Is Financial Aid fair?

Paying for College
1

<p>Financial aid looks at parents' income, their assets (homes or land), parent's net worth, and the amount of money in their bank account.</p>

<p>They do not account for previous debts that people have had or their spending habits.</p>

<p>Doesn't it discourage people from saving money for college? We could all be living lavishly, buying new cars, shopping all the designer brands, and enjoying fine dining because in the end we would receive less financial aid based on the fact that we have money in our bank account.</p>

<p>There are people who spend money extravagantly instead of saving money for college.</p>

<p>The people who are doing the right thing in saving for college are in a sense not receiving the aid they deserve because they have saved.</p>

<p>I am a student who is curious about your thoughts about this subject. This is just an observation that I have made. I do understand that there are people who genuinely cant afford college and have struggled to make ends meet. I just think that financial aid calculators neglect alot of factors.</p>

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<p>Financial need is based mostly on income not assets. And since most schools don’t have much aid to give having savings helps.</p>

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<p>Financial aid is much more heavily driven by income than it is by assets. For FAFSA up to 47% of income can go to the EFC once someone is over a certain income (not tremendously high). For assets the max that can go to the EFC is 5.6%. On top of that certain assets are not reportable at all (such as the primary home and retirement accounts such as IRAs and 401ks) and also there is some asset protection on top of that based on the number of parent and the age of the older one. </p>

<p>So if you have 2 couples where the older parent is aged 50, if couple A saved $100,000 and couple B frittered it away, the impact on couple A’s EFC could be from 0 (if saved in retirement accounts) to around 2867 (asset protection is 48,800). They may get 2867 less in aid, but they have $100k saved. And as most schools do not meet full need without loans couple B would probably be borrowing the difference.</p>

<p>Most people who can afford designer brands and fancy cars probably have high incomes and would have high EFCs based on that whether or not they have a dime saved.</p>

4

<p>

Why does anyone deserve aid? Aid is essentially charity for those who wouldn’t be able to attend college otherwise. The family who is “doing the right thing” in bringing in enough money to buy food doesn’t get food stamps either. I think you are looking at this all wrong. And the people who are “spending money extravagantly” probably are not getting aid either, because they are wealthy.</p>

5

<p>I find financial aid to be very confusing. I think its great if you are truly poor but where I think it gets a little screwy is when your middle class or higher. We will not get any aid for our kids due to high income but parents who make less will. Now here is the part that hurts, we don’t buy new cars, eat out, have cabins or boats or snowmobiles ect… People we know who make a lot less always seem to spend so much more??? On the other hand I am able to stay home with the kids so maybe if I went to work we could have some of those other perks. It just seems like we’re running on a trend mill sometimes, working hard but not getting ahead.</p>

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<p>You can run the financial aid calculators anyway you want and you’ll always find that you’re better off with more money than with less. I know quite a few kids getting need-based financial aid (including my own), but none of them has parents that buy new cars, have cabins or boats. Are there ever any cases like that? Maybe, but that isn’t necessarily something wrong with the system – it may be an odd quirk with that family’s financials, it may be money coming from somewhere else (grandparents?), it may be living on debt (which financial aid does not typically take into consideration), or it may be a case of some kind of dishonesty. However, the cause there lies with the individual family, not the system.</p>

<p>Looking a college costs is really daunting. The people who make out the best are the ones that become really informed about their options, about how to access other forms of support (merit-based aid, scholarships), who develop a well-considered list of schools to apply to, and who keep their minds open about the many places where their student can get an excellent education.</p>

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<p>Now here is the part that hurts, we don’t buy new cars, eat out, have cabins or boats or snowmobiles ect… People we know who make a lot less always seem to spend so much more???</p>

<p>You can’t look at it that way. People each have their own areas of spending. Some will spend on restaurants, vacations, etc (and some have lots of debt because of it). Some will spend on private school education, or choose to have a parent stay home. Those that spend on vacations and fancy cars wonder how people afford private schools. Everyone has their own areas of justified spending.</p>

