I Won't Qualify for Financial Aid

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I Won't Qualify for Financial Aid

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One of the most common, and often the most disheartening, misconception about financial aid is that a family's income will disqualify them from receiving any aid. This is usually based on some anecdotal evidence where a friend or family member went to all the trouble to file the paperwork to receive aid and they were denied any money. This of course could happen to anyone at any income level filing for financial aid; aid is not guaranteed. These misconceptions often lead to a family not filing for aid and a student paying way too much for an education or, in the extreme, skipping a college education entirely.While financial aid is based to a large extent on a family's income, families earning up to $250,000 per year are often receiving some type of aid to offset the cost of a constantly increasing college cost burden. It is true that families earning less than the $52,000 median income in the United States will receive the bulk of the need-based financial aid, especially the money funded by the federal and state governments. It is also true that to attract the top students to their institutions colleges and universities are resorting to a widening variety of financial incentives for families earning over the median income. Even at state institutions, which are supposed to serve as the great educational equalizers, a recent study found that between 1995 and 2003 aid to families earning over $100,000 per year jumped by 400%, while aid to families earning less than $20,000 fell by 13%.It is important to understand how the financial aid process works. Colleges and universities all require a family to fill out a Free Application for Federal Student Aid (FAFSA) which is designed to determine how much a family can afford to pay for college. The FAFSA is also used to determine whether a family qualifies for Federal and State grants and subsidies for education. Colleges try to use money from outside sources first when developing an aid package. They will especially try to get you as much money as they can from government sources. While this is free money to the family, it is also free money to the college. Once the outside sources have been exhausted a college or university often has its own money to subsidize a student's education from their endowment funds. While most of this money is still given away based on need, much of the money is allocated based on the "merit" of the student. In other words how much they want a student to attend their school.While merit money is largely allocated on the basis of academic achievement, colleges also use this money for a variety of other purposes including geographic diversity (it looks good in the college catalogue when you can say you have students from all 50 states), ethnic diversity, acquiring special skills (talented athletes or musicians), and increasingly more common, the gift giving ability of the parents. If a university thinks that you might be a generous benefactor in the future there is no doubt they will find some way to subsidize your student's education.The gist of all this is very simple; there are no fixed rules about whether you will or will not receive financial aid. Even at the Ivy League colleges which always prided themselves on only giving away aid based on need, competition for students and the constantly increasing cost of college have forced them to toss out the old aid formulas. At many of these schools families earning less than $60,000 per year will pay little or nothing for their student's education. Families earning up to $180,000 per year will pay for college based on a sliding scale which is well below what the FAFSA would calculate for their family contribution. Competition breeds more competition and now the second tier colleges and universities are offering tuition discounts, up to 50% in some cases, and reducing the amount of student loans allocated to each family.So before you throw your hands up in the air and despair about your ability to receive financial aid you can perform a self-assessment. A quick look at your income versus the cost of the school will give you some indication of your likelihood of receiving need-based aid. If your income is over the median income of $52,000 per year and five times the cost of the school, your likelihood of receiving need-based aid is poor. So if you earn $70,000 and you want your student to go to a community college which costs $3,000 per year, it is likely you will be paying most of that cost on your own. However, if your student wants to attend a school that costs $50,000 per year it is likely your student's education will be heavily subsidized with financial aid. This is not a hard and fast rule. The number of dependents and the type of assets you own will also affect this calculation. It is just a quick way of giving you some perspective on receiving need-based aid. Families earning less than the median income are likely to receive aid at most any college or university.When you look at the schools your student wants to attend, how does your student measure up with the typical entering class? If your student's class rank and SAT or ACT scores put them in the top 25% of the entering class, it is likely the school will be providing your student with not only need-based aid but some of the merit money as well. Colleges subsidize the brightest students. This of course means the dream of your student attending an Ivy League school may not come to fruition. You have to be realistic about your student's chances of receiving aid.Are you willing to let your student attend a school in another state? Colleges and universities are increasingly looking for geographic diversity in their student body. I tell parents, especially at private schools, the further away you live from a school the more likely it is that you will receive a better aid package. A student from Massachusetts is less likely to receive a great aid package at Boston College than a student from California. So many students from Massachusetts want to attend Boston College. So few students from California want to attend Boston College. The law of supply and demand also works for financial aid.Does your student have special nonacademic talents? If your student has athletic or musical talents a school often has a bit of money to attract theses talents. On the athletic front your student is more likely to get a bit of extra money if they play lacrosse, rugby, or gymnastics than if they play the two big sports football or basketball. This is especially true for women. Title IX requires a school to provide as many scholarships for women's sports as are provided to men's sports. To offer money to all those male football and basketball players they have to offer the same number of scholarships to women. If your student is a talented musician, to receive some merit money, they may have to agree to play in the marching band on Saturday. If it helps pay for their education they can live through it.With the complexity of the financial aid process there is really only one guarantee. If you do not apply for aid you will not receive any aid. Families earning up to $250,000 should go ahead and fill out the financial aid applications. Even though your family contribution may end up being higher than the cost of attending, it indicates to the financial aid officers that you are interested in some of the school's money. These financial aid officers just might take a second look at your student and decide that they are deserving of a little help. Even if it is only a few thousand dollars, over four years, that can add up to a lot of money.Timothy R. Wall is a partner in the group Independent Financial Aid Advisors (IFAA, LLC) which works with families to develop strategies for achieving the best financial aid packages for their students who want to attend college. The company provides a free resource guide at http://www.achievecollegeaid.com. You may contact Tim at trwall@achievecollegeaid.com.Visit to - http://fafsa-studentaid-ed-gov.blogspot.com/

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