NY Times Article: The Business of Negotiating for More College Aid

Parents Forum
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CHOOSING a college should be more like buying a car — or at least that’s what Paul Celuch thinks. Find one that fits your taste, lifestyle and budget, he says, then negotiate the best deal. After all, you shouldn’t buy a Lexus if you can’t afford one — and, whatever car you buy, do you really want to pay the full sticker price?
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Michael Houghton for The New York Times</p>

<p>Sarah and Mike Rapp of Granville, Ohio, are using a consulting firm to help find a college financial-aid plan for their daughter Kelsey, center, now a high school senior.</p>

<p>“We approach college like any other large consumer product,” said Mr. Celuch, a former corporate executive who is now an educational consultant. “It’s big business, and you’re the consumer.”</p>

<p>The college admissions frenzy has spawned a cottage industry of private tutors, SAT prep classes and consultants to assist applicants with most everything from recommending activities to polishing essays. And when it comes to dealing with the rising costs of college, experts say, people are flocking to financial planners.

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<p><a href="http://www.nytimes.com/2006/11/12/business/yourmoney/12college.html?_r=1&oref=slogin%5B/url%5D"&gt;http://www.nytimes.com/2006/11/12/business/yourmoney/12college.html?_r=1&oref=slogin&lt;/a&gt;&lt;/p>

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<p>The funny thing about this article is that I'm from Rochester NY and I have never heard of the compnay they're talking about!</p>

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<p>This is a very interesting article because I just returned from the College Board Conference where I attended a presentation on the use of professional judgment and appeals in financial aid. The speakers were the directors of financial aid at Northwestern, Lake Forest, and the University of Illinois. I specifically asked all of them about the ability to "negotiate" as indicated in this article, and in other recent media reports. Here is what they said:</p>

<p>Financial aid awards can not be "negotiated" in the same sense that one negotiates with a car dealer for a "better deal." Financial aid offices are required by federal law to comply with the regulations of the Higher Education Act which allows for financial aid offices to adjust awards for individual applicants with SPECIAL CIRCUMSTANCES. The "special circumstances" wording is key. "We need to justify and document any adjustments we make, both to institutional and federal financial aid" said Carolyn Lindley, Northwestern's FA director. "We don't just give more money or change the package components because a family comes to us with a competing offer. We have to have documentation that special circumstances require an adjustment." Special circumstances can include: Student may have higher cost of attendance than most students, information about the family's financial situation is not in the FAFSA/Profile (i.e., unemployment, illness, high debt, etc.), or the student's dependency status has changed.</p>

<p>All three emphasized that, contrary to rumors and articles like the above, adjustments to financial aid packages are not made just because the family comes in with a competing offer. They all stressed that their offices are audited yearly by outside auditors and by the federal government and they need to justify and document special circumstances. If a review of the financial aid paperwork doesn't justify a package adjustment, all of the "negotiating" in the world isn't going to get you more money from financial aid. (Some schools might throw in some additional merit money, but not need-based aid if the review doesn't warrant it).</p>

<p>When I asked about "negotiating" here is what Lindley said, "Just because you hear a parent down the street say they pulled one over on us, don't believe it. We may have made an adjustment to a package but it was because, when we went back and took a second look at the financial situation, we could justify making that adjustment." I asked if SOME schools might differ in this approach and they said, each school uses PJ differently, but all are constrained by the same legal rules about documenting and justifying any adjustments.</p>

<p>So, when you read about consultants "negotiating" better deals, or here people here saying they "negotiated" better deals, making it sound as though it was simply because they "showed a better offer," keep this in mind: yes, some colleges may be able to come up with more money, but they aren't going to do so unless they can justify it -- you need to be able to document those special circumstances, or the school needs to find special circumstances in your FA paperwork that can justify any change. </p>

<p>I will be writing a full report of the session up for my blog, including their suggestions for how families can best appeal FA offers if they have special circumstances, but, unfortunately, I can not post the link here due to the TOS of this board. If anyone is interested, they can contact me directly.</p>

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<p>I am not surprised to hear what FA officers are saying, but I can tell you (and I'm further away than down the street) that it did not work that way in the spring of 2003. Maybe it's different today. I agree that the system needs to be cleaned up. As the article says, there is a danger that people will ask for a 'second read' to see if they can't increase the aid. Why wouldn't families ask, since awards aren't reduced but may be increased? I thought it was interesting, too, that they don't mention in the article what families pay for this company's advice, a pretty glaring omission in the article. It sounded to me like the company, which claims to primarily work in financial aid, is going deeper when they talk of finding the right fit for a student. </p>

