ED and Financial Aid

Parents Forum
1

<p>What is the connection? From what I have been reading, the vast majority that apply ED do not need any financial aid at all.</p>

<p>Are the ED applicants applying early and getting accepted early, is it money related? I mean, if you need financial aid, you don't apply ED, so the wealthier families can take advantage of the ED program. while less well to do families cannot.</p>

<p>Is the ED program for the rich? And don't tell me, if you saved, blah blah blah</p>

<p>For most, saving 200,000 for schools is extremely difficult. But we are in the postion to borrow, etc.</p>

<p>So, do you think there is a seperation between the well to do and the average folk in the ED process, that even if the student may be qualified, money to even try ED stands in the way</p>

2

<p>Anyone can apply early decision, including non-wealthy students, even low income students.</p>

<p>You will probably get the same financial aid package applying ED from a particular school as you would if you apply RD.</p>

<p>However, what you give up in the process is the ability to compare financial aid packages from OTHER schools. And, they CAN vary considerably, even if the total dollar amount on the surface appears the same --- i.e., you get $20,000 in financial aid from two schools. But school A gives you 5,000 in grants and $15,000 in loans and work study while school B gives you 5,000 in loans and work study, and $15,000 in "free" money (money that doesn't have to be earned or paid back). </p>

<p>Obviously, College B's financial aid offer is MUCH better, even though the dollar amounts are the same. But if you apply ED to school A, you won't ever know that, and you are basically stuck with however the financial aid package is structured. </p>

<p>So, this is not so much a rich vs poor consideration but rather a "can we afford and are we willing to give up the opportunity of comparing offers to gain whatever advantage, real or imagined, ED provides." </p>

<p>Of course, families that don't need financial aid don't need to compare offers. And, some families, no matter their income level, may decide that getting into a particular school ED is worth taking a single financial aid offer. But most families who need financial aid DO benefit from being able to compare offers, and at least knowing what they are giving up by accepting the final choice.</p>

<p>In the end, however, there is absolutely nothing to preclude low income or middle class families from applying ED. They will get the same financial aid package from that PARTICULAR school that they would have if they'd applied RD. But, they should know in advance that they may be giving up a better deal, and they should be sure up front that whatever "boost" they feel they'll get from ED is worth giving up that potential.</p>

3

<p>Carolyn, as usual, covered about everything you need to know.</p>

<p>Here's my ten seconds analysis: the ED application should not hurt you -for finaid- as long as your FAFSA/CSS application can be CRYSTAL CLEAR. This means that your application should fall in the very, bery low numbers or too high to bother. If your application for financial aid contains several gray areas such as divorces, unclear custody situation, high home equity with reasonable income, rental properties or businesses, you may expect a chasm between your version of what is affordable and the college's. Nothing devious or malicious will happen as you will be treated honestly and according to pre-established guidelines and some professional judgment of the officer. </p>

<p>Lastly, there is a very telling number that is widely available: the yield of ED applicants. Very few students end up NOT attending their ED school -accepted student, that is.</p>

4

<p>Another way of thinking about it is the car buying process. You can buy the first car you see, and live with the financing because that's the only car for you and it might not be there if you take your chances and shop around...Or you can shop around, compare deals, compare financing, and take your chances that the car of your dreams may not be available when you finally get ready to buy.</p>

<p>Same basic principle. But, as Xiggi implied, I think financial aid offices are a lot less devious than car dealers. They'll give you the same deal whether you buy now (ED) or buy later (RD). You just won't be able to shop around for a potentially better deal or have much negotiating power if you don't like the offer they make you during ED.</p>

<p>Again, families will, and should, make the decision based on what is right for their particular circumstances. Some families, regardless of their income level, will opt for POTENTIALLY boosting their chances of locking in the car...eh, school...of their dreams, others will take a different approach.</p>

5

<p>I think the need based aid is fairly consistent. The merit based aid, from what I understand, can vary widely as colleges may be less inclined to "buy" students with merit offers if they already have a captive audience.</p>