<p>If these people are really earning so much less than you and have nicer cars and eat out a lot, then they are either thrifty in OTHER areas (that you’re not) or they’re going into debt.</p>

<p>You’ve mentioned that you have 3 in private schools. I don’t know how much your tuition is, but it could be $20k per year or more for 3 kids. That could be a lot of meals out, a nice vacation, or a new car every couple of years. </p>

<p>Again, I’m not criticizing your decision to have your kids in private school. My own kids went to private K-12 education. BUT IT IS A choice and a LUXURY. The amount of money that we spent on each child’s private education times 2 kids is a LOT OF MONEY. </p>

<p>If you end up spending $60k+ on each child’s private K-12 education (and I’m giving a lowish number since you said that your kids haven’t always been in private schools) then that’s a lot of money that could have been saved for college. </p>

<p>We will not get any aid for our kids due to high income but parents who make less will.</p>

<p>You do NOT understand financial aid if you think that those who make less are going to be getting a lot of financial aid.</p>

<p>Do you understand that most schools do not have ANY financial aid to give other than the small amounts that is given by the federal govt to low income people? </p>

<p>Do you realize that most financial aid is LOANS???</p>

<p>I think you think that some family making $50k per year is getting a free education for their kids at the various schools. They are not. </p>

<p>Even a family with a very low income that qualifies for full federal aid, only gets $5500 in Pell grants, $5500 in student loans, and maybe a couple thou in work study.
How are such people going to pay for $30k tuition plus room and board at a non-elite private college?</p>

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<p>Your right I am very new to this. Trying to figure it out is very confusing to me. Also never thought maybe some of those perks may have come from grandparents and other resourses. Luckily our private school while expensive is not as bad as most have suggested. Of course the yearly fees we pay now will go to DD for college. A lot of this college search and cost of going is my unfortunate way of looking at the glass is half full life view. Some on an other post have suggested looking at state schools that have honor colleges(?). Both DH and I are from California and now live in upper midwest so to be honest everything is a little strange to us. We are learning a lot everyday and hopefully will be as prepared as possible when the time comes.</p>

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<p>Newfaith, most schools have some type of honors program or honors college. Some open the program to a lot of students and others only open it to a select few (maybe like 30?), so it really depends on the school. We are in a similar position to you in that we have large assets (rental units) which give us a large EFC, that we can’t possibly justify since it would mean borrowing large amounts against our retirement. In our case, DS is in a good position to qualify for merit scholarships, and that is what we have focused on.</p>

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<p>No it’s not and I don’t think it even pretends to be so.</p>

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<p>*Some on an other post have suggested looking at state schools that have honor colleges(?). *</p>

<p>You have to really look at each honors college because there is no standard.</p>

<p>Many honors colleges are very good and offer lots of LAC-like classes that have small class sizes.</p>

<p>A very small honors college is not going to offer many course choices and wouldn’t seem to work well with a variety of majors.</p>

<p>Some have very competitive admissions and some admit all who have certain stats. </p>

<p>There are usually additional benefits associated with belonging to honors colleges…

  1. priority registration.
  2. smaller class sizes
  3. honors housing
  4. classes taught by the best profs.</p>

<p>Also, some honors colleges have additional scholarships associated with them.</p>

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<p>Sometimes the system works. If someone runs up large amounts of debts, that does not help them at all in the calculations. If someone has a high income but little savings, they probably will get little if any financial aid.</p>

<p>Considering that many colleges are “need aware” in admissions, having savings helps get admitted. As noted above, savings also reduces borrowing. </p>

<p>Many colleges do not meet full need and they expect parents to take out PLUS loans or home equity loans to pay the difference. Those PLUS loans are not low interest rate, and a parent with bad credit can probably not get them. Those PLUS and home equity loans eat away at the ability of a parent to fund their own retirement.</p>

<p>If a family puts aside savings in advance, they can hopefully limit each child’s debt to the $21K or so that is typically available for subsidized Federal loans over 4 years. Those subsidized loans don’t have to repaid until a few months after the student is finished with college. All other loans are much more burdensome and expensive.</p>

