ED financial aid problem

Paying for College
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<p>

Because unless the income is very low and the financials are very simple, the college they apply to may not have the same view of their income as they do. And very low income students & their parents don’t tend to be the most highly sophisticated when it comes to understanding the workings of FAFSA & CSS Profile. </p>

<p>There have been 2 separate, unrelated posters in the past couple of months who were not employed and had low to moderate incomes stemming from investment assets and were stunned to find that their kids’ top choice colleges did not offer aid. The individual fact situation were very different, but the bottom line is that investment income isn’t the same as earned income, because professional judgment standards allow colleges to attribute an asset value to the investments, even if the applicant fails to fully represent them on the FAFSA. </p>

<p>Many low income parents are also single parents, who may not realize that the college will need information from the noncustodial parent. </p>

<p>Some low income individuals are homeowners who may live in a home that has increased in value over the years. They may be living in a family home that was inherited from their parents and has long since been paid off. They may not be aware of the impact the home equity will have on their financial aid, or even know how the colleges will go about calculating the equity on their homes. </p>

<p>Plus, things can change financially between December and March, and poor families are the least able to weather the changes. </p>

<p>Students who are truly low income should opt for programs like Questbridge --which comes with a guarantee of full cost of tuition and room and board, with no loans.</p>

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<p>So if there is a possibility that ED won’t always work out perfectly for every FA applicant, should ED be used only by the well-to-do? A serious question: Does it matter to you how often it does work out, or is one unsuccessful outcome sufficient for you to recommend that no applicants you are thinking about should apply ED?</p>

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<p>stephen:</p>

<p>one footnote about Wake is that they do not really meet full need in the traditional sense even though they claim to. Unlike other “full-need” schools, WF packages private loans in the need-based package. </p>

<p>Thus, this is one case where applying ED is NOT a good idea. But that is not a problem with ED per se, but Wake’s spin on their claim to meet full need.</p>

<p>ST: yes, ED financial aid awards are based on preliminary estimates. If they are close, the need-based award should be close.</p>

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<p>The problem with low income, high need kids applying ED is that if a problem does arise, the consequences can be harsher for this group. If someone who backs out of an ED commitment does so without true financial need, s/he often has many other alternatives. Those kids that I know who are truly high need are often working on the apps on their own, may have gotten sketchy financial information from their parents and are not able to move quickly when things go wrong. On top of all of this, they need all of their options more than those who have financial flexibility. So if ED goes wrong, it is a curve ball that can take time to handle, and can too often be handled incorrectly. </p>

<p>In two current cases of ED, the families involved really felt enormous pressure to take the ED offer even though it was not one they should have taken. They couldn’t afford it. With Parent Plus loans so available, it’s easy to tell a family that they can borrow. When people hear a school meets full need, they don’t often get it that the school’s definition and theirs may not jive. That need can be met with loans and work study. Most of us are amateurs in all of this, but just as a rule, and educational studies bear me out,kids who come from high need, low income family do not have as much information and experienced adults helping with the process.</p>

<p>Comparing offers is a great thing for families who have budgetary concerns. Yes, $30K a year might be doable with a huge loan and work study, and a strict budget, but a kid who is a candidate for those schools who meet full need, have binding ED, is also very like a candidate for some very nice merit awards and might even get a full ride. Until those offers are on the plate and staring at you, it’s hard to get the impact of them. Even experienced parents, realistic parents get caught up. Also, the idea of going to the state honors school in an honors program might not really register until accepted and other kids in your school are considering and you get more information. These days it’s to easy to get into the mode of “gotta get in” during the application part of the ED process. Few kids these days are applying ED because that school is truly their one and only. The talk is often about which school they should put their chips down on for ED. </p>

<p>My son would have loved to have applied ED to a certain school. It’s still a top choice for him and he has been accepted RD whereas his friends were accepted earlier. But he got a nice merit award that is making him reconsider a school that was not high on his list. I think he may end up going there. Had he applied ED, that option would not have been their. Our financial need is very small–just a few thousand maybe, under the more generous formulas and just for this one year with two kids in college. The merit award is far, far more than we would have gotten anywhere. And our EFC is really not something we can meet. This is my fourth one and I don’t look at the EFC as the guideline for what I should be paying, but I don’t know how many parents I’ve met who feel that is what it is. </p>

<p>As general advice, I do not recommend ED for those who need financial aid. It eliminates options for those families who most need them. I can’t answer the question of “successful outcomes” because the definition of that can vary. I know of too many unsuccessful ED outcomes that were celebrated upon onset and the problems arose years later when it became clear the school was unaffordable. </p>

