Merit aid cancels out need-based aid

<p>Not so sure that most with a high income will get much in need-based grants, regardless of savings. As others have said, one you hit a certain income your EFC is close to $50K, regardless of your savings. If you have a “high” income, you will likely be offered loans.</p>

<p>There are also families that appear to have a lot in terms of expensive homes, vacations etc but who get financial aid. In those cases it may be that grandparents paid for the house or the vacation or there is a business that pays for these things, but does not look as profitable on paper.</p>

<p>It also seems that financial aid does not take into account the number of kids a family has, unless those kids are in college at the same time. With mine four years apart, we really do not get a break.</p>

<p>The system is never going to be completely fair. But I think those who have managed to save a lot are still going to be in better shape.</p>

<p>“As others have said, one you hit a certain income your EFC is close to $50K, regardless of your savings. If you have a “high” income, you will likely be offered loans.”</p>

<p>There are a number of colleges that allow you to make $100,000 to $150,000 and will offer financial grants. In these cases, your savings can have an impact on the amount of aid received.</p>

<p>Hold the phone a minute . . .
If we go back to OP an the original formulation for a moment - D of OP was offered Pell Grant and Perkins Loans. Of course Pell is AIG based and unless OP did some real acrobatics with tax information their family does not fall into this hypothetical high income, high spending straw-man group that people are setting up. They may have been gapped as said school does not promise to meet 100% of need, the school might have a small endowment and not be able to offer institutional grants to cover the difference, and the OP may not have been in the fortunate position that I think we would all prefer of being able to save enough to cover the EFC with a combination of income and savings. We are not talking about “the 1%” here. We are talking about a family which falls into that middle group who heard the message in all the college nights to look beyond the sticker price. They must have minimal or modest savings and, contrary to many posts here, are NOT better off and not able to attend.</p>

<p>Again going back to the OP–what was their EFC?</p>

<p>It seems that the student was granted $27.4K in merit/grants and workstudy. An additional $7500 in loans. So from the schools perspective they have met the student’s need with a financial aid package totaling $34.9K.</p>

<p>Since the COA is $50K, the difference is a little more than $15K. The OP states that the school on average meets 90% of need. If the OP’s EFC was about $10K to $12K, it seems that these figures work out pretty spot on.</p>

<p>Did the OP think that merit aid was going to cover her EFC and that they would then give more grant money to cover financial need?</p>

<p>She is confused in not knowing that in the end it is one and the same from the school’s perspective.</p>

<p>uskoolfish - This proves the point that a family with moderate to substantial savings and the same income would be better off because they are more likely have the resources to meet the EFC as calculated by the school if they choose to employ their resources to that end.</p>

<p>Yes, it is not always clear to families that the EFC is a floor not a ceiling. By stacking merit and leadership awards along with a Perkins which is discretionary loan money on the school’s part it appears that they did favor D of OP to the best of their ability within their institutional formulas.</p>

<p>I’m still curious about what the OP’s concern was. I couldn’t tell from reading his or her posts what the gap was between EFC and merit/need-based aid awarded.</p>

<p>As for the hypothetical case of the profligate $100K income family vs. the thrifty $100K income family: My understanding is that with FAFSA-only schools, those families come out looking more or less the same. The CSS includes things like home equity and other assets, yes? So if you have a complicated situation (lots of money in real estate that you don’t wish to leverage or lots of other assets that make you look richer than you feel, but little saved in a college fund and not a lot of disposable income for whatever reason), then you look at FAFSA-only schools. I mean, what’s the point in complaining about the methods of private schools that disburse money according to their own formulas?</p>

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<p>Considering the OP mentions Pell, their EFC is mostly definitely not in that range. I’d say somewhere around 3000 for an EFC.</p>

<p>thank you romanigypsyeyes! As I said in my post #83, this whole profligate high earner notion is a total straw-man in this case. If OP really had such a great accountant that they got their AIG down to Pell ranges while hiding massive assets they would be laughing all the way to the bank, not posting here about sleepless nights.</p>

<p>If Romanigypsyeyes is correct, it seems then that the OP would need to come up with $90K over 4 years to attend a private college. $12K of that should have been expected due to the EFC. Another $28K should have been expected in student loans.</p>

<p>So the student would need to come up with about $12.5K a year in loans, additional family contribution or income from summer employment, etc that was not expected. Although not the optimal situation, hopefully it is still doable. The OP states that they were expecting a gap of 10 %.</p>

<p>The thing to remember is that at most schools–even state schools–the EFC will still be expected to be met and the student will still be expected to take out loans. So the question is about the additional $12.5 a year.</p>

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<p>Indeed. Not just Harvard, Princeton, Yale and Stanford, either.<br>
At Trinity College (Hartford), the mean need-based aid package for a family that gets it, and earns $120K-$149,999, is about $32K. Kiplinger ranks Trinity #45 of 100 “Best Values” among liberal arts colleges. Although for average need-based aid alone it is #3 (behind Amherst and Williams), their total cost also is high (> $56K). So the net cost (~$24K) for a family in this income bracket would be roughly the same as the full-sticker in-state cost to attend Pittsburgh, Rutgers, Penn State, or Vermont.</p>

