Financial Aid Can Change Over Time

MarketWatch: “Grants and scholarships are the best ways to pay for college because you don’t have to repay them. But if you chose a college because it offered you the most free money, your final bill may end up bigger than you thought.” For example: A”ll of the scholarships listed on your financial-aid award letter may not be available to you next year … some schools award incoming freshmen a one-time scholarship for visiting the college’s campus or interviewing with the school … Other scholarships are renewable if you meet specific requirements. These may include maintaining a particular grade point average, choosing a certain major or following the school’s code of conduct. Review your scholarships to see which are renewable, and make sure you meet their terms.”

” Typically, schools aspire to maintain overall awards from year to year … But the types of financial aid within that award may change. For example, students have higher federal student loan limits after their first year in school. To account for this, a college could replace a grant with a loan of an equal amount for your sophomore year … Other changes to your financial circumstances could lead to you losing aid altogether. For example, say your older sibling graduates or moves out of your parents’ house while you are enrolled. The financial aid calculation now sees your family as having more available income, which increases the amount you’re expected to pay out of pocket.”

“Even if you receive the same amount of aid year after year, it may feel like less because your college’s costs increased. On average, tuition and fees have risen roughly 3% annually over the past 10 years, based on data from the College Board … Planning ahead is the best way to prevent these additional costs from catching you by surprise. To help predict future tuition and fee increases at your own school, look it up on the College Navigator website.”

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Students Need Schooling on Financial Aid

Bloomberg: “An overwhelming majority of 11th and 12th graders (from 73% to 81%, depending on income group) were unaware that the government will pay their interest on existing loans while they are still in college, according to a new analysis of data by the ACT’s Center for Equity in Learning. From 67% to 70% didn’t know about a program that allows students to repay loans slower, based on how much money they make after college, the study found … The center outlines steps for improvement, including tailoring information for different student groups and improved outreach by college representatives.”

Equity in Learning: “The Center proposes the following ideas in its report … Where possible, a more nuanced view of high school students and their financial needs should be adopted … Colleges need to improve their outreach to the students who could use their assistance and advice the most; without it, students may not have the most up-to-date, personalized or accurate information to make college enrollment and student financial aid decisions.”

“Despite efforts to increase financial aid literacy, there remains an urgent need for more financial literacy–specific interventions. Further, debt-averse students may need additional information about the value of undertaking some (but not too much) debt, and the difference in types of debt.”

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FAFSA: Mind the Deadlines

US News: “For students seeking federal financial aid to pay for college, the deadline to submit the Free Application for Federal Student Aid, or FAFSA, is on June 30 each year. But to maximize their chances of getting aid, every prospective and current college student would ideally promptly submit the FAFSA shortly after the application opens on Oct. 1 of the school year before the aid will be used … This means that rising high school seniors who plan to begin college in 2020 should prepare to fill out the FAFSA starting this October … To be eligible for federal financial aid like work-study, student loans and the Pell Grant, as well as a range of other college and state need-based aid, students must submit the FAFSA.”

“In addition to keeping the federal deadline in mind, they must juggle multiple independent FAFSA deadlines unique to their college and state. The difference between filing early, on time and late can amount to thousands of dollars in funding to pay for college.”

“The U.S. Department of Education publishes a list of state deadlines for the FAFSA annually, and Shank says students should also check their college’s website to find deadlines for specific grants and scholarships, or contact their financial aid office if the submission deadline isn’t clearly stated.” The priority deadline for Connecticut is midnight, February 15th.

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Financial Aid: What Goes On, Really?

Of all the most frequently asked questions about college admissions, financial aid probably comes up most often. Inquiries typically start with the basics, such as “what is the difference between merit and need-based aid?” The quick answer is that merit aid, or scholarships, are dollars donated by people who are either very wealthy or very dead and are designed to entice students from the top tier of the applicant pool, regardless of financial need. Need-based aid generally refers to the government grants and loans allocated through FAFSA, as well as other sources, that are determined by the student’s ability to pay.

