Parents Confused About Aid Options, Siegel+Gale Study Finds

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.)

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