STUDENT-CENTERED SOLUTIONS FOR COLLEGE PLANNING

Early April can be the best of times—and the worst of times—if you are a college applicant. Those who are fortunate to have received good news from colleges are understandably elated. For them, the process of making the final choice begins now.

Earlier this week, I received an email from the mother of a young woman whom I had met earlier in the year. Her daughter, Ali, had done well (admitted to six of seven schools and placed on one Wait List) with her applications and her mom was understandably excited. Now, she wanted to know how to help Ali sort through her options.

Ali had already ruled out one college and, upon visiting two others, had decided against them as well. She is keen on two schools, one mid-sized and the other small, and is dallying with the idea of an honors program at a state university. In her heart (according to her mom), though, it seems she really wants a smaller school. Ali is planning to visit the small school even though it is the only one that has yet to offer her financial aid. Her mother also wants to know how to approach the Wait List situation. I offered the following feedback to Ali’s mom and pass it along here in the event you are grappling with similar issues.

1. Ali needs to revisit her educational priorities. At this point in the process, it’s easy to become distracted by the commotion surrounding “who’s getting in and where.” She needs to focus on three basic questions: “Why do I want to go to college?” “In what type of academic environment do I function most comfortably?” “What are the three things I want to make sure I accomplish by the time I graduate?” If she is true to herself, the answers to these questions will guide her to a final choice with which she will be most comfortable.

2. Visiting the campuses of her top choices is a must as Ali is preparing to “buy.” She should spend twenty-four hours (not on a weekend!) on each campus of interest and immerse herself in the “neighborhoods” of the campus in which she is likely to spend much of her time once enrolled. She needs to talk with students and professors (outside of the panel discussions at open house programs that are scripted for her benefit) about their experiences. In which environment can she see herself functioning most comfortably?

3. She needs to figure out where the Wait List school fits in the picture. If it is a clear first choice, then she should remain active on the Wait List. Wait Lists are likely to move this year so Ali needs to provide new information (scores, grades, awards) and demonstrate her commitment to enroll if accepted. A campus visit can be an important expression of that interest. I do not, however, recommend remaining active just to see if she can get in—this is not a time for “fishing expeditions.” Her actions should be purposeful and reflect conviction.

4. Finally, Ali needs to make sure she clearly understands the financial aid awards she receives. Award letters, at their best, can be very confusing. At this stage of the game, it is vital that she compares “apples with apples.” Moreover, her parents need to be frank with her about the impact of cost/financial aid from their vantage point. While they might have personal preferences, are there any deal-breakers financially? It’s better for her to know of any such limitations as soon as possible.

The next month promises to be highly energized as college-bound students zero in on their final college choices. Getting it “right” is critical as the Best College Fit™ (BCF) program continues to cover the admission process through the final decision-making process. The March 24 BCF Web-Side Chat webcast, “Strategies for Evaluating Enrollment Options,” featured a discussion that covered the above topics and much more including tips for navigating the Wait List. A recording of that webcast is available in the BCF archives.

On April 7, the Web-Side Chat webcast, “Evaluating Financial Aid Options,” will compare actual financial aid awards and provide advice with regard to next steps in making the final choice of a college. In addition, the “College Talk” email forum provides on-going conversational opportunity throughout the month. To join the conversation, you must first subscribe to Best College Fit™ . The 30-day subscription rate is $19.95.

It’s time to fill out applications and a big concern for many families this fall is, “Should we check ‘yes’ or ‘no’ to the question about financial aid on the admission application?”

While it’s understandable that students would want to avail themselves of as much financial assistance as possible, uncertainty over whether the family’s ability to pay will have an impact on the admission decision has folks on edge. There are three issues worth noting in addressing the concern.

One, the “ability to pay” is increasingly a factor in the admission process, especially for students on the competitive margin. There was a lot of discussion at the end of the admission process last spring about “full-pay” students with modest credentials getting the nod over students with somewhat stronger credentials but demonstrated financial need. With that in mind, you need to go into the admission process with your eyes wide open and make sure you are focusing on schools that value you-they’ll admit you and give you what you need.