<p>I already had my breakdown on the other ED thread :) so I'm not going to "blah, blah, blah" as CGM puts it, but I will say that "rich" is a relative and freighted word in America. </p>

<p>In answer to the question: no, ED is not only for those who can afford to (or are by default forced to) pay full freight. It is also for those, as Carolyn and Xiggi explain, who can afford to take the risk that their ED school will provide reasonably fair financial aid.</p>

6

<p>It is also for those, as Carolyn and Xiggi explain, who can afford to take the risk that their ED school will provide reasonably fair financial aid.>></p>

<p>And that is why it is important to do your homework UPFRONT if you are planning on applying financial aid. Find out what how the typical financial aid package is structured at the ED school, find out the details of how they compute your need, find out the same things about some other schools of interest as well. In short, make an informed decision before you apply ED.</p>

7

<p>Our financial situation was very cut and dried. No real estate, big debts, large side businesses, etc. Not self-employed. We found need-based aid (in the RD round) to be relatively inconsistent, based on exactly the same numbers sent to 100% of need schools. It was inconsistent not only in the makeup of the packages (grants, loans, workstudy, etc.), but in total size. (I say "relatively" because the differences were not that great based on a $45k price tag; but based on what we and my d. would actually have to pay (left over after grants and workstudy) the ratio was roughly 1.75 to 1.)</p>

<p>I don't think any of the schools was devious; I think they all engage in "enrollment management", and ED is an invitation to them not to have to play. But obviously there is no information available regarding what the size of the offers would have been for the same candidate applying ED v. RD. If the difference between the smallest offer and the largest offer wouldn't impact where your d. or s. would attend, or you wouldn't want to know (given that you might be tempted to have him or her attend the second choice school), then go for it!</p>

8

<p>I have to say that while I agree with Xiggi and Carolyn, I think that the vast majority of working class/middle class families (those in the $40-$90K annual income range) probably also have the types of complicating financial situations that make it hard to predict a financial aid award. It can be very, very difficult for families who definitely need financial aid to get a good handle in advance as to what they can reasonably expect. "Devious" or not, there is a lot of the financial aid process that is kept secret. </p>

<p>There are no online calculators that will tell me how or to what extent my ex-husband's income will be assessed. I know that I have to get his cooperation in submitting a Noncustodial Parent form -- but I have no right to see or review what he puts in it, and if, for example, he reports that he makes $50K annually, I don't know what that will add to our EFC. </p>

<p>So when it comes to ED, there might as well be a notation, "children of nonwealthy divorced parents need not apply" -- and statistically, that weeds out a big segment of potential applicants.</p>

<p>The same is true of self-employment income. I work from home -- will the college add back in my home office deduction to my income? Will they add back in my car expenses? What about the section 179 depreciation write off I took when I bought my computer? Will the college assign an arbitrary net value to my "business" and treat that in itself as an asset? I'm lucky, actually -- my net is not that far off from my gross, because my business expenses are modest -- but many self-employed people have much higher overheads. </p>

<p>But the bottom line is that ED is just one more tool in the game of enrollment management; the colleges are well aware that they are much more likely to get full paying applicants with ED -- and they have the freedom to structure their own financial aid determination as they choose. If they want to skimp on need-based aid and leverage merit aid dollars, then the ED process will tend to favor no-need applicants or needy applicants with high stats - the ones who know they will quailfy for the more generous merit awards. That means that if there is an ED-advantage in terms of likelihood of acceptance, the rich kids can get it, but the needy applicants don't, because they can't take the risk of a short financial aid offer.</p>

9

<p>only one of my daughters schools offered ED- they also vowed that ED applicants receive a better package than RD applicants</p>

<p>( actually what they say is their resources go to continuing students and those who applied ED, then they go to RD students)
We believed them, kinda- but still even though it was her 1st choice school, she still wasn't sure enough about it to want to commit that early in the process.
She applied RD instead- and still recieved a package that allowed her to attend.
Their reasoning actually makes sense to me- why not offer your money to students that are committed enough to the school to apply ED? If you accept them, don't you want them to attend? Why not give them an incentive?</p>