<p>It dismays me to read about people paying for financial aid advice, when all you need to know is posted here, on FAFSA.org, in books or through contacting financial aid offices directly.</p>

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<p>P.S. I am fully aware that I am likely to be flamed left and right for the last post. I'm just reporting what I heard direct from the mouths of three financial aid directors at very different institutions.</p>

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<p>Actually, lefthanddog, I'm glad you mentioned that. All three officers said that families SHOULD ask for a review if they feel that the financial aid package did not adequately take their special circumstances into account. In short, it never hurts to ask, but your best bet for a significant adjustment is to be able to provide the documentation.</p>

<p>By the way, these same rules have applied since the early 1960s, with some adjustments over the years.</p>

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<p>Lefthandofdog, Good point about paying a consultant. This is not something you need to pay someone to do for you. All you need to do is contact the school yourself. And, as for the "research" the first consultant claims to do about the schools -- well, that's just common sense. We all know that there are schools with larger financial aid budgets, or who are willing to offer more merit money to get a particular student, who pretty much give a "discount rate" to most of their admitted students off the top in the form of merit money, or who meet 100% of need of every applicant. That's also research every parent can do on their own.</p>

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<p>I know very few families who have gotten more than some loans upon appealing an aid package even armed with competing bids EXCEPT for those schools that are very local, hardly known, and the student is a real catch for them and has committed to going there there if the aid package can be upped. The exception to my statement is if a true mistake has been made, as occurred to a family in that featured article. And I will say that having a consultant help a family who is terrible at paperwork is not a sin, and could make a big difference. There are so many kids out there who never got through the financial aid process because a parent just could not get the info together. If a consultant can make it happen, the charge is well worth it, especially since it lowers the chances of mistakes that an inexperienced, careless person migh make. Also it gets done. I am not popular with this stance, but I stick with it. </p>

<p>I know a young lady who applied to three non selective colleges in the area. She had excellent stats, and was able to negotiate a nice package with them--or rather her parents were able to do so. Dickenson, F&M and Muhlenberg, on the other hand, three more schools that accepted her and wanted her, were only willing to cough up about $1000 more, play around with some loans, and guarantee her employment. And she was well in the upper 25% group for those schools. So you can see how difficult it is to dicker for money. Yes, it can be done, but you have to shoot waaaaay low to get more money. It appears the market is pretty efficient in this area.</p>

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<p>Carolyn, what you say applies to need-based aid based on the FAFSA. It does not apply to "institutional methodology" where the expected contribution is higher than the FAFSA; it does not apply to merit aid; and it does not apply to any college that was not meeting 100% need in the first place. It also does not pertain to how a 100% need based award is packaged -- for example, whether or not it requires loans or work study to meet EFC. </p>

<p>"Professional Judgment" is very important for families who are looking for 100% need based aid to know about, but the federal policies only come into play for the relatively small number of colleges which meet full need by FAFSA standards. If the FAFSA EFC is $5000 and the institutional methodology EFC is $15,000, that's $10,000 of wiggle room. I have a family member who chose to attend Harvard only after Harvard agreed to match the financial aid award from Stanford. I don't know the details, but I do know that the mom owned a house -- so I assume that the two awards were fairly close to begin with, and the home equity was being added into the equation -- which of course, wouldn't be considered at all under FAFSA methodology. In that case, the parents were divorced, so the consideration of the ex-husband's income would be another huge influence on each college's award that would not be part of the FAFSA calculation.</p>

<p>For the vast majority of private colleges, financial aid is highly negotiable, and it is definitely worth it for students to identify those types of colleges and to target colleges that are competing for the same students. </p>

<p>Each college does have its own policies. Some colleges will look at the financial aid awards from other schools -- others won't. For example, NYU almost routinely will grant the student who "appeals" an award an additional $1000-$2000 of grant money, but it doesn't matter what the student says or what documentation is provided. NYU figured out how much they wanted the student in the first place, and then gives out an award in a certain range. </p>

<p>Every other college has its own policies when it comes to negotiation, and some will say their internal policy is required by federal regulation, when in fact it is not. (That's where the financial aid offices start to look a lot like car dealers, and it helps to really be well-versed on the federal procedures).</p>

<p>The big change I saw this past year, that I didn't see when my son applied to colleges in 2001, is that my daughter received one merit-based award offer that came directly from the colleges "Office of Enrollment Management" - I know from anecdotal postings on this board that other parents have had a lot of success in negotiating for better awards with that particular college. Somewhere along the line there was a thread about merit awards that included substantial discussion about which colleges tend to negotiate awards.</p>

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<p>I agree with the points calmom made.</p>

