Your Financial Aid and Financial Need Are Not the Same With Every College

My friend, Lynn O’Shaughnessy, financial aid reporter as well as the author of The College Solution book and Web site recently posted a comprehensive piece on how different colleges consider home equity when then calculate financial need and aid. I encourage everyone to read this, not only because of the content, but also because it provides a valuable lesson for parents of college-bound students: financial aid and financial need are what the college says they are.

If you’re new to the college search, but have been given some initial exposure to financial aid, you probably heard about the Free Application for Federal Student Aid, aka ‘the FAFSA’. Anyone who wants to apply for Federal financial aid, even a student loan, must complete it. Other schools, mostly private colleges, require an additional form called the CSS-Profile, which is administered by the College Board, the same organization that manages the SATs, SAT Subject Tests and AP exams.

But while the FAFSA’s programming will come back with an Expected Family Contribution, the maximum that a family should be expected to pay for college, the colleges will come up with their own calculation. As Lynn pointed out, home equity is sometimes a consideration. Your non-retirement assets and the student’s ability to save and earn an income might be others. The resources of custodial and non-custodial parents in the event of a divorce could be treated differently from school to school.

Sometimes the financial aid decision will be based on how a student applied to a school. Suppose a student applies Early Decision, and is offered admission. Early Decision is a binding commitment to come, and withdraw all applications to other colleges. But in some cases, it is also a commitment on the part of the college to try to fulfill the student’s full financial need. It is fair to say that if a school and a student want each other badly, the more generous the aid will be. Colleges do not want to be known for being too stingy; parents do talk in this age of social media. In addition, their admissions offices do not want to be known for having released too many accepted students from their obligations.

The financial aid decision might also be based on where a student ranks among all applicants or all accepted applicants. When schools offer merit based aid, which is credited towards filling financial need, they rank the students by potential for success, using high school transcripts and test scores as well as any other evaluations of special abilities or talents. The qualified student who is also a recruited athlete or musician, for example, will be regarded more highly versus a peer who has similar academic accomplishments but not the added abilities or talents.

When college costs are a serious consideration, then students should consider schools that are most likely to offer them the reasonable costs before the financial aid office reviews the FAFSA and other supporting documents. Some colleges will help by providing merit scholarship and other tuition discount information on their financial aid web sites or their Net Price Calculators. You can also check the Web site for your state’s Department of Education to see if there are specific requirements such as income or academic achievement, to receive state-funded scholarships.

However, even though many schools try practice transparency by posting this information, you have to drill down into a Web site to find it. The information will not usually be on the college’s home page, or even one page down. And there are still many schools where you have to ask the admissions and financial aid offices for help. Those schools are the ones that should leave you concerned. The less transparent the school is about providing cost information, the more difficult it will be for financially strapped families to consider that school.

Need help in comparing colleges on costs and other considerations? Contact me at stuart@educatedquest.com, or call me at 609-406-0062.

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