10

<p>"I have to say that while I agree with Xiggi and Carolyn, I think that the vast majority of working class/middle class families (those in the $40-$90K annual income range) probably also have the types of complicating financial situations that make it hard to predict a financial aid award. "</p>

<p>Calmom, this is exactly what I meant by needing a very clear situation. Families with zero or very small EFC in both FAFSA and CSS/Profile have a lot fewer worries when it comes the the ED process. </p>

<p>You are also correct that a number of issues could be made more public. I have, SO FAR, been unable to pinpoint with certainty the ancillary formulas used in the IM and CA. However, there are few usable roadsigns in this game of treasure quest! For instance, you may want to use the early discussion papers from the 568 group to get a feel for their logic. Check this [url=<a href="http://www.news.cornell.edu/releases/July01/568.presidents.report.html%5Dreport%5B/url"&gt;http://www.news.cornell.edu/releases/July01/568.presidents.report.html]report[/url&lt;/a&gt;] . From there, you can check finaid websitses or MIT's moneyman blog and hope to see them spill a few details -by accident or design. </p>

<p>This is what the reports say about businesses. In so many words, the only deductions they'll accept are REAL CASH expenses. Deductions such as depletion or depreciation will be added back to the AGI. The business valuation form available on many websites gives a pretty good idea on how the valuation will work. </p>

<p>
[quote]
B. Assessment of Business and Real Estate </p>

<p>Recommendation: Continue to exclude business and rental losses from the calculation of income in central processing; add back rental depreciation; impute rental property value; redesign Business/Farm Supplement Form to improve quality of data; seek expert advice on various adjustments; and ask CSS to keep us informed of and involved in their work in this area. </p>

<p>Discussion: An increasing number of our applicant families present complex business and real estate profiles for our review and this complexity makes central processing of this information impossible. Consequently, financial aid professionals have attempted to make sense of this information with varying levels of experience, expertise, and applicant-provided information. More experienced aid officers have learned to apply a "sixth sense" to these cases, while those with little experience and limited staff resources are often forced to deal with these applicants as if they were salaried employees rather than as self-employed business persons or entrepreneurs. Understandably, the self-employed family’s calculated ability to pay often varies significantly from campus to campus. Because business and real estate issues may not always lend themselves to central processing, we propose to standardize local treatment of these matters.

[/quote]
</p>

11

<p>Xiggi, the report you referenced is very interesting -- thank you for the link -- but it doesn't answer any of the specific questions that I have. In fact, the reason that report is written is precisely because there is not a consistent way of treating a whole variety of issues that come up in the financial aid process. When it comes to the ED process, I think the answer is:</p>

<ol>
<li><p>If the school guarantees to meet 100% of financial need and the family's has a very low income and minimal assets - which in most areas would mean that the parents are wage earners and renters, the student is safe to use ED. </p></li>
<li><p>If the family has enough income and assets to pay the full cost of college, the student is safe to use ED.</p></li>
<li><p>If the school guarantees certain types of merit aid to ED applicants and the ED applicant certainly qualifies (for example, if the school promises a certain amount to National Merit finalists) -- then the student is safe to use ED.</p></li>
</ol>

<p>For anyone else, ED is too risky. </p>

<p>I'd also note that in many ways the IM (institutional methodology) is set up to favor families with more discretionary income. For example, IM will adjust for private school tuition for siblings; on the other hand, there is no adjustment for consumer debt. So the family with a $70K annual income which is paying for private school for younger siblings may come out with a lower IM EFC than the family with kids in public school who are up to their ears in credit card debt. Many families with modest incomes end up using credit card debt to finance necessary but unanticipated expenses -- such as car repair, medical and dental expenses not covered by insurance -- so high consumer debt cannot be taken to mean that the family has been irresponsible. The poorer the family, the more likely they are using high-interest consumer debt to bridge the gap between their income and necessary expenses. </p>