<p>In addition, there are some need-based-only colleges whose IM is systematically more generous than FAFSA in many cases. (I'm not talking about "professional judgment." I'm talking about an across-the-board EFC formula that is systematically more generous. E.g., the schools that guarantee 0 EFC to all families with incomes below a certain point, even though the FAFSA EFC is not zero.)</p>

<p>I have heard of cases of students getting a need-based award letter that states that because their aid package is more generous that FAFSA, they are not eligible for Federal work-study or subsidized loans, and so the institution is replacing their Federal workstudy money with institutional workstudy funds and their Federal subsidized loans with institutional subsidized loans.</p>

<p>In those cases, as well, there would be no accountability to the federal government because the student's need-based package did not involve any government aid.</p>

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<p>In our experience, there is a little play in the need-based aid, but not enough to make a huge difference. We requested a second look based on differing offers, and the schools (who were all top 10, thus equally selective) came to within a few hundred dollars. It can't hurt to ask for a review, but I don't think that families should expect to "negotiate" a better deal. If several colleges of equal selectivity offer different need-based aid, there may be some play, but it's not likely to lead to a "full ride."</p>

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<p>No one is saying that negotiating for a better aid package is going to lead to a full ride. The point is simply to get the best aid package possible, and in many cases that means appealing an initial financial aid award and working with the financial aid office. The NYT article was very clear about the approach the Celuch (the consultant) uses: </p>

<ul>
<li>he "shuns brand-name schools"</li>
<li>his company maintains a database which tracks college endowments and past financial aid awards,</li>
<li>he counsels clients NOT to apply ED</li>
<li>he focuses on finding colleges that are likely to really want the student </li>
<li>he tries to pinpoint colleges of similar size or academic stature which are likely to compete for a given student (and thus participate in a bidding war)</li>
</ul>

<p>As far as need-based aid goes: there is considerable variation in packages which purport to meet full need. With both my kids, there was considerable variation in aid packages. Even between 2 UC campuses, there was a difference of $2000 -- among private colleges, the difference in our cost of attendance among 100% need awards was at least $9000.</p>

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<p>Cal Mom,
You're talking about MERIT money. Professional judgment refers to adjustments to NEED-based awards, not MERIT money. As we all know, merit awards can indeed be negotiated sometimes, depending on how attractive you are as a candidate, and often they are really discount rates that have little to do with how much need you have but rather how much the institution wants you . </p>

<p>It is, however, much harder to negotiate significant NEED-based increases or structural changes, and PJ is both a federal and internal process. In this seminar, the three FA folks clearly made the point that they face both Federal auditors and INTERNAL auditors, and must justify their NEED-based decisions to both for both FM and IM (They are actually audited more frequently by internal auditors than Federal). They definitely acknowledged that different IM colleges/universities might apply PJ in their own individual ways, but good luck trying to get a college to openly explain what that interpretation might be.</p>

<p>In most cases MERIT awards are not awarded by the financial aid office but, rather, by the admissions or enrollment management office. So, if you want to negotiate for more MERIT money (and it never hurts to ask), they are the folks to contact, not the FA office which focuses on need-based awards.</p>

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<p>Carolyn, the article in the NYT was very clearly talking about merit money - hence the eschewing of 'brand name schools' and the targeting of schools that would be likely to want to bid against one another for desired students.</p>

<p>However, your comment about "professional judgment" and "special circumstances" comes into play ONLY when the college is meeting 100% of FAFSA EFC. If the college is meeting less than 100%, then it is irrelevant: the point of negotiation is to try to get them to come up with more. </p>

<p>As far as I know, there are no private colleges that promise to meet 100% of need and also rely solely on FAFSA methodology. Those 100% need schools always reserve the right to define "need" by their own terms, usually after seeking financial info not included in the FAFSA. Barnard college used "professional judgment" to recalculate my daughter's FAFSA EFC in a way that made our family eligible for a Pell grant (EFC under $3000). But they calculated our aid package using institutional methodology -- which take into account factors not included in the FAFSA (my home equity, my ex-husband's income). So they expect us to PAY about $10,000 over and above the FAFSA EFC. Obviously if I were to try to negotiate with them, that $10K would be the target of the negotiation. Now I happen to be happy with the award as it stands --but the point is that if I did negotiate, FAFSA regulations have nothing to do with that $10K over and above the FAFSA EFC that the college thinks we should pay.</p>

<p>U. of Chicago guarantees 100% need of all students, but using the same FAFSA numbers and non-custodial parent form that Barnard received, they decided that we should contribute about $25K. That is a very big difference in the way two colleges which promise to meet full need are looking at our ability to pay. </p>

