consisted of $12,120 in credit card claims, $13,971 in medical bills and $2,774 for what was described as a 401 (k) loan.
The bankruptcy was the second for Owings and his former wife. The couple had filed before in May 1991, records show.
More recently, Owings was sued in small claims court after he failed to pay off $3,416 in credit card debt.
Owings could not be reached for comment on this story.
McClain County sheriff candidate Ryan Lake filed for bankruptcy roughly six months after Owings, in November 2004.
It's was Lake's second bankruptcy, but unlike his first filing — a Chapter 7 — the candidate claims he paid most of his debts back.
With a Chapter 13 bankruptcy, debtors are allowed a specific amount of time to spread payments out while avoiding contact with creditors. A Chapter 7 bankruptcy typically involves discharging of most of the filer's debt, essentially “wiping the slate clean,” as Lake put it.
In Lake's first bankruptcy, which was filed in April 2000, he and his wife had accumulated $6,605 in credit card debt and owed $4,646 for personal loans.
Court documents show that Lake and his wife had a 1997 Pontiac Trans Am, a 1999 Ford F-250 and a 1997 Maxum ski boat repossessed between mid-1999 and March 2000, the month before the couple filed for bankruptcy protection.
Lake said he wasn't surprised to learn that eight sheriff candidates in the metro area had sought bankruptcy protection in the past.
“Law enforcement pay is so low ... you run yourself ragged trying to survive,” Lake said. “I've worked two or three jobs to keep me and my family afloat. It happens in law enforcement.”
Lake said the bankruptcies, despite the hardships they caused, helped him become more financially responsible.
“You don't this job for the money,” he said. “You do it because it's in your blood, and you want to help people.”
Most cases from '90s
Lincoln County Sheriff Charlie Dougherty filed for bankruptcy protection in December 1996, a year before his opponent in next month's election, Wesley Scott Donovan, did the same.
Dougherty and his wife at the time had accumulated $131,861 in debt by the time the couple sought protection in federal court. The couple since have divorced, records show.
The couple's credit card bills totaled $21,179 by the end of 1996, records show. The largest creditor was a mortgage company, who was owed $89,000 for the Doughertys' home.
At the time, Dougherty claimed a $1,227 monthly income from his job with the city of Prague. The couple also listed additional income, which was not specified, totaling roughly $18,000 a year.
The couple also owed $1,550 for a home entertainment center and $1,856 for a Kawasaki motorcycle, records show.
Donovan, Dougherty's opponent in the Lincoln County sheriff race, filed for bankruptcy protection in July 1997.
Included on Donovan's list of creditors were 11 credit card companies, who were seeking a combined $32,500 from the couple, records show.
Other than the credit cards, Donovan listed no other unsecured debts. Secured claims included roughly $18,000 in auto loans and $5,684 in student loans.
Donovan could not be reached to comment on this story, but he told The Oklahoman in June that he was working two jobs and trying to make ends meet when he and his wife at the time filed for bankruptcy.
Dougherty, Donovan's opponent, did not return calls seeking comment.
Both sheriff candidates in Logan County have filed for bankruptcy in the past, as well.
Challenger Ben McHand and his ex-wife filed in March 1995 after amassing $71,806 in debt.
The couple owed $7,878 for “household furnishings” and $5,228 for a “firearm purchase” made the year before the bankruptcy, records show.
Most of the outstanding debts McHand and his wife listed in court documents were incurred in the two years before the bankruptcy. The couple also owed $2,255 for four separate signature loans, which were taken out one right after the other between March and June of 1994.
McHand and his wife listed no credit cards on their claim forms, although documents show the couple had a mobile home and a Mercury Cougar repossessed in the years leading up to the bankruptcy.
McHand could not be reached to comment on this story.
Logan County Sheriff Jim Bauman and his wife at the time filed for bankruptcy protection in July 1999.
The county's top lawman's largest debts were bank loans and a mortgage, which totaled about $90,000, records show.
Bauman and his wife at the time owed $757 in state income taxes and listed credit card debt totaling $2,166 on claim forms. The couple claimed $4,030 in unsecured bank loans and $1,866 in medical bills.
The sheriff also listed $785 for a security system on his list of unsecured claims, records show.
Bauman did not return calls seeking comment for this story.
Jeff Franklin, who is running for sheriff in Grady County, filed for bankruptcy in May 1999.
By that time, Franklin and his former wife had accumulated $75,527 in debt, including $15,000 for a tract of land in Blanchard and mobile home valued at $35,000.