<p>I honestly think that most private colleges want to maintain a certain percentage of full paying students and they use the ED process to as part of that goal. No matter what they say, they don't really want to create a level playing field -- they want to use tools to manage their enrollment to get the kind of students they want. They don't like rich students better than poor ones, but they do like to take in a certain amoung of tuition dollars every year -- and they need paying customers to provide them. ED serves several purposes from the college's point of view, but it is definitely NOT a way to increase diversity or attract disadvantaged students -- rather, it is primarily a way to lock in a certain percentage of students who are attractive to the college either because they are able to bear the full costs of enrollment or they have other qualifications that make them particularly attractive to the college (particularly high stats, athletic prowess, etc.). </p>

<p>I think the colleges are well aware that there is an extremely small percentage of students who fit in my category #1 above and who also have the level of academic achievement combined with early planning and awareness needed to get an ED application together. I mean, face it, the poor kids don't go to the schools where they get that quality of advising.</p>

12

<p>We wouldn't have had anything to worry about unless the difference of 1.75x relative to what we might have paid elsewhere, both schools being 100%-of-need, both claiming to use the same methodology, with no real estate, businesses, divorce, self-employment, child support, etc. involved wouldn't be a reason to worry. </p>

<p>And, if you apply ED, you really don't have a reason to worry, because you've decided you don't need to know.</p>

<p>The difference between low and high amounted to roughly $40k over four years, and the differences in loans for my d. $17.9k in loans. The reality is that we would have found a way to pay it, in any case, but it would have been a stretch. It "would" have been a worry. I have to admit I was quite surprised to find the differences to be so great; I also know that if my d. had made a different choice, we would have gone back to the school and asked for more: and from the experience of friends, I expect they would have found us more "needy" if given the opportunity.</p>

13

<p>I don't think it is devious, but the fall out of Ed and Financial Aid has create a tier system of those with no financial worries have a big leg up in the admission process with regards to ED- I would be that in some schools, the percentage admitted ED without any need of financial aid is much more than would have been before ED in RD, if you get my drift</p>

<p>But kids that would make it in the combined pool of RD and ED, because of lack of certainity about money are in a larger pool with ED, while those of wealth are in a smaller pool and because theyhave no financial concern get a leg up because of funds, not necessarily because they are more qualified than a number of kids in the RD pool, who may be MORE qualified, but can't do ED- you can have kids in the RD pool who are middle income with better stats, but who can't take te chance at ED, but ED infers that the ED pool is the best, when in fact, it is money very often</p>

<p>So, money talks in its own way</p>

14

<p>well those with no financial worries have a big leg up in the process regardless-
parents probably better educated- better schools- better college counseling- even sat prep tests- and money to visit schools before applying-
but I guess because D wasn't applying to school that was ubercompetitive anyway- where parents tell themselves that ED really does make a difference in acceptance rates- i was able to get through waiting to hear without getting my knickers in a twist.
I guess because D wasn't planning on being an investment banker or anything where it really was an old boys club that seemed to matter what your sweatshirt said, that if she got into college wonderful- if she got into a good college- fantastic- if she got into her #1 choice college- yippee!
If folks want to throw their hat in the ring and pay for the privilege, I really don't have a problem.
I think it makes sense that they are need aware- after all somebody has to pay full price- and I would rather that the top schools be need aware- yet be prepared to pay 100% need for students who could really benefit.
I am glad in retrospect however that D didnt' apply ED, even if her package might have been a tad more grant heavy.
To risk not being accepted, and then having to wait until all the other offers came in- would have been too agonizing.
It was better to apply RD- then have the surprise of her #1 choice, sending her a package long before we expected it!</p>

15

<p>
[quote]
I don't think it is devious, but the fall out of Ed and Financial Aid has create a tier system of those with no financial worries have a big leg up in the admission process with regards to ED- I would be that in some schools, the percentage admitted ED without any need of financial aid is much more than would have been before ED in RD, if you get my drift</p>

