Financial Aid

Question: I am 17 and have left home due to family problems. I have not legally emancipated myself yet, but I am self-supporting and want to know what my options are concerning government grants, tax breaks or anything that will make my final year in high school a bit easier.

Our expertise is in college admission and we don’t feel that we can give you a responsible answer about all of the financial issues you may need to understand as you face a senior year on your own. However, when it comes to college and independent students like yourself, we can offer some advice about financing your college education.

As you may know, there are two main types of financial aid: need-based aid, which is tied to your family income and assets (and that includes your parents–even if you don’t live with them–more on that in a minute) and merit aid, which is money for college given to you because a college is trying to recruit you for any number of reasons (grades, class rank, athletic ability, special talents, etc.). We’ll explain here how both apply to your non-traditional situation:

Need-based aid:

Most students qualify for some sort of need-based aid if their family income is below roughly $120,000 per year. If it’s well below that, you will probably qualify for a lot of aid. However, even if you go to court and emancipate yourself legally from your parents, the vast majority of colleges will still count their income when they determine if you qualify for need-based aid (and how much you’ll qualify for). If your parents don’t have a lot of money (and if you’re on decent enough terms with them that they will help you complete the financial aid forms) then that will be good news for you.

If, on the other hand, your parents can afford to pay a lot towards your education but are unwilling to do so, then you will have extra hurdles to scale. We consulted with one college financial aid expert who told us that there are no simple solutions. Even if a court of law was to proclaim you independent of your parents, the majority of college aid offices would not. She thus advises you to proceed on a school-by-school basis. That is, once you compile a list of the colleges you’d like to attend, you should then contact financial aid personnel at all of them and explain your situation. (This isn’t quite as time-consuming as it sounds. That is, you should summarize your situation in one e-mail that you send to multiple places. You can then follow up with the colleges that seem encouraging.)

Some colleges may be willing to take your extenuating circumstances into consideration, while others definitely won’t. Our expert tells us that public colleges tend to be more flexible here than private ones. That might sound surprising, because often it’s the private schools that are more able to tweak the rules than the public institutions (and they often have more money to give away), but—in this case—you may find that the opposite is true.

Ordinarily, a student is not considered “independent” from a financial aid officer’s point of view unless he or she is at least 24 year of age or has satisfied several other conditions (e.g., has completed military service, is an orphan or ward of the court, or is married). In seeking an exception to this policy, you should be prepared to provide as much documentation as possible to validate your claim of independence. Tax records, pay stubs, rent and utility receipts, affidavits from employers, friends parents, former teachers, etc. can all help your cause. Be prepared to reveal personal information about yourself that you might find intrusive. If you endured particularly difficult conditions at home (e.g., physical abuse) that led to your early independence, you should explain this as candidly as possible and provide as much documentation as you can. Nonetheless, expect an uphill battle and inconsistencies among the different colleges or universities you query.

Keep in mind that while your relationship with your parents appears to be a troubled one, perhaps if they understand that you cannot receive any government aid whatsoever without their participation in the completion of your aid forms, they may be cooperative and provide the information (or even the funding) that you need. College financial aid officers may also help you obtain loans to cover what is known as your “Expected Family Contribution,” even if your parents refuse to help out. However, in order to calculate this “EFC,” your parents will have to work with you to complete the Free Application for Federal Student Aid (which you can get at your school or online at www.fafsa.ed.gov ).

Merit Aid:

If you are not on speaking terms with your parents or if they refuse to fill out financial aid forms or to contribute to your college costs, then your best bet may be merit aid. Some colleges have a lot of it (that is, they offer a number of full scholarships that even include room and board) while other colleges give only small amounts that won’t put much of a dent in your bills. Some give none at all. Unfortunately, there’s no easy way to quickly identify which colleges offer what. Your guidance counselor may be able to be of some help there. In general, however, the best way to get merit aid (unless you qualify for an athletic scholarship) is to apply to colleges that are eager to recruit you. If you are a member of an underrepresented minority group (generally African-American, Native American or Latino, but it depends on the college) then you will be a desirable recruit at many colleges that have primarily Caucasian student bodies. If you are not an underrepresented minority, then your best bet for merit aid is to apply to private colleges (and sometimes state schools, though they tend to have less merit aid than private colleges do) whose “admitted student profile” is not as good as yours. In other words, if you are an “A” student with 1300 SATs, pick places that normally admit “B” students with 1100 SATs. Or if you are a “B” student, look for less competitive colleges that typically attract “C” students, and so on.