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<p>ho boy…rich people complaining about not getting aid…</p>

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<p>Is Life fair? Is it fair that people are segregated into two groups, those who can and can’t pick their colleges freely without worrying about the feasibility of paying, based on whose fleshy hole they were squeezed out of? Frankly, my family wasn’t capable of saving a large amount of money for college, which is now potentially stopping me from going to one of my top choice schools, and it really irks me to hear someone who was capable of it complaining that now they get a little bit less aid, even though overall they’re in FAR better shape. Saving was the right decision. The small difference in aid is nowhere near as relevant as the fact that you won’t have to take out tens of thousands of dollars in loans to pay for college.</p>

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<p>Financial aid is not fair. College is a business. Don’t let what you hear from the colleges make you believe otherwise. Since there is an education market, some people cannot afford it. Merit aid is hard to come by. I know this firsthand. I a freshman on a full ride merit scholarship, but I worked my – off for it! Also, only my State Us and some southern out-of state public schools offered me a full scholarship.</p>

<p>Don’t worry about Fin Aid “advantaging” those who are financially irresponsible. I seriously doubt that even the schools that pretend to be need blind don’t engage in some selection based on ability to pay. Those with low EFCs are probably discriminated against by admissions committees. Also, those with bankrupt and impoverished families often can’t afford the room and board and other expenses, even if they get their tuition cut.</p>

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<p>I got screwed for financial aid this year. My dad was fired last year and this year he was forced to take out all of the stock options he built up in his old company. This artificially doubled our income for this year and this year only (sucks that it’s the year I’m going to college). The problem with that is he spent ~9 months unemployed so we’re still recovering from that and now that he’s at a new company but makes a lower salary and doesn’t have nearly as many assets backing him up. Compound that with the fact that we’ve been saving for college since I was born and is all equals ZERO financial aid even though we need it after almost a year of financial instability. It’s not fair at all.</p>

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<p>It’s not fair in that Mom is penalized for working, compared to the Mom next door who chose to stay home, go to the gym and play tennis. It ought to be based on estimated EARNINGS, assuming that both parents work. It shouldn’t reward a physically capable mother of one school-aged child who chooses not to work – for not working.</p>

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<p>@jkaufman</p>

<p>I believe you can get a new financial aid package after your first year, since your EFC will go way down. Just weather this year with your savings and you should be fine.</p>

<p>@Momzie
Do you really believe (typical, not elite LAC/Ivy League level) financial aid is anywhere near enough to pay for college on its own? If you don’t work and make very little money, you’re not gonna be able to afford anything other than community college without taking out massive loans. I wouldn’t call that system penalizing you when you’ve given your son FAR more college options and likely provided for your own retirement as well. Your proposed system would make it impossible for anyone who lost their job in the past few years to send their child to college, since they would be expected to pay far more than they would actually be capable of. Sure, there will always be welfare people who don’t try to work and just live off the government charity, but these programs do far more good than harm, IMO.</p>

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<p>jkaufman…</p>

<p>Where are you applying? </p>

<p>If you end up at a school that doesn’t give great aid, then even if your EFC goes down later on, you still may not get the aid you need.</p>

<p>Does your mom work or is she considering going to work? If so, then your EFC could still end up too high for aid.</p>

<p>If paying for college is an issue, are you considering applying to a couple of schools that will give you big merit for your stats?</p>

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<p>*It’s not fair in that Mom is penalized for working, compared to the Mom next door who chose to stay home, go to the gym and play tennis. It ought to be based on estimated EARNINGS, assuming that both parents work. It shouldn’t reward a physically capable mother of one school-aged child who chooses not to work – for not working. *</p>

<p>I do agree that if the stay at home mom does not have young kids at home or a disabled child, there should be some assumption that she could work and earn some money.</p>

<p>I’m always shocked when I hear kids post that their families don’t earn much, but only their dad works and theyre aren’t young kids in the home. I don’t think these moms are playing tennis or going to the gym, but I do wonder why they aren’t trying to earn some money to help pay for college.</p>