Financial-aid questions quickly escalate to murkier turf where definitive answers are scarce. One question we hear on almost a daily basis is whether applying early decision effectively closes the door on getting any merit aid. The answer would seem obvious, since why would a school throw money at a student who is legally bound to attend, scholarship or not? However, the real answer depends on which school you ask. We heard an unexpected perspective at a roundtable discussion among four vice presidents of enrollment during the recent IECA conference in Chicago.

Without naming names, some schools say that, contrary to popular belief, early-decision students are indeed sometimes awarded scholarships. The reasoning is that if a school were to gain a reputation for denying early-decision students merit aid, it would depress the number of quality applicants and the school would miss out on some really great kids. This does make some sense, although a healthy dose of skepticism is also understandable. It’s not so much that these schools are making false claims as it is that the policy almost certainly varies from school to school. So, if merit aid is a consideration, it would be worth researching a school’s position on merit aid before submitting an early-decision application.

A somewhat related question is whether students who are not declaring an intention to apply for need-based financial aid are unlikely to be awarded merit scholarships. Why give money to students who don’t need it? Once again, the intuitive answer may not be correct. One of the enrollment VPs said that providing scholarships to wealthy students actually makes more need-based money available to those less well-off.

Part of the reason is that tuition increases each year, but the scholarship award does not, and overall revenues rise accordingly. So, in a way, these students help support revenue growth. In addition, similar to the early-decision scenario, schools may view the potential scholarship as an incentive to apply even to students who don’t need the money. After all, scholarships are an honor, and not necessarily just about the money. Awarding merit aid makes a student feel wanted, which is a big deal. Once again, some schools are also wary of doing anything that might discourage high-quality applicants.

All of this is to say that navigating the financial aspects of a college application is complicated, and it is best to research, ask questions, and never assume anything. That much you can take to the bank.

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Top 10: ‘Best Buys’ in Public Universities

CNBC: “Some public schools are far more affordable than others, particularly for those applying out of state. Personal finance site GOBankingRates ranked 100 public universities by out-of-state tuition costs, based on data from schools and U.S. News & World Report. People assume a private school is better, but ‘these public schools are equally good and they have huge resources,’ said Andrew DePietro, the lead researcher and data analyst at GoBankingRates. In addition, not only are the schools near the top of the list relatively less expensive, but most also have a high acceptance rate, making them particularly attainable for college-bound seniors.

Here are the public colleges that made the top 10:

University of South Florida; Kent State University; University of Wyoming; Florida International University; SUNY College of Environmental Science & Forestry; San Diego State University; Montclair State University; University of Central Florida; Ohio University; and Florida State University.

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Five Tips for Scholarships

Robert Farrington: “Scholarships are the most under-rated tool when it comes to getting money to pay for school … here are my top five secrets for landing scholarships to help you pay for college.” 1) “A few years ago, Fastweb shared that $2.9 billion in grant money went unclaimed simply because people didn’t apply for the FAFSA … When you think about scholarship math in probability and expected value, applying to a lot of scholarships suddenly makes sense.” 2) “On average, about 20% of all applications get disqualified for not following the scholarship application instructions … On the flip side, this really increases the odds for those that do follow the instructions.”

3) “Instead of waiting to the last minute, apply for scholarships early. Even better, plan out a scholarship application calendar and treat it like homework. This will allow you to space out your scholarship applications and hopefully prevent you from missing a deadline.” 4) “When you apply for the scholarship, let others know you applied for it. Show your enthusiasm. Be excited for the organization, the mission, and the opportunity … scholarships are also a form of advertising for the organization. As an entrant in a scholarship, you can help them amplify their message – and this can help get you noticed as well. If the organizer not only sees your scholarship entry, but then they also see your enthusiasm online, it could give you the edge you need to win.”

5) “If you apply to just 20 scholarships, you can have a real chance of getting a substantial amount of money to pay for college.”

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Tips on Appealing For More Student Aid

The Washington Post: “In just a few weeks, families across the country will find out how much their children will receive in financial aid … This will send students and their parents into a frenzy over how to persuade the colleges to give them more assistance. Negotiating for additional financial aid isn’t easy … But if you want to plead your case for more money, there’s a way to strengthen your argument.” Mark Kantrowitz comments: “Negotiation for more financial aid depends on presenting a college financial aid office with documentation of special circumstances that affect the family’s ability to pay.”