The most important thing to realize is that, when it comes to going to college, even if you are on your own and struggling, you will have options and you shouldn’t rule out a college education. Obviously, the better your grades and test scores are, the more options will arise, but there will be a place for you somewhere regardless. We wish you luck with what is surely a stressful situation. Be persistent and patient, and you may get the good news you’re looking for.

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Question: I am in 9th grade and wondering what Ivy League schools look for when they give out scholarships? Do sports and other extracurricular activities count as much as grades and test scores?

The first thing you need to know is that all scholarships awarded by the Ivy League are “need based.” That means that the only students who receive Ivy League financial aid are those whose families cannot afford to pay full freight. However, even many students from “comfortable” middle-class homes receive some sort of scholarship assistance due to the high price tag attached to these schools.

The way Ivy League colleges operate is that they first evaluate their applicants based on their qualifications. In order to pass muster with an Ivy League college you have to maintain tip-top grades (usually close to a straight-A average), with the vast majority of your classes selected from the toughest ones available to you. (Admission officials don’t penalize you if your school doesn’t offer any AP or even honors classes, but they do like it when you turn to a local community college or find other enrichment opportunities, if your own school isn’t very challenging.)

Your SAT I and II scores are also very important—probably more important than most admission folks are willing to admit. In fact, College Confidential offers an “Academic Index” calculator that is similar to the system that Ivies uses to compare candidates. You can read more about this at Academic Index, but as a freshman you probably don’t have test scores yet and won’t be able to try it.

Finally, your essay(s), recommendations, and extracurricular activities are all evaluated from a more subjective standpoint (i.e. no formulas used here). Not surprisingly, the Ivies receive stacks of applications from amazing students who excel in a wide range of areas. Typically, an Ivy applicant has to be more than a French Club president or yearbook business manager. The Ivies are looking for student government presidents and yearbook editors-in-chief. Moreover, they’re also seeking students with unusual accomplishments—not just the same old, familiar high school stuff, however impressive it may be. Thus, applicants who have published books, danced on Broadway, or founded a national charity may get extra attention at decision time, even if their grades and SATs aren’t quite up to snuff. (They still have to be good, of course.) Not surprisingly, recruited athletes also get special attention (and some slack) when it comes to transcripts and test scores.

Applicants are never evaluated in a vacuum, either. That is, admission officials pay close attention to such factors as socioeconomic background and a range of other extenuating circumstances that a student has had to face.

Now, to get back to your original question … once admission officers have “graded” a student, they put together the final list of those they wish to admit. In most cases, each of these admitted students is then awarded what that college believes is enough financial aid to attend. For some students, this will be the entire cost of tuition, room and board, and perhaps even money for transportation and books. For others, it will be nothing. The strongest candidates don’t get more dough than the more borderline ones. It’s all based on family finances.

There are some variations to this system. For instance, a college that is not “need blind” will make some “fine tuning” decisions about candidates based on their ability to pay, but that doesn’t happen until the very end of the evaluation process, and a very strong applicant—however poor—will most likely be admitted and receive a generous scholarship. Some colleges are “need blind” for U.S. citizens and permanent residents but not for international students.

Thus, the only way to win a scholarship from an Ivy League college is to get yourself admitted. This means being an exceptional student with an exceptional list of accomplishments as well. Even then, there is a certain element of luck involved. Many highly qualified candidates are turned away each year, often with no apparent reason. You also have to come from a family with “demonstrated need.” Thus, the bad news: No matter how smart or talented you are, you will not get a scholarship from the Ivy League if your parents can afford to pay your way. The good news, however, is that–if admitted—you should not have to pass up an Ivy education for financial reasons, because the colleges promise to meet your monetary need, no matter how high.

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Question: Earlier this fall I was admitted to my first-choice college. I was given a nice scholarship of $6,000, but I did not get the largest scholarship of $8,500. According to the criteria put forth by this school, I meet all of the requirements except for my class rank. However, after the fall semester, I believe my rank will go up at least one spot, putting me in the top 10%. I will also have completed 9 hours (plus 9 from last year) of college credit this fall, while keeping a 4.0 grade average. I know it is possible for one to appeal a financial aid award, but is it possible for me to go to my university and ask them to reconsider the scholarship given my mid-year grades, without me seeming like I’m looking a gift horse in the mouth? And is it done?