The second matter is more practical. It has to do with how colleges use the information they glean about your financial need from the admission application. Checking “no” that you don’t need financial assistance means that a hurdle goes down—the question of your financial need has been answered. If you check “yes,”colleges still don’t have enough information to be able to discriminate in the admission process. You see, approximately one-third of the students who indicate that they will be applying for financial aid either never apply—they know they don’t need it, or they do apply and demonstrate that they don’t need it!

Colleges that discriminate based on “ability to pay” in the admission process will wait until they have seen the academic credentials and the financial aid data for most if not all of the potentially admitted students before making their final decisions.

Checking “yes” does, however, allow the admission officers to be on the alert for your financial aid application materials. That can be important if you encounter delays or problems with the processing of the latter.

Finally, you need to know that the financial aid question on the admission application is intended to reflect your intent to apply for need-based assistance from the institution itself. Period. Your eligibility for merit scholarships awarded by the college does not require you to check “yes” unless you are specifically instructed to do so on the application.

The bottom line, then, is that you should check “yes” if you know you want to be considered for need-based financial aid. That checkmark should not compromise your application for admission.

This blog was first published on www.witf.org under Education, Life After 12th Grade on July 13, 2009.

As college costs continue to increase and the norm for private colleges approaches $50,000, there is increasing speculation in education circles about consumer tolerance for such increases. How long can these increases be justified? How much is too much? When will the upward spiral come to an end?

At the risk of sounding jaded, I remember similar concerns as the cost approached $10,000 per year and then $20,000. And now that seems like a long time ago.

Frankly, the question of pricing is centered on the actual cost of producing the goods and services—and the question of price tolerance is market driven. As long as demand remains high and academic infrastructures must be maintained, costs are likely to maintain their current trajectory.

That said, the Obama administration has begun a number of measures to increase access to financial assistance. In my previous posting, I discussed the potential impact of streamlining the process of applying for financial aid (FAFSA). Now, I will take a look at some of the funding enhancements that will potentially benefit students applying to college this fall.

Increased Grant Money The Federal Pell Grant program provides need-based grants to low-income students pursuing undergraduate and certain post-baccalaureate degrees. The maximum grant amount has been raised by $500 to $5,350 for the coming school year. Passage of the President’s 2010 budget will ensure continued growth in this amount.

Low Interest Loan Opportunities The Federal Perkins Loan Program provides need-based, low-interest (5% fixed) loans (up to $5,500 per year) to help low income students finance college costs. President Obama has committed an additional $5 billion to the loan program while ensuring the interest rate remains at five percent.

Eligibility for the Pell Grant and the Perkins Loan is determined by the need analysis utilized by the FAFSA.

Analysis: On the surface, it would appear that these funding measures help ease the pressure on families to meet college costs—and that might turn out to be the case. However, colleges have the discretion to administer these funds to eligible students as they wish.

For example, in awarding financial aid to its applicants, a given college can elect to either use Pell Grant funding to reduce the amount of loan or work-study (campus job) opportunity it extends to admitted students or to displace its own grant funding or to cover a demonstrated “need” that would otherwise be left unmet. Similarly, a Perkins Loan can be written into a financial aid award in place of institutional grant monies. When this happens, the college is, in effect, using the Federal funds to lessen its own burden in supporting a student rather than easing the financial burden on the student.

Depending on the disposition of the college or university in question, then, the increase in Federal funds may actually do little to reduce the burden on the student’s family to cover college costs. Even if a college applies the funds charitably (as it should), the easement experienced by the student’s family will be slight.