<p>[Trinity</a> College: Financial Aid Facts](<a href=“http://www.trincoll.edu/orgs/planning/publicdata/FinancialAid.html]Trinity”>http://www.trincoll.edu/orgs/planning/publicdata/FinancialAid.html)
[Best</a> Values in Private Colleges, 2011-12](<a href=“Kiplinger | Personal Finance News, Investing Advice, Business Forecasts”>Kiplinger | Personal Finance News, Investing Advice, Business Forecasts)</p>

<p>"The reality is that private college has become something of a luxury item. </p>

<p>In my opinion, a big problem is the refrain students are told to apply where they want and not worry about cost because there is so much aid available. This even comes from info sessions at colleges. The reality is many colleges don’t offer merit aid and those that do offer very little."</p>

<p>I totally agree. And if something is a luxury item and people can’t afford to pay for it without huge sacrifice and debt, it’s just not worth it. </p>

<p>I remember when we were first going through this with son #1. At a college meeting, the person sitting next to me chuckled a bit when they were talking about college tuition costs and said, “You have no idea what the price is going to be, until after they’re accepted.” I kept quiet, but thought, “I know what the price is. It’s the sticker price and no less,” having a kid with less than stellar grades and us with a good income. I’m sure his statement was true for his family, though, seeing as their only kid was a high achiever, only one parent worked, with a moderate family income.</p>

<p>In my opinion, a big problem is the refrain students are told to apply where they want and not worry about cost because there is so much aid available. This even comes from info sessions at colleges. The reality is many colleges don’t offer merit aid and those that do offer very little."</p>

<p>==========</p>

<p>Right…parents, GCs, and even the school info sessions indicate that there’s all this FA available…when most schools do not have much non-fed aid to give…and most fed aid is LOANs…not free money.</p>

<p>Take two families living in the same area and both make the same income (let’s say around $100,000) and have the same number of children. One family has a big house, luxurious cars, travel frequently and, consequently, no money saved. The other family has always lived frugally, sacrificed to save their money and has managed to accumulate $500,000 for their retirement. Will both families receive the same financial aid for college. I don’t think so. I could give you many more inequities with the process, but this is one example. </p>

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<p>But … the primary factor in calculating the EFC is current income. Retirement savings are protected (yes, Profile schools ask about them, but they don’t appear to be much of a factor in a Profile EFC). So, given the same income, the EFC is most likely going to be pretty darn close … and if we are talking about a high income, there isn’t likely to be much, if any, grant aid for either family. So in the end, the high earners who know how to save can cut back & pay for school. The high earners who spend will either stop spending so much or borrow to pay for school . </p>

<p>The whole idea that people who spend it all come out so much better off than those who save is just silly.</p>

<p>"(yes, Profile schools ask about them, but they don’t appear to be much of a factor in a Profile EFC)."</p>

<p>This is my understanding, that retirement accounts are not touched.</p>

<p>Yay! Kelsmom checked in. I thought that was the case about EFC and current income. I probably learned it from reading another one of your posts!</p>

<p>I was assuming the $500,000 was mostly in non-retirement accounts. Remember, most people are limited in how much they can contribute to a retirement account</p>

<p>“The whole idea that people who spend it all come out so much better off than those who save is just silly.”</p>

<p>I don’t know the specifics of how it works out, but I can give you one example. With S1, our EFC was 99K+ from the FAFSA. With S2, our EFC was 67.5K. The second time I filled in the FAFSA, we had large increases in income. But the first time we had a pretty good bit of money in the bank, the second time, almost nothing.</p>

<p>The point being, that a large income increase, but a huge savings decrease actually lowered our EFC substantially. Which makes me think that money available in non-retirement accounts does effect EFC quite a bit.</p>

<p>^ Were both sons in school at the same time?</p>

<p>“Location matters. In other posts on this subject, others have disagreed but $100K per year is very different in the NY suburbs than in the midwest. The financial aid formulas do not take that into account.”</p>

<p>Typically, income is higher in higher cost of living areas. This has been my personal experience having lived in Ohio, Connecticut and California.</p>

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<p>maybe not so much better, but not silly IMO. How about the family that has saved $200k over 18 years opposed to the family with same income who opted for the luxuries. That’s roughly $12k difference in EFC. What would the family with an EFC of $20k receive in grant aid compared to the family who saved with an EFC of 32k at a $50k+ school? I realize that this will vary from school to school. The point is, however, any amount of grant aid given to the family who didn’t save over the family that saved would appear to be an injustice. That’s all some are saying. Why should the family that CHOSE to have the bigger house, nicer cars receive 1 dime more in grant aid that the family that CHOSE to save?</p>

<p>OK - you guys are still straying far afield from the OP’s post. If they are Pell eligible all this talk of choosing to live in a McMansion and travel to Europe vs saving is likely completely irrelevant. In our world (not Pell eligible) we got to choose whether to use bonus to have brakes done and timing best replace in the 12 year old car so it was safe to drive having already done head gasket repair for 18 year old car the month before or save that money for college. </p>

<p>busdriver11, as xiggi pointed out awhile back, OP might be perfectly happy to have your kind of problems with the FA formula.</p>