So, like a lot of you, we are in the process of selecting a college for our child. A few on the list are “meets full need” top 25 dream schools. We feel very fortunate with the great choices she has!
As anticipated, we did not qualify for any need based aid at any schools. She did get some nice merit scholarships at some schools. But, the T25 schools really don’t give any merit, so we would be full pay at those.
I was playing around with the net price calculator at her top choice, full-pay school. I was trying to figure out what we might get for need based aid when our youngest enters college in a few years and we’ve got two in college at the same time. I kept all of the numbers the same, except I added a “sibling in college”. I was surprised to see that we would qualify for a need based grant that would cut my daughter’s full pay school in half for that one year.
While I am happy that we may qualify for a grant for that one overlapping year, I fail to see the “fairness” behind the methodology.
Take two families with identical income and assets, both with two children. Assume that Family #1 has kids that are one year apart (so 3 overlapping years) and that Family #2 has children that are four years apart (so zero overlapping years). It seems to me that Family #1 stands to get significantly more need based aid than Family #2. But, the question is Why? Both families have identical incomes, identical assets, and eight years of college to pay for. And, both families had 18 years to prepare for college payments.
I understand that years with multiple kids in college are difficult, but it just doesn’t sit right with me that the age difference between our kids can have such an impact on need-based aid.
What am I missing here? I’m not complaining about the methodology, I really just want to understand it. Perhaps more folks are paying tuition out of “current earnings” vs “savings” than I realize.
You are not missing anything. At a college that guarantees to meet full need for all…when you have a second kiddo in college, it’s very likely your need based aid will increase unless you are VERY wealthy.
But the real question is…can you pay for all four years…because you never know…younger sibling just might decide to take a gap year, or not go to college or wherever.
We were in the “5 year gap” between kids situation, so no overlap. I agree, it does give a benefit for spacing kids close. But you are definitely right that most families are paying most of their costs out of current earnings, not savings.
Agree with you but it is what it is. My two did not overlap at all, one went for four years and graduated at the same time the next one graduated from high school. The only thing I can say it is impossible to predict the future. Maybe student two would get a scholarship, attend an academy or go to a school with a lower COA. Schools can only base the financial aid packages on what is known and that would be the facts regarding who is attending school now. I am full pay for eight years. Could I have gotten some aid if I had two in college at the same time. Who knows.
This process is unfair in general. How about two families with same income. One family is a saver (used cars, inexpensive vacations, etc). The other family lives life large. No savings. Guess who gets more financial aid?
@thumper1 Yes, we can afford full-pay for all four years. I was just curious and that’s why I ran the NPC with the overlapping student…pure curiosity about what that overlapping year might look like.
Right now we are trying to determine worth. We can afford the full-pay school, but is it “worth” it? We will figure it out…eventually…within 3 weeks…eek!
Keep in mind while your FAFSA EFC will be split in half, it does not necessarily mean that your D’s school will suddenly be half the cost. Profile schools will probably be about 60% of what you are paying now. Many CSS profile meet full need school will want to know how much you are paying for kid 2 to attend school.
If kid #2 gets a full ride, full tuition scholarship, your need based aid for kid #1 will not go down much, especially if it is less than your federal EFC.
For example: If your EFC with 2 kids in college is $40k and kid # 2 gets a full tuition scholarship leaving you with approx 17k to pay, school number one will probably only give 17k in aid (the difference of what you are paying out of pocket). IF kid# 2 gets a full ride, you will still be full pay for kid #1, because you will have no out of pocket expense.
If both kids are attending schools where the COA is approx $65k/year and the EFC comes out to about 40k/kid each may get 25k.
Guess which student, because the parents are good financial planners and have saved diligently for their child’s college education, has far more options in higher education?
Need-based financial aid is determined on a year-to-year basis; it’s not done by looking at a multi-year schedule as that would mean making a lot of assumptions, many of which would probably have to be recalibrated.
Families who live life large rarely get more FA than the savers. High(er) income families, whether they save it or spend it, rarely get grants. They get loans. Some people don’t get FA because they have a second home at the beach, but they have a house on the beach!
So you have the saver has no financial aid and a fund for college and the spendthrift has no financial aid and…nothing.
Oh, and no one said it would be fair, and it isn’t.
The financial aid formulas do weigh current income very heavily – that can also be a benefit for the offspring of olderr parents who have retired, especially if the retirement assets are largely shielded within a 401K.
It also can make things very difficult for families with uneven income from one year to the next.
There are many different ways in which the financial aid system favors some over others, depending on circumstances. But they do need a system and a formula to work with, and this is the one they have come up with.
The federal system (FAFSA) is really targeted for lower end earners overall – so far less likelihood of substantial savings. I
The private, meets-full-need colleges do build their financial aid offers from FAFSA combined with CSS Profile information, but they also have an agenda of wanting students to attend. So that does mean considering current circumstances of the family-- rather than trying to punish or reward for past history. And that does mean taking a family’s current discretionary income into account. Because it isn’t about “fairness” over a lifetime – the colleges are only concerned about the 4 years a given student will be enrolled.
And it does not mean that both colleges will come down to meet your EFC or even 60% of that. You have to be lucky for your children to be accepted to very generous schools. Also don’t forget to take in to account your primary home equity because some of the colleges go aggressively about it in a way that you will still look full pay to them. In our case with two in college we received wildly different financial aid packages. And surprisingly enough the best deal of need based aid came from a school that does not meet 100% of need. Go figure…
@calmom Thank you for this response. It does help to keep in mind that colleges have an agenda of wanting students to attend, rather than an agenda of achieving fairness. It’s easy to lose sight of that fact.
@HRSMom I agree…the whole thing can make you crazy