It is also worth noting that the Perkins Loan may be extended to students with greater need in addition to the Subsidized Stafford Student Loan. Undergraduate students may be awarded as much as $5,500 per year in Perkins Loan as determined by the institution at which they are enrolled. The amount of the Stafford Loan may not exceed $3,500 in the first year, although an additional $2,000 of optional, interest unsubsidized Stafford Loan may also be borrowed on top of that. It is possible, then, that a low-income student may be expected (by some colleges) to borrow as much as $11,000 in the first year or $49,000 over four years. This is unreasonable and, in my opinion, not the intended outcome of funding from the Recovery Act. While personal debt is to be anticipated, a more reasonable amount over four years would be in the neighborhood of $25,000.

As financial aid officers assemble financial aid awards, they cobble together funds from different sources in a manner that enables them to meet the needs of admitted students while stretching their own budgets as far as possible. The introduction of Federal funds (Pell Grant, Perkins Loan), then, won’t necessarily reduce the out-of-pocket expense for families as they fund college costs if, in fact, those funds are not used by colleges to close the gap between the family’s expected contribution and the cost of attendance.

Ultimately, the commitment of institutional funds in the packaging of financial aid awards is an expression of institutional values. Colleges that place a high value on your attendance are more likely to award you grant/scholarship assistance up to your full, demonstrated need in addition to Federal grants, loans and work study, thus limiting your four-year exposure to debt to a reasonable amount. A careful read of your financial aid award letters will reveal whether you—and not the colleges—are being supported with this additional funding from the Federal government.

For more information go to www.finaid.org.

This blog was first published on www.witf.org under Education, Life After 12th Grade on July 6, 2009.

Over the past several months, the Obama administration has initiated a series of bold measures to improve college access and completion rates in the U.S. Two of the initiatives may have immediate implications for students seeking to enter college in 2010.

On June 24, 2009, U.S. Secretary of Education, Arne Duncan, outlined substantive changes to the Free Application for Federal Student Aid (FAFSA) designed to simplify the application process. This announcement follows earlier moves to reduce cost barriers by increasing grants (free money) and low interest loan opportunities for America’s neediest students.

These are positive signs for families looking for encouragement in the face of rising costs and diminishing means. In a two-part series, I will take a closer look at the real impact each is likely to have on educational access in the next several years.

Streamlining the Financial Aid Application Process
According to the U.S. Department of Education, students applying for financial aid using the Free Application for Federal Student Aid (FAFSA) should find the process easier this year. Starting in January 2010, students completing the online FAFSA can retrieve relevant tax information from the Internal Revenue Service giving them seamless access to information needed to their aid applications.

In a related move this spring, the Education Department began providing instant estimates of Pell Grant and student loan eligibility. Students had previously been forced to wait several weeks for notification. And starting this summer, enhanced “skip-logic” will be employed to make it easier to navigate the online FAFSA.

Analysis
Most financial aid models assume at least three sources of funding with regard to college costs: the family, the institution and the Federal Government. Students attending in-state institutions may also receive funding from their own states. Some students also receive scholarship assistance from various funding sources in the community.

The intent of the FAFSA is to determine the contribution from the family and, thereby, the family’s eligibility for funding (grants, loans, work study) from the Federal government. Unfortunately, that determination of eligibility or “need” does not apply uniformly across all funding sources.

While the Federal government and most state governments subscribe to the definition of need that emerges from the FAFSA, all bets are off when institutions themselves make EFC determinations relative to the distribution of their own funds. In fact, colleges and universities frequently rely on more stringent assessments—including sensitivity to factors such as home equity or the financial contribution of a non-custodial parent in the case of a divorce or separation—that invariably require greater contributions from families. Many private institutions use the College Scholarship Service (CSS) Profile to collect such data. As a result, you might receive mixed signals regarding their respective EFC’s.

On the surface, then, each of these moves to simplify the FAFSA makes sense. Whenever complex data collection relating to family finances can be simplified by eliminating steps or unnecessary information, everybody wins. The big news, however, relates to the access to IRS files. Personal IRS files have always been accessed after the fact in the financial aid process to verify data submitted on the FAFSA. In this case, making the connection between the Department of Education (FAFSA) and the IRS saves steps and eliminates redundancy of effort for families of college-bound students.