“Here’s the reality: Most demands for more money fail — miserably. Although appeals are seldom successful, you have a slightly better chance at private nonprofit schools and high-cost colleges, which often have a policy of providing more aid to needy students … If, however, your financial circumstances have changed, it’s worthwhile to submit an appeal. A number of special circumstances can affect a family’s ability to pay. These include a recent job loss or salary reduction, unusually high child-care expenses, or medical costs not covered by health insurance.”

“Kantrowitz provides useful suggestions on writing an appeal letter, including the do’s and don’ts. For example, don’t ask for a specific amount of money. Do detail a significant financial hardship.”

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Sticker Shock: What is the Real Cost of College?

CNBC: “According to the College Board’s 2018 Trends in College Pricing Report, from 1988 to 2018, sticker prices tripled at public four-year schools and doubled at public two-year and private non-profit four-year schools … During the 2018 – 2019 school year, the reported tuition at private non-profit four-year schools is an average $35,830. But in reality, many students end up paying far less. Here’s how. College ‘sticker prices’ include tuition, fees, room and board (TFRB) and do not account for scholarships, grants and tax benefits … students typically pay less than the published price.”

“In fact, the average net price of tuition and fees in 2019 is $14,610 at private nonprofit four-year schools. These students typically receive an average $21,220 in grant aid and tax benefits. Similar discounts are also in effect at public colleges. During the 2018 – 2019 school year, the reported sticker price for in-state students is $10,230 at public four-year schools, but the average net tuition and fees is closer to $3,740.”

However: “Many students underestimate the cost of living expenses when they go to college … more than a third of students struggle with basic needs such as food and housing. Prospective students also often overlook graduation rates when they are considering colleges, but they can be an important measures of a school’s quality and cost … just 40 percent of first-time full-time bachelor’s students earn their degree in four years, and only 59 percent earn their bachelor’s in six years … students may want to estimate what six years of tuition and fees will cost them at schools with low four-year graduation rates, and be mindful of planning their schedules and making the most of AP and other college credits.”

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Financial Aid: The Top 10 Private Schools

CNBC: “When it comes figuring out how they’ll pay for college, many families start by shying away from pricey private schools. Yes, annual tuition plus room and board at four-year, private universities is much higher — $48,510, on average in the current academic year — compared with just $21,370 at public institutions, according to the College Board. However, about two-thirds of all full-time students receive aid, which can bring the net price way down.”

“In fact, the top schools for financial aid all have sky-high sticker prices, yet their very generous aid packages make them surprisingly affordable, according to The Princeton Review … When it comes to offering aid, private schools typically have more money to spend.”

In order, the Princeton Review’s top 10 private schools for financial aid are: Bowdoin, Vassar, Princeton, Yale, Pomona, Vanderbilt, Williams, Washington University in St. Louis, California Institute of Technology, Colgate University.

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Financial Aid: How To Interpret Your Award

CNBC: “A school’s financial aid offer typically maps out your expected family contribution and what scholarships or need-based aid you qualify for, not only in the first year but throughout your college career … At public, four-year institutions, tuition plus room and board for the current school year hit $21,370, according to the College Board. At four-year private universities, the cost was more than double that: $48,510, on average … The first thing families should do is take the time to understand the financial aid award letter — particularly the difference between scholarships and loans.”

Ashley Boucher, a spokeswoman for Sallie Mae, which provides loans to students, explains: “It will show free money, like scholarships and grants, and borrowed money, like loans. Not every offer is created equally. If you compare a package that has a higher percentage of loans, it might make sense to take a smaller package that has more money that doesn’t have to be repaid.”

“To get a better sense of your total cost, also consider books, supplies and transportation costs … Note the terms of the aid being offered. Is it renewable for all four years, and what is the minimum grade point average you have to maintain? A school that seems more generous initially might offer less funding down the road … Schools are often receptive to appeals for more aid; they just don’t advertise it. The best way to make such a request is to write a letter to the school’s financial aid office.”

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