<p>The U. of California only considers the FAFSA - but there was a significant discrepency in need-based awards at the various colleges that accepted my kids. I don't know if those were supposed to be 100% need awards or not - I just know that they were different, and hence there may have been some room to negotiate. </p>

<p>I understand what you were told at the conference, but you were given party line. It isn't necessarily how it really works. The way that it really works is that colleges routinely gap students and that their policies as to how they determine need and how they allocate aid among their students vary, but they generally give some students preferential packages. And the majority of colleges do offer merit aid, usually in combination with need based aid, which gives added flexibility for negotiations. Many colleges do not distinguish clearly between merit & need based aid - need-based packages are often structured with both, and the various grants are often laeled in ways that make it hard to know whether they are considered to be merit awards or not. </p>

<p>Most (but not all) colleges will look at the award from other, similar colleges in terms of making their offers; in any case it is a simple matter to ask. They may say that they don't consider it, but the reality is that the colleges want to protect their yield and they will find ways to adjust awards to keep students that they want. Obviously they prefer some students over others and borderline applicants might not have much negotiating success.</p>

<p>One value of applying to multiple colleges is that it gives the parents some valuable data in terms of the comparative awards. They can see how different colleges calculated their need. The college financial consultants claim that they have a more extensive data base -- I assume that is probably the case, as that is the same sort of information that parents use these board to gain, even though here it is only anecdotal. I think the consultants are charging a lot of money for services - and maybe that rubs some people the wrong way -- but I can see a middle class family paying a $1500 fee to a consultant if it might make the difference between them paying $40K a year to educate their kid vs. $30K a year.</p>

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I can see a middle class family paying a $1500 fee to a consultant if it might make the difference between them paying $40K a year to educate their kid vs. $30K a year.

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<p>This does make sense to me, if one believes that the consultant can get better results.</p>

<p>I keep wondering how my son was able to be offered a subsidized Stafford at some schools that cost less than others where he was not offered a susbsidized Stafford. Something does not seem right about that.</p>

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<p>Can anyone tell me what is the difference between admissions and enrollment management?</p>

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<p>I think there is a significant difference between need based aid tied to FAFSA EFC computations and merit aid. Carolyn, I do not see how a college can be restricted by the Federal govt in the choices it makes on scholarship awards funded by their endowment funds. Pell grants, yes. Federally subsidized work-tudy, certainly.</p>

<p>The fee of less than $2000 cited in the article seems reasonable enough to me. My son, who was on a quest for merit aid, did the same thing on his own and received merit awards in excess of $375,000, and merit aid of $100,000 from the college he decided to attend. BUT, he spent countless hours doing his own research to achieve the success he did. If it had been up to me, I would have been glad to hire the services of this consultant.</p>

<p>I do have some qualms about post aware negotiating of finaid unless family situations have changed/aid was less than EFC and I wouldn't do it. But thats just me.</p>

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<p>Kudos to your son, originaloog - it's great that he devoted so much time to ferreting out good aid. </p>

<p>I'm not sure what you meant by, post aware negotiating of finaid. </p>

<p>I think the colleges pretty routinely engage in negotiating or entertain appeals of financial aid awards. I do feel that with NYU that it is essentially built into their system -- we did a lot of comparing of notes last year, and basically everyone who had a grant in the same range that my daughter did got $1000 or $2000 more if they appealed, and my daughter was told as much when she talked with the financial aid people. NYU is probably a bad example as they clearly leverage their aid and do not come close to meeting full need for the vast majority of their students -- but the point is that just about everyone who asks is going to get the extra thousand or two. </p>

<p>The whole concept of "enrollment management" is for the college to target the lowest possible discount necessary to entice the student to attend -- so by definition there is room to negotiate, as long as the student is still within the ballpark of the maximum range of discount the college is willing to offer. In other words --the college decides where the student stands among their applicant pool -- lets say the kid is in the top 3rd. The college hypothetically is willing to give that kid up to $15K in merit money, but they start off with an offer of $10K. If the family asks for more, perhaps that college would offer $12K -- but if the family had enough information to know that they should hold out for $15K, then that is what they would get. They probably would not get more, because $15K is as far as the college is willng to go. </p>

<p>However, seeing an award from another, competing college may tip the balance toward the higher offer, simply because it is evidence that the student really does have an equivalent or better and less expensive option. So for purposes of prompting action, it may be the most effective negotiating tool around.</p>

<p>I don't care what the colleges say -- they must expect this. If the aid is very generous in the first place, then of course the family has no need to question it. But it is far more typical that the award is coming up short. We see it every spring.</p>