<p>But kids that would make it in the combined pool of RD and ED, because of lack of certainity about money are in a larger pool with ED, while those of wealth are in a smaller pool and because theyhave no financial concern get a leg up because of funds, not necessarily because they are more qualified than a number of kids in the RD pool, who may be MORE qualified, but can't do ED- you can have kids in the RD pool who are middle income with better stats, but who can't take te chance at ED, but ED infers that the ED pool is the best, when in fact, it is money very often</p>

<p>So, money talks in its own way"

[/quote]
</p>

<p>Sigh! CGM, you can't jump to your conclusions without making a modicum of efforts to check facts. For instance, the meaning of your following statement "but ED infers that the ED pool is the best, when in fact, it is money very often" is quite unintelligible and ... inaccurate.l </p>

<p>As I posted before, the very poor does not need to fear ED nor do the special students ranging from development cases to students who are expected to contribute to the school in non-academic ways. </p>

<p>Now, if you want to provide an opinion that ED might give SUBSTANTIAL advantages to a select group of students and families, allow me to welcome you the club with a resounding "duh!" Bhutanese goat herders even know that!</p>

16

<p>"For example, IM will adjust for private school tuition for siblings; on the other hand, there is no adjustment for consumer debt. So the family with a $70K annual income which is paying for private school for younger siblings may come out with a lower IM EFC than the family with kids in public school who are up to their ears in credit card debt."</p>

<p>That is true but not necessarily wrong. Financial aid is primarily based on income and to a lesser degree on assets. Spending patterns resulting in consumer debt are and should not be relevant. On the other hand, I believe that all methodologies allow for very generous allowances for debt on assessable assets. Converting consumer debt into home equity loan would help families with bulging credit card debts. This said, renters who spend -even if forced to- beyond their limits will not find much help when it comes to financial aid.</p>

17

<p>cgm:</p>

<p>does the term "facts not in evidence" ring a bell. Thought, not.</p>

<p>bb</p>

18

<p>You know, I'm a little tired of hearing my S got an ED acceptance because we checked the not applying for FA box. It has been asserted on this forum elsewhere that need-blind schools are actually need-aware for very low income students, that they are actually sought out. I believe this may be so and applaud it. But I don't believe that schools who call themselves need-blind are actually taking kids just because they don't check the box.</p>

<p>And it also doesn't follow that because they don't, they've had all kinds of special advantages. My S went to a public school about one step above failing, never paid or did one second of SAT or any other prep, never went to a summer program except the local rec music one (cost us in the mid two figures, possibly), never did expensive ECs, worked during hs, etc etc. The reason we could forgo aid is exactly because we live a very frugal, middle class life. Yes, he has two college educated parents--that's a huge benefit--the same two parents now have a combined income of less than 50,000, (and doing fine on that, I might add.)</p>

<p>I know lots of mid-income families who did apply ED, who made the decision to work with whatever the FA turned out to be; I know some people feel that this is a dumb decision, but I think it really is a choice--depending on how low you're willing to let your standard of living be. Ours would not be acceptable to most people here--not our house, not our neighborhood, certainly not our schools. But it works for us.</p>

<p>My S's test scores and grades are above average for his school, and he is excelling there now. Maybe, just maybe, he actually got in on his merits.</p>

19

<p>Garland: Well said, from a parent whose child was admitted EA. Despite the fact that we are paying full freight, I like to think that my S was admitted on his own merits.</p>

20

<p>There are too many stories of kids from very affluent homes, and expensive private schools, who do not gain acceptance to their college of choice to assume that ED is only a matter of rich parents. We did not allow our son to apply ED, but he did apply EA to a variety of very selective schools and was accepted. We applied for FA, he was not an athlete and we aren't wealthy. I think it has to do with who is is, as is the case for Marite and Garland's sons.</p>