Medical bills totaling roughly $6,500 were the Franklins' largest unsecured debt.
Franklin, who was a police officer in Minco at the time, listed a monthly income of just $1,010, which included proceeds from a side business.
When reached by phone, Franklin said a failed marriage and the expense of having two children contributed to the bankruptcy.
“A divorce will make you do things and make decisions you don't normally make,” Franklin said. “You learn from your mistakes, though. You see where you went wrong and do what you can to avoid going there again.”
Oklahoma County
Whetsel filed for bankruptcy in October 1987. He told The Oklahoman in 1996 that he and his wife at the time filed for Chapter 7 bankruptcy after a bad “oil field” investment.
Whetsel, despite filing a Chapter 7 bankruptcy, claimed in 1996 that he repaid 93 percent of the debt listed in court records.
Darrell Sorrels, Whetsel's opponent in next month's general election, has not filed for bankruptcy protection, court records show.
Read more: http://newsok.com/several-central-oklahoma-sheriff-candidates-have-filed-for-bankruptcy-records-show/article/3721185#ixzz2A2jcY0yQ
Friday, June 10, 2011
Charlie Batch Bankruptcy: Exposing the too frequent plight of professional athletes.
Charlie Batch, the journeyman backup Quarterback of the Lion and Steelers recently filed for Chapter 7 Bankruptcy. He made over $20 million over his playing days but claims that bad investments have dissipated all of that income. While it is probably true that he did invest in well-intentioned business ventures, I would suppose that many other "poor investments" like expensive cars, jewelry, trips to Atlantis, etc. were involved in the dooming of Mr. Batch's economic status. It is sad to see but the majority of professional athletes are broke within 3 years of ending their careers. Their plight illustrates what dooms most of us in our own small way. Borrowing against our future for the toys and trips we want today. If this has or is happening to your family I encourage you to visit my website www.attorneyok.com and research how bankruptcy can afford you a fresh start. Remember, true ignorance is only failing to learn from our mistakes. You likely have paid expensive tuition on those lessons so make the most of it. We help Oklahoma file Chapter 7 and Chapter 13 Bankruptcy and let them get on with a more enjoyable and stress-free, debt-free life.
Wednesday, June 8, 2011
Stress, Cancer & Bankruptcy
A recent study has detected a strong correlation between folks who have been diagnosed with certain kinds of cancer and later bankruptcy filings. While this speaks to the financial devastation that debilitating illnesses cause to a family's finances, there is something more to glean from this. I would suppose that there is a bigger connection here. Research in the 90s showed that stress reduces the cancer-fighting white blood cells in our body exposing us to an increased risk of cancer. I would assume that if you were to take a closer look at the cancer/bankruptcy study you would find that those people who were diagnosed with cancer and later filed bankruptcy were already suffering financial stress prior to the diagnosis. . .the illness just further exacerbated the issues.
The take away here is that the stress that people have who are suffering through financial difficulties can be tremendous. Every day I see people who are at the end of their rope and are, quite literally, dying from stress. I encourage everyone to look at the connections between stress and poor health and realize that there may be a solution to your financial stress in bankruptcy. Just remember. . .bankruptcy is not the evil concoction that it is made out to be. . .it may just save your life.
The take away here is that the stress that people have who are suffering through financial difficulties can be tremendous. Every day I see people who are at the end of their rope and are, quite literally, dying from stress. I encourage everyone to look at the connections between stress and poor health and realize that there may be a solution to your financial stress in bankruptcy. Just remember. . .bankruptcy is not the evil concoction that it is made out to be. . .it may just save your life.
Tuesday, June 7, 2011
Company That Owns the Spiegel Brand Files for Chapter 11 Bankruptcy
Signature Styles (Spiegel, Newport News & Shape Fx Brands) Files for Chapter 11 With Deal to Sell All Assets
Signature Styles which operates a primarily internet/catalog retailer specializing in women’s apparel Spiegel, Newport News and Shape Fx brands, filed for chapter 11 bankruptcy June 6, 2011 in Delaware. The company acquired Spiegel Brands, Inc., which were being sold in a foreclosure sale conducted by Dymus Funding Company, LLC. Signature Styles was the only bidder for the assets and paid $21.7 million.
