Last weekend, I couldn’t help but notice the full page My Rich Uncle ad in the New York Times. To use their words, My Rich Uncle is “a different kind of loan company.”

Boy ain’t that the truth!

Their ad has a middle-aged man standing with dazed look on what I assumed to be a golf course landscape with the caption reading, “I Didn’t Use My Brain, I Went Right to the Financial Aid Office.”

In other words, “If you go to the financial aid office, you must be stupid.”

(Because the top of the gentleman’s head was sawed off, I found myself thinking “Where did his brain go?” but I’ll solve that mystery another time.)

The remainder of the MRU ad reads:

“Most families aren’t prepared for what college costs today. So why do they check their brains at the door when it’s time to get a student loan? Smart families know that the financial aid office isn’t their only option. It takes fifteen minutes to save thousands of dollars on a student loan with My Rich Uncle. That’s probably why more and more people are learning that thinking saves thousands at MyRichUncle.com”

As one who has worked as a financial aid administrator for over 25 years, let me first say that I believe that families are “using their brains” when they seek help from the office that is responsible for helping them find financial resources to attend college.

I have absolutely nothing against the loan products that MRU offers. Any lender that can offer a stable benefit to students is welcome to do so. Financial aid offices do not discriminate against any loan provider that can offer low-cost loans to students.

The real issue at hand is the advertising used by MRU and other direct-to-consumer loan marketers that attempt to create mistrust between financial aid offices and families. It’s destructive, abhorrent, and downright dirty, and ultimately it harms the customers they’re supposed to be serving.

The financial aid process can be challenging. MRU and other DTC marketers make it even more complicated by boiling down all financial aid to student loans. Contrary to popular belief, the College Board reports that by far the largest form of financial aid in the country comes from institutional grants and tuition discounts, not loans. The very first step in a student’s quest for financial aid must be the financial aid office – plain and simple. Students who are discouraged from reaching out to the financial aid office could potentially lose out on all sorts of financial aid.

It’s simply an inappropriate business model to exploit a family’s apprehension about college costs in an attempt to increase loan volume. Creating distrust between a family and the financial aid office is counterproductive to students and certainly a loan company must realize that a healthy loan market requires a healthy and fully funded need-based aid program first, so that low-income students and families can avoid loans altogether if possible.

If I had the money, I’d run a companion ad. The ad would consist of me giving the “brainless” man his brain back to help him make informed decisions using all of the financial aid information that we provide. It has always been my firm belief—and this has been confirmed in my travels the past year–that the 14,000 financial aid professionals across this nation are, and will continue to be, the most trustworthy source in helping students and families.

Also, as a parent, when I read an ad of this nature, my first thought is, “If this is true, why aren’t other lenders marketing in this inflammatory manner?

I agree wholeheartedly with Dr. Day’s letter that encourages each of us “to oppose on every level the ultimate harm done to students and families by advertisements that intentionally cause families to distrust the financial aid office.”

What are your thoughts? What, if anything, should be done about direct-to-consumer student loan marketing?

Several weeks ago I wrote Winning More Students, a blog post that talked about FA Consultants who promise to help “families pay less for college.”  In that particular blog I asked “What are your thoughts about families paying financial aid consultants for ‘services?’” I acknowledged that financial planners can and do help families develop and follow plans to save and pay for college. 

Part of the reason financial aid administrators become soured on companies that offer these types of services to students can be found in flyers that were recently distributed by a college planning company at a recent College Goal Sunday (CGS) event. The flyers are misleading and I find them personally offensive. The flyers invited students and parents to attend a “free” teleseminar, which was normally $79). They attacked the CGS event, claiming that student loan providers use CGS to lure new borrowers to take out high interest loans.

“The friendly student lenders lurking nearby see you as fish in a barrel to shoot at … but WITH A MACHINE GUN!!!!” the flyer screams.

“Learn how to afford a prestigious, elite private college for less than the cost of a community college,” it goes on to promise.

We’ve heard these claims before, but unfortunately these companies have become even more aggressive in their marketing tactics and claims. At some points during the day I can’t turn on the radio without hearing similar ads.   Some are even cautioning certified financial planners about advising students and parents about educational loans since most they have little training in this area (and I find myself wondering what specific training college planners have?) Advertising on the radio or in newspapers is one thing, but attempting to lure families into fee-based college planning with misleading advertising at a CGS event is repugnant.

“We’ll help you with all paperwork and how to navigate the FA process,” we as financial aid administrators say to families.  “We’ll let you know what you will qualify for and other options to finance your education… and we do that all for FREE.”

But some college planners reply, “Stop getting ripped off! Get your fair share of the money! I’ll tell you what they won’t!” (All for a fee mind you.)

Even though our message is more realistic and accurate, their message gets attention, and may be amplified more because of the recent attacks on our profession. But we shouldn’t be deterred. I encourage all NASFAA members to continue diligently serving this nation’s students and families despite these frustrating circumstances. We may not have the loudest voices, or the same marketing dollars, but it’s vital that our students and families know that applying for federal student aid is free, without cost or commitment. They must also know that our help is also available for free, and that our sole purpose is to help them find funds to meet their postsecondary educational needs.

In the wake of last year’s “student loan scandal” private companies rushed to provide websites that compare student loan rates and benefits. However, the sheer volume of loan companies and variety of benefits and rates makes an apples to apples comparison of loan products complex. Trying to determine which loan benefits best suit the individual needs of students and parents makes this process even more complex.

Despite the seemingly insurmountable challenge of the task, I am aware of at least eight companies that have taken it on. What I’m not so sure about, and am curious to hear your experiences about, is how effectively these websites help consumers (and/or financial aid offices) compare student loan rates and benefits.

Here are the companies I am aware of along with a brief description of what they do:

• College Advance LLC provides Student Loan Scout where students and parents submit demographic and financial information and receive loan offers (for private loans) from lenders on its platform, which can then be compared. Not all lenders participate, and the company is working to add more lenders, but other lenders may provide better terms/benefits.

• FinAid.org offers a private loan comparison chart that provides the annual and cumulative loan limits, the highest, average, and lowest interest rates and fees, and loan term for the most popular private student loan programs provided in alphabetical order.

• Goal Financial, LLC owns eStudentLoan Inc, which provides LoanFinder. This tool gives students and parents up to six loan programs (based on the type of loan) to compare based on the best advertised rates and fees, not actual rates. The highest rates can also be compared on the site.

• Graduate Leverage (for grad students) and Collegiate Leverage (for undergrads) uses industry-wide or school-specific likelihood of qualifying for a loan discount to rank FFELP lenders by “effective APR” for Stafford, PLUS, consolidation and private student loans.

• The Greentree Gazette’s StudentLoanListings.com provides the lowest possible rates and fees for Stafford, PLUS, Consolidation and Private student loans. Lenders pay a fee for every time a visitor clicks the link to their site.

• Moneycafe.com provides current information to help visitors comparison shop financial resources, including student loans. Student loan providers are listed by state.

• SimpleTuition is an online loan comparison tool for Stafford, PLUS, consolidation and private loans. The tool lists loan results with lenders that pay a fee at the top. Users can then sort the lenders by the lowest advertised rates and fees.

• TuitionBids is a startup that plans to auction loan applications to the lenders with the lowest rates and fees. Up to six lenders will submit bids for the prospective borrower’s loans.

I’m interested to hear members’ experiences using any of these services or a service not listed above. Comments and concerns about these loan comparison tools are also welcomed.