Providing links to information that has already been captured (prior year tax returns) early in the process will make it easier for families to complete the financial aid application. Current year tax returns will still be used for verification as family circumstances often change from year to year. The FAFSA may be further simplified if/when the Administration is successful in its efforts to eliminate unnecessary questions from the application.

Lest you see these developments as a panacea in the financial aid process, however, I would raise two cautions. One, the connectivity to data collected by the IRS can only work as well as the completeness of the IRS files for that individual and his/her custodial parents. For example: How will families with IRS files that are incomplete, in dispute or non-existent be able to complete the FAFSA in a timely fashion? And imagine the complexity of determining the appropriate IRS files for students who live in blended families or with unrelated guardians. Ironically, the FAFSA/IRS marriage may fail to make the process easier for those who are in greatest need of assistance.

Two, and perhaps more importantly, the discussion about ease of access with regard to the financial aid application process overlooks an important detail. The outcome of the FAFSA submission—a determination of the “expected family contribution (EFC)”—is not a reliable indication of how colleges themselves will assess the expected family contribution in determining “need.”

Frankly, none of this is new. Colleges have resorted to their own methodologies for determining the EFC for some time. Be cautious, therefore, about making assumptions with regard to the EFC that is reported by the FAFSA as you try to anticipate college costs and the assistance you might receive in meeting them. While you may indeed have eligibility for enhanced Federal assistance, the bulk of your financial aid is likely to come from the college itself.

Make sure you understand from each college how it will determine your EFC and, subsequently, your financial need. The Federal government is but one source of need-based financial aid. The reality is that, across the board, colleges and universities fund the vast majority of financial aid that is awarded each year. Moreover, they are not obligated to meet a student’s full need as demonstrated by the FAFSA or the Profile. While you are not likely to receive any guarantees of funding, it is certainly worth exploring these questions with each of the schools on your list as you visit them this summer.

Who would have thought that the headlines would read “Recession has Silver Lining for Class of ’09”? (Washington Post, Susan Kinzie, April 1, 2009) After hearing how “record numbers of talented applicants were rejected at top colleges” for much of the past decade, it would seem that this is the year of the applicant—or is it?

It turns out very little is predictable about outcomes this year. Sure, some members of the Class of ’09 are finding unexpected success, but the good news is not flowing evenly. In fact, if you are an applicant, much depends on your personal financial circumstances.

Students who do not need financial aid are finding more college options than usual. Conversely, those who need assistance are either finding themselves admitted—but short of the money they need—or, worse yet, on wait lists.

I heard about these scenarios and more during the March 25 Web-Side Chat in which I talked with Best College Fit™ members about what to expect with regard to admission decisions. I received questions about the impact of needing financial aid on a student’s ability to gain admission from the wait list as well as the likelihood of receiving merit scholarships from selective schools.

One participant, a college advisor, observed that, “Many of my full pay kids are getting money even though they haven’t asked. And my inner city kids are getting scholarship offers in their acceptance letters, but when the financial aid package letters come, they are gapped so much they cannot attend the schools.”

The next six weeks promise to be unprecedented with regard to renewed admission activity as colleges and universities press onward to get their classes. And it will be a time of opportunity for students who understand the process and are prepared to respond decisively when that opportunity presents itself. Wait lists will move and I won’t be the least bit surprised to see schools revisiting admitted students with new offers of financial aid and/or merit scholarships.

The Best College Fit™ (BCF) Membership program continues to provide insight and support to families as they sort through the various college options that lie before them. On April 13, BCF hosts a Web-Side Chat webcast, “Evaluating Financial Aid Options,” that will compare actual financial aid awards and provide advice with regard to next steps in making the final choice of a college. In addition the “College Talk” email listserves provides on-going conversation opportunity throughout the month.

NB: All Web-Side Chats are recorded and available for review in the Webcast Archives.