$48.6 million of assets and liabilities of $87.6 million were listed in the schedules. Secured debt is $14.6 million owed to Zohar II 2005-1 Limited and Zohar III, Limited, and $22.64 million owed under a term loan facility provided by Zohar III, Limited. The obligations owing to the Zohar entities, which are investment funds managed by companies whose collateral manager is related to Patriarch Partners Agency Services, LLC, are secured by liens on substantially all of the debtors’ assets. The companies’ remaining debt consists of $9.8 million of trade debt, $23.2 million of obligations to customers for returns, credits and gift cards, and various other unsecured obligations. The debtors’ equity is wholly-owned by Zohar III, Limited.
The debtors plan to use the chapter 11 cases to effectively liquidate most of their assets. They’ve also petitioned for approval of bidding procedures to facilitate a quick sale and have received a stalking horse bid for the assets from a newly-created affiliate of the pre-petition lenders (i.e., the Zohar entities and Patriarch Partners). Under the proposed stalking horse agreement, the consideration that the purchaser (Artemiss, LLC) would provide for the assets would consist primarily of solely the assumption of certain liabilities of the Signature Styles companies. Specifically, the purchaser would assume the following liabilities:
Up to $30 million of outstanding DIP loan, pre-petition term loan and pre-petition revolver loan obligations. These claims are all owed to affiliates of the proposed purchaser.
“All liabilities accruing or due to be performed from and after the closing under the Assumed Contracts, Assumed Leases and the Post-Petition Contracts” (all capitalized terms as defined in the sale agreement).
“All liabilities for employee compensation and certain employee benefits.”
“The liabilities and obligations of Sellers to retail customers for (i) merchandise returned to Sellers that was purchased on or after the Petition Date [June 6, 2011] to the extent not satisfied as of the Closing Date, (ii) outstanding merchandise ordered on or after the Petition Date [June 6, 2011] to the extent not satisfied as of the Closing Date and (iii) gift cards or gift certificates purchased on or after the Petition Date [June 6, 2011] to the extent not satisfied as of the Closing Date.”
“All liabilities under or in respect of any employee benefit or welfare plan.”
However, if the stalking horse bidder is not the winning bidder at auction, the agreements provide that the successful bidder would not be able to assume any portion of the outstanding DIP loan, pre-petition term loan and pre-petition revolver loan obligations, but would instead be required to pay those obligations in full. In addition, the proposed agreement does provide some proposed relief for existing customers of the debtors (in other words, customers of Spiegel, Newport News and/or Shape Fx). If it is the successful bidder, Artemiss would provide “merchandise credits under its loyalty award program for prior retail customers of [the debtors] in amounts, dollar-for-dollar, equal to (a) the amounts payable for returns of merchandise purchased prior to the Petition Date [June 6, 2011] and that are to be settled in cash by [the debtors] under [the debtors'] current [return] policy and that remain outstanding on the Petition Date, and (b) up to $10 million of the amount of any remaining balance of gift cards or gift certificates that were purchased by third parties prior to the Petition Date or that were issued or are to be issued for returns of merchandise purchased prior to the Petition Date in accordance with [the debtors' current return policy].” The new loyalty credits would be good only for merchandise offered for retail sale by the purchaser and would expire as follows:
For merchandise return credits (subpart (a) above), on the first anniversary of the closing of the sale
For gift card credits (subpart (b) above), four months after the closing of the sale
According to a footnote in the debtors’ motion, they estimate that there are currently approximately $18.1 million in outstanding gift cards and gift certificates which would fall within the $10 million cap described in subpart (b) above.
Signature Styles which operates a primarily internet/catalog retailer specializing in women’s apparel Spiegel, Newport News and Shape Fx brands, filed for chapter 11 bankruptcy June 6, 2011 in Delaware. The company acquired Spiegel Brands, Inc., which were being sold in a foreclosure sale conducted by Dymus Funding Company, LLC. Signature Styles was the only bidder for the assets and paid $21.7 million.
$48.6 million of assets and liabilities of $87.6 million were listed in the schedules. Secured debt is $14.6 million owed to Zohar II 2005-1 Limited and Zohar III, Limited, and $22.64 million owed under a term loan facility provided by Zohar III, Limited. The obligations owing to the Zohar entities, which are investment funds managed by companies whose collateral manager is related to Patriarch Partners Agency Services, LLC, are secured by liens on substantially all of the debtors’ assets. The companies’ remaining debt consists of $9.8 million of trade debt, $23.2 million of obligations to customers for returns, credits and gift cards, and various other unsecured obligations. The debtors’ equity is wholly-owned by Zohar III, Limited.