<p>The other thing is that applying ED does not put a family in the best position for a good age package. That commitment thing is definitely in the favor of the school. It is an impediment to pulling the plug. Why give your best packages, your merit awards that come out in the spring to those who are already stuck with the commitment? If you don’t think that colleges are not operating on a business model about these things, you are smoking your own stash.</p>

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<p>“If you don’t think that colleges are not operating on a business model about these things, you are smoking your own stash.”</p>

<p>I do readily admit that I’m not that cynical, so this may indeed color our views! :slight_smile: Schools do indeed like ED for locking in money from full list payers, but with ED FA they are trying to lock in top applicants for whom they accept the financial “loss.”</p>

<p>Since, in my view, ED should be used only by those who have one top choice above all others, the “dream” school, the only question is: can I afford it? The family has to look at the offer and think hard about it, but I won’t try to make their decision for them by not recommending ED when it is generally accepted that at most schools it confers at least a slight acceptance advantage, perhaps important at the dream school.</p>

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<p>My family is neither low income nor affluent enough to pay full tuition anywhere (including public univ’s), but my son applied ED to a school a meets full need – he’s now a junior there. When we were visiting the school I asked about this and the admissions officer said if the aid award was not enough then we could decline an ED offer.</p>

<p>My son was on the bubble in terms of stats of accepted students, he had a first choice school, it was my first choice too because receiving the kind of aid the school provided would make all the difference, financially, in whether he’d be able to do much more than attend community college and live at home.</p>

<p>We have a solid middle income – pretty much average for a family of four – in the mid-60K range. We own a small house that is not too far from being paid off.</p>

<p>I researched the FA policies of a lot of schools, and felt confident that this ED school would be a good choice from a financial perspective, if he could get accepted… the admission rate is very low. And if he got a FA award that was unworkable, I took them on their word that we could just decline it, and he had 10 RD apps already to go in Dec. that year if he needed to cast a wider net.</p>

<p>There is much argument about how much ED helps a student in admissions, and I won’t venture a guess on that, however if it was any help to my son with his on-the-bubble stats then it was a smartest thing he’s ever done. He’s getting an excellent education, he’s not going to graduate with debt, we are not having to borrow to put him through, and he’s at the school he most wanted to attend.</p>

<p>I agree with Vossron that there are perhaps some cases where it doesn’t work out well, however to make a blanket statement that it’s always a bad idea of anyone with financial need is really wrong. True, people who opt for it should do their own research, but if they don’t I wouldn’t immediately say the problem is with ED itself.</p>

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<p>

If they are indeed “top applicants”… then they have excellent chances of being admitted RD… when in addition to “locking them in”, the college will have the motivation to try to entice them into attending.</p>

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<p>With ED, schools try to lock in a class. They know that they have a 90%+ chance that those kids will come. At some schools, the % is more like 99%. That gives them a good firm base where they do not have to worry about yield. They can then fill in the rest of the class. ED is a huge advantage to colleges.</p>

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<p>“If they are indeed “top applicants”… then they have excellent chances of being admitted RD… when in addition to “locking them in”, the college will have the motivation to try to entice them into attending.”</p>

<p>That doesn’t work at non-merit-money schools that use a FA formula for ED and RD. What most such schools are offering at ED time is a slight acceptance advantage, and relieving the pressure before the winter break.</p>

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<p>That’s not true. Many of the non-merit schools actually have extras that they can offer some students that result in favorable aid packaging or providing funding in other ways (such as offering a research grant). I know specifically of students who have received such offers-- typically along with the admissions offer, they are told that they have been named a such-and-such scholar. Just because they don’t call it a merit award doesn’t mean that it isn’t money.</p>

<p>I also know of specific cases of super elite universities - like Harvard - “matching” the financial aid awards of competitor colleges… like “Stanford”. Obviously one must have the offer in hand in order to fax it to the college and get the match. It may be “need” only, but the colleges have the ability to tweak their internal formulas to get to a desired result. (I’m sure the less super elite need-based colleges do that as well – the point is that there are few, if any, colleges that won’t sweeten the pot in the RD round if they really want the student).</p>

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<p>“That’s not true.”</p>

<p>It is true if, like I said, they use a FA formula for ED and RD. You’re describing cases where they don’t, where they throw in the extras you mentioned.</p>

<p>“the point is that there are few, if any, colleges that won’t sweeten the pot in the RD round if they really want the student”</p>

<p>Ok, I don’t have all that information. If they don’t really want the student in the RD round because of taking top students in ED, it’s too late, the ED advantage is lost. :(</p>