Merit aid cancels out need-based aid

<p>^ threads do often sway off topic…not sure what else can be said about a college that didn’t meet full need.(surprise, surprise)</p>

<p>For the most part, those who can save $200k are most likely earning in excess of aid territory. $99k to 67.5k EFC … neither is aid-eligible anywhere. This is the point I am trying to make. And if you are able to save $200k with an income that otherwise would be aid-eligible, you are most likely wise enough to understand that you shouldn’t be comparing yourself to anyone else. You have probably accepted the fact that others earning what you earn lived more comfortably than you, but you saved because you knew it was what you wanted to do. YOU probably aren’t concerned that the next guy might get more aid than you … because you are probably not “expecting” anything from anyone. You take care of your own.</p>

<p>I suppose I did get off topic somewhat, but I laid out an example where these financial aid formulas have perverse consequences and some posters disagreed with me. If someone is close to poverty level and has no savings, I do think this person is entitled to some help. However, there is less aid for this person under the present system because some people are receiving aid inappropriately. Also, the other point I made way earlier in the thread is that colleges keep raising tuition because of all the federal and state money available to students. Sometimes, I wonder what would happen if you stopped all this govt money from going to colleges through our various financial aid programs. Is it possible that our colleges and universities would have to reassess their tuition increases if no one could afford it.</p>

<p>Our state flagship recently petitioned for the right to set their own tuition rates. The state has been pulling back in the percentage of subsidy year after year, so U was hacking at the budget. The theory was that they could raise rates to be more in line with other big name publics so higher income families would pay more, then provide more robust aid to low and middle income students. This is just in the past 2 years. However, the aid prospect is so uncertain from year to year that many in the middle are finding privates and other state u options to be more attractive. It is really sad and seems backwards. State land grant U offers guaranteed merit and additional competitive merit besides and is pulling kids away from flagship. Anyway - the idea seems to be to milk OOS and international students for as much as possible, get mid-upper income in state families to pay at least EFC and give more aid to mid-lower. It’s all working except the more aid part.</p>

<p>kelsmom…I get an EFC of $28k on AGI of $100k and $200k in savings.</p>

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

<p>I don’t have a problem with it. My point was that it seems to reflect that savings may matter substantially to the EFC formula, though others have said that it is mostly based on income.</p>

<p>“Sometimes, I wonder what would happen if you stopped all this govt money from going to colleges through our various financial aid programs. Is it possible that our colleges and universities would have to reassess their tuition increases if no one could afford it.”</p>

<p>Sure does make you think! If almost nobody could pay for the product, then they’d have to do some serious realigning of tuition increases.</p>

<p>". Anyway - the idea seems to be to milk OOS and international students for as much as possible"</p>

<p>That certainly seems to be what many states are doing. We’re just all trading around our students so the universities can get more cash. People have been asking if they can pay OOS tuition to get OOS acceptance rates, but of course the answer is no.</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.</p>

<p>What sort of college meeting are you talking about?
Ive had two kids being admitted to colleges, had a couple college nights at each of their schools & don’t ever remember anyone saying " just apply & the money will follow"</p>

<p>I always expected we would be the primary source of college funding for our kids, but since neither I nor H had ever attended a 4 yr college, perhaps we were too inexperienced to think anything else.</p>

<p>Oldest applied to one out of state public that offered merit & three in state public schools. It was only after she took a year off to do volunteer service with Americorps that we heard that some private schools meet 100% of need.</p>

<p>When she reapplied to the same colleges during her gap year ( they didn’t hold acceptances) we thought it couldn’t hurt to apply to the private school as well, just to see, even though we still thought it would likely still be too expensive.</p>

<p>Now it * is possible* I suppose at one of the college fairs or tours someone was pushing the idea that colleges are so interested in your student that they will knock the price down for them to attend. </p>

<p>But I have always had the experience that when something seems like it is too good to be true, it usually is, so I don’t pay attention to people who seem to be preying on others greed.</p>

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<p>Institutional Need-Based Scholarships/Grants Awarded by Colleges, 2010-11 (total amounts)</p>

<p>Small LACs
Amherst … $38,997,712
Grinnell … $29,625,885
Carleton … $27,650,350
Colorado College … $21,604,319<br>
Kenyon … $20,696,220
Rhodes … $15,861,630 </p>

<p>Universities
Northwestern … $82,335,654 (2009-10)
Duke … $76,575,561 (2009-10)
JHU … $57,237,394
Wake Forest … $28,489,118 (2009-10)</p>

<p>Most if not all of the above schools award need-based aid to every (or nearly every) admitted student determined to have need, in amounts covering 90-100% of determined need. Average need-based aid packages typically are over $30K/year. At Wake, 283 of 1201 freshmen received n.b. aid in 2009-10 (24%). At Amherst for 2010-11, 292 of 490 got it (nearly 60%). Granted, these are all selective private schools.</p>