The debtors plan to use the chapter 11 cases to effectively liquidate most of their assets. They’ve also petitioned for approval of bidding procedures to facilitate a quick sale and have received a stalking horse bid for the assets from a newly-created affiliate of the pre-petition lenders (i.e., the Zohar entities and Patriarch Partners). Under the proposed stalking horse agreement, the consideration that the purchaser (Artemiss, LLC) would provide for the assets would consist primarily of solely the assumption of certain liabilities of the Signature Styles companies. Specifically, the purchaser would assume the following liabilities:
Up to $30 million of outstanding DIP loan, pre-petition term loan and pre-petition revolver loan obligations. These claims are all owed to affiliates of the proposed purchaser.
“All liabilities accruing or due to be performed from and after the closing under the Assumed Contracts, Assumed Leases and the Post-Petition Contracts” (all capitalized terms as defined in the sale agreement).
“All liabilities for employee compensation and certain employee benefits.”
“The liabilities and obligations of Sellers to retail customers for (i) merchandise returned to Sellers that was purchased on or after the Petition Date [June 6, 2011] to the extent not satisfied as of the Closing Date, (ii) outstanding merchandise ordered on or after the Petition Date [June 6, 2011] to the extent not satisfied as of the Closing Date and (iii) gift cards or gift certificates purchased on or after the Petition Date [June 6, 2011] to the extent not satisfied as of the Closing Date.”
“All liabilities under or in respect of any employee benefit or welfare plan.”
However, if the stalking horse bidder is not the winning bidder at auction, the agreements provide that the successful bidder would not be able to assume any portion of the outstanding DIP loan, pre-petition term loan and pre-petition revolver loan obligations, but would instead be required to pay those obligations in full. In addition, the proposed agreement does provide some proposed relief for existing customers of the debtors (in other words, customers of Spiegel, Newport News and/or Shape Fx). If it is the successful bidder, Artemiss would provide “merchandise credits under its loyalty award program for prior retail customers of [the debtors] in amounts, dollar-for-dollar, equal to (a) the amounts payable for returns of merchandise purchased prior to the Petition Date [June 6, 2011] and that are to be settled in cash by [the debtors] under [the debtors'] current [return] policy and that remain outstanding on the Petition Date, and (b) up to $10 million of the amount of any remaining balance of gift cards or gift certificates that were purchased by third parties prior to the Petition Date or that were issued or are to be issued for returns of merchandise purchased prior to the Petition Date in accordance with [the debtors' current return policy].” The new loyalty credits would be good only for merchandise offered for retail sale by the purchaser and would expire as follows:
For merchandise return credits (subpart (a) above), on the first anniversary of the closing of the sale
For gift card credits (subpart (b) above), four months after the closing of the sale
According to a footnote in the debtors’ motion, they estimate that there are currently approximately $18.1 million in outstanding gift cards and gift certificates which would fall within the $10 million cap described in subpart (b) above.
Friday, April 29, 2011
Monday, April 25, 2011
Even Donald Trump needs Bankruptcy Protection from Time to Time
One of the first and most things I hear from people coming in to my office consulting about a potential bankruptcy is "I didn't want to have to file Bankruptcy." While that sentiment is commendable, the simple truth is that bankruptcy is often the right and sometimes only option available. Credit card companies' ridiculously high interest rates makes paying off large balances almost impossible for the average wage earner. The guilt about filing bankruptcy, in my opinion, stems from the many fallacies that the creditor PR arms have disseminated over the past decades. In reality, at least in Oklahoma, most of the myths like you will lose your home, automobiles, retirement, furniture, etc. is just that, myths. Also, bankruptcy can be the best thing that ever happened to your credit long term. And those of you who feel beaten and embarrassed by the thought of having to file bankruptcy remember this: Donald Trump has filed bankruptcy at least 3 times over the past 20 years.
In 1991 he negotiated with his creditors to give up the Trump Shuttle airline, a 49% stake in the Grand Hyatt Hotel, his 282 foot yacht, a 27% stake in the retail store Alexanders after falling behind on $4 billion in debt. He also had to relinquish large stakes in the Taj Mahal and other casinos in Atlantic City. By 1995 he had paid off creditors and trimmed his debt to $70 million and was even flying again in his own jet.
Trump defends bankruptcy as a smart business practice used by the likes of Carl Icahn and Henry Kravis. . ."We're using the laws to our advantage, That shouldn't be embarrassing, that should be smart."
So, when your considering your own bankruptcy remember that the laws are there for a purpose. You may just need to make the smart play and file bankruptcy and, who knows, you may just be flying private soon!
Subscribe to:
Posts (Atom)