Siegel+Gale News

Colleges Need a Course in Explaining Financial Aid Awards

NEW YORK, July 21 PRNewswire — The parents of this fall's college-bound freshmen may be breathing a collective sigh of relief that their children have cleared the admissions hurdle. But few parents understand the terms necessary to make fully informed financial aid decisions, says a new survey conducted by leading global strategic branding firm Siegel+Gale.

"Parents really don't understand the true cost of college and the financial help that is available," states Peter S. Cohl, Siegel+Gale's Higher Education practice leader, "nor do they understand the difference between loans, grants, scholarships and work-study funds.

"We found that more than three-quarters of survey respondents did not know the difference between cheaper government subsidized loans and unsubsidized loans, which are more expensive. And shockingly, 40 percent of working class families surveyed didn't realize that Pell Grants are not loans, but federal grants, which do not have to be repaid."

Siegel+Gale surveyed 202 parents of college-age children who have applied for financial aid in the past two years and who have evaluated financial aid award letters from schools. Yet according to the survey, the two major types of federal student loans, Stafford loans and Perkins loans, were correctly identified by only 53 percent and 33 percent of parents respectively.

More than three-quarters of parents (77 percent) do not know the difference between a subsidized loan and an unsubsidized loan. (Answer: A subsidized loan is based on financial need and an unsubsidized loan is not. With a subsidized loan, the federal government pays the interest incurred while the student is in school, and for a grace period after graduation.)

Other findings of Siegel+Gale's survey:

— 25 percent of parents do not know that grants in general do not have to be repaid

— Less than half knew that not all student loans require a credit check

— Over two-thirds were unaware that work-study money is taxable income to the student

Make Financial Aid Easier to Understand

Evaluating financial aid award letters gets more complicated when parents and students must compare offers from competing schools and make decisions under time pressure.

Siegel+Gale simplification expert Irene Etzkorn argues the root of the problem stems from a unique environment in which colleges, the federal government, and state agencies each use their own jargon, acronyms, and definitions. Ultimately this leads to added confusion.

"All of America's colleges and universities ought to adopt a simplified, standard financial aid award letter so parents can make comparisons across schools," says Mr. Cohl. He also recommends schools cluster financial aid award terms and rank them in order of value, from free (grants and scholarships, for example) to the most costly (private loans).

"The choices parents must make regarding financial aid will change the lives of their children for decades," Mr. Cohl noted. "That's why it is critical for parents to be fully informed in order to make smart decisions from the beginning."

For the complete Siegel+Gale "Financial Award Letter Survey" research findings, or to interview Peter Cohl, or Irene Etzkorn, please contact Davia Temin of Temin and Company at 212-588-8788 or news@teminandco.com.

About The Financial Award Letter Survey

Siegel+Gale's Financial Award Letter Survey findings are based on June 2008 online responses of 202 parents, 40-60 years old, who have at least one child of college-age and who have applied for financial aid in the past two years.

About Siegel+Gale

Siegel+Gale (http://www.siegelgale.com) is one of the world's premier strategic branding companies. Since it was founded by Alan Siegel in 1969, the firm has applied the art and science of simplicity to create branding programs that have helped many of the world's best-known organizations excel. Driven by its philosophy of "Simple is Smart," Siegel+Gale has led the way in bringing innovation to the corporate branding field, including transforming complex, incomprehensible customer communications into plain English; helping clients create distinctive brand voices across all their communications; transporting brands onto the Internet; and aligning the brand experience for customers with the brand promise.

The firm has worked with an array of leading organizations, including American Express, AARP, College Board, Cornell University, Dell, Duke University, Lexus, MBA.com, Merrill Lynch, Motorola, the National Basketball Association, 3M, Dow, and The Four Seasons Hotel Group, Sony, and Yahoo!. Siegel+Gale has full-service offices in New York, Los Angeles, London, and Dubai and strategic partnerships around the world. It is part of the Omnicom Group Inc. (http://www.omnicomgroup.com), a leading global marketing and corporate communications company. Omnicom's branded networks and numerous specialty firms provide advertising, strategic media planning and buying, direct and promotional marketing, public relations, and other specialty communications services to over 5,000 clients in more than 100 countries.

SOURCE Siegel+Gale

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