<p>[url=<a href=“http://www.kiplinger.com/tools/privatecolleges/]Best”>Kiplinger | Personal Finance News, Investing Advice, Business Forecasts]Best</a> Values in Private Colleges, 2011-12<a href=“Universities”>/url</a>
[url=<a href=“Kiplinger | Personal Finance News, Investing Advice, Business Forecasts”>Kiplinger | Personal Finance News, Investing Advice, Business Forecasts]Best</a> Values in Private Colleges, 2011-12<a href=“LACs”>/url</a></p>

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<p>A 100,000 a year income probably could not afford anyone to save that much outside of the retirement accounts. Unless they have been making that kind of income for 20 years.</p>

<p>One should not forget that whose who have savings have a lot of options. only very limited # of schools that offer exceptionally generours need based FA. Trying to get into one of those is very difficult. </p>

<p>Bottomline - if you have the ability to put some $$ aside for your child(ren) education, do it.</p>

<p>$18k at $100k income/$200k assets. And with 0 assets, it’s $19k. Assuming 100% of need would be met … VERY difficult to get into these schools … you would be expected to pay $8000 more. And you have $192k more in assets. Doesn’t seem especially “unfair” to me.</p>

<p>Again, having need met at $100k is not all that common.</p>

<p>kelsmon…what would a state school with oos costs of over $40k such as Uconn or UVM give in grants(if anything) to an oos student with an EFC of say $20K? How about a private that costs the same or more that doesn’t meet need? any way to ballpark this?</p>

<p>^ Download each school’s Common Data Set file and go to section H2, item “i” (“On average, the percentage of need that was met of students who were awarded any need-based aid.”) Subtract ECF from total cost, then multiply the difference by the percentage of need in section H2(i).</p>

<p>This should give you a rough approximation, assuming that the school meets a percentage of need that is fairly flat across various EFC levels (which might not be the case).</p>

<p>Vermont’s average percentage of need met (from the CDS, H.2.i) is 72%.</p>

<p>At Hobart & Wm. Smith College (a private LAC), the average percentage of need met is 79%. </p>

<p>By my calculations, the net costs for these 2 schools, for that $20K EFC, should come out within a few hundred dollars of each other. (Surprise!)</p>

<p>More selective LACs in New England typically meet 100% of determined need. These generally are richer schools that can afford to up the ante.</p>

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<p>I’m curious about this. So D received merit aid from the school before FA was applied for. This left a gap between that aid and cost. When FA package came, the school didn’t give any further aid at all beyond Pell and loans and $3K grant. Is that right? or they gave FA grant but took back some of the merit?</p>

<p>It seems like your EFC is either $15K or they gapped that amount?</p>

<p>"$18k at $100k income/$200k assets. And with 0 assets, it’s $19k. Assuming 100% of need would be met … VERY difficult to get into these schools … you would be expected to pay $8000 more. And you have $192k more in assets. Doesn’t seem especially “unfair” to me."</p>

<p>Yes, but what is the difference in EFC if assets are $300,000 or $400,000 as opposed to $200,000. And let’s say the only reason for the difference in non-retirement assets is because of lifestyle differences.</p>

<p>Edit: In my example, my understanding from the FAFSA formula is that you would apply 5.6% to the incremental non-protected assets. So a family with $400,000 in savings would receive close to $12,000 more in aid than a family with $200,000 in savings</p>

<p>“A 100,000 a year income probably could not afford anyone to save that much outside of the retirement accounts. Unless they have been making that kind of income for 20 years.”</p>

<p>You would be surprised what some people are able to save if they really make the effort.</p>

<p>I agree parent57- and for those that don’t, read up on the time value of money. The more you put away early on the more you will have later on. I know it sounds obvious but if you put away $5000/year for only 10 years starting at around age 25 your account will be larger than someone putting away $5000/year for 20 years starting at age 35–the wonders of compounded interest :). (assuming the same allocations in those accounts obviously).</p>

<p>Also, a family diligently saving money every year and investing it wisely could have a sizable nest egg by the time the kid is ready for college</p>

<p>Edit: I posted before I saw your comment SteveMa, but I agree with it 100%</p>

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<p>BD1, here’s a safe way to get to the bottom of that possible debate. The government provides the details of the EFC formula. That is what I used several years ago to build that simple excel spreadsheet to reconcile our federal EFC. It is very precise. </p>

<p><a href=“http://ifap.ed.gov/efcformulaguide/attachments/082511EFCFormulaGuide1213.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/082511EFCFormulaGuide1213.pdf&lt;/a&gt;&lt;/p&gt;

<p>However, that might be a tad much to chew at once. This old post is a lot more succinct and may do the job. I think that a back-of -the-napkin calculation of assets should be that if you make less than 50,000 a year assets do not matter and if you make more that the maximum contribution from the parental assets is $5,640 per $100,000 of assets. Please note that there are exclusions and limitations on what becomes your assessable assets. </p>

<p><a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/1090757-parental-asset-contribution-fafsa.html[/url]”>http://talk.collegeconfidential.com/financial-aid-scholarships/1090757-parental-asset-contribution-fafsa.html&lt;/a&gt;&lt;/p&gt;

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<p>PS That is, of course, for FAFSA and EFC purposes. The CSS/Profile is a different animal altogether.</p>