Congratulations on being admitted to your first-choice college and for being awarded a scholarship as well. You can certainly appeal that award, and you’re already getting off to the right start. Contact the financial aid office at your university (e-mail is fine) and tell them almost exactly what you’ve told us—and in the same way. That is, explain that you are thankful for the money you’ve been given and that you don’t want to “look a gift horse in the mouth,” but do point out that your fall semester achievements may enable them to view you in a different light.

There is often flexibility in financial-aid budgets and policies, and—not surprisingly—admission officials are more apt to favor students who appear appreciative rather than those who act entitled. Moreover, since you may be working with the same staff members for the next four years, it certainly would be wise for them to identify you in the former group, not the latter, from the get-go.

Make sure in your letter you clearly explain that you understand why you weren’t initially awarded the larger scholarship, but explain carefully, too, how your rank is improving. Offer thanks for the $6,000 you have been promised, but also offer all applicable reasons why an extra $2,500 would make a significant difference (“I am now working 15 hours/week, but would like to cut back during my first semester of college;” “My parents are shouldering unexpected medical expenses;” “My mother will be facing a job lay-off in the spring,” etc.).

Appeals like this are done all the time, and it sounds like you have solid grounds for yours. Don’t be shocked, however, if you don’t succeed. (For instance, there may be a rigid rule that requires aid decisions to be based on class rank at the time of application.) But do be persistent, and be sure to be grateful and polite.

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Question: I can hardly get any help from the government because I am considered dependent on my parents, and they make quite a bit of money. The problem is, they won’t help me with tuition. I have lived on my own for over a year and will be 23 next month. I’ve heard of emancipating yourself from your parents to be considered independent (I’m not married, nor do I have children). Is this possible for someone my age?

Unfortunately, as you’ve probably figured out all ready, college financial aid offices—and the U.S. government as well—aren’t very sympathetic when it comes to students whose parents have the resources to help pay for college yet refuse to do so. That is, while they may feel sorry for you and the bind that you’re in, there isn’t a lot they can do to get you out of it.

You can only become an independent student when you hit the ripe old age of 24—still more than a year away. There are some mitigating factors than enable students to be declared independent sooner, but it sounds like none apply to you. These include: being an orphan or ward of the court or an Armed Forces veteran, having a legal dependent other than a spouse, being married or in a graduate/professional program.

It’s difficult to advise you without knowing more about your situation. For instance, have you already completed any years (or semesters) of college? How strong is your academic record (either high school or, if applicable, college)? Did you take SATs? If so, how did you do?

Your best bets at this point would be either to:

·Wait another year until you are 24 and apply for aid as an independent student

·Apply to colleges that offer Merit Aid to qualified students, regardless of their ability—or inability—to pay. (You would have to be a strong student to get a substantial award, although you don’t have to be Ivy League material. The trick is often to apply to colleges whose typical student boasts a GPA and test scores significantly below your own.)

·Begin your education at a low-cost community college and then transfer. By the time you do, you’ll be 24+.

·Depending on the dynamics in your family, you can apply to the colleges of your choice and explain your situation to financial aid officers. At some schools, staff members may be willing to contact your parents and point out that you will not be able to attend without their help. Some parents seem to pay attention (and even change their thinking) when they hear the news from a college official, regardless of what they’ve said to you. Others, of course, are more apt to blow a gasket that could turn a sticky situation into a downright explosive one. So that’s a call you’ll have to make yourself.

Good luck to you. Keep persevering.

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Question: The Common Application asks you to indicate on Page 1 whether you will be seeking financial aid. So do the Form 1’s for some colleges that I thought were need blind. This means that admissions committees have access to this information when they make decisions (although they don’t know how much you’ll need). Does this suggest that colleges may not be as “need blind” as they claim to be?

This information is typically not used by admission evaluators in any significant way. Occasionally, it may make admission officers curious. That is, they see an applicant who had two parents in snazzy-sounding corporate jobs who check that “yes” box, and ponder what mysterious truths lurk below the surface; while the daughter of a single-mom/nurse’s aide might indicate “no.” (Adcom members might fleetingly wonder if the latter was an error or if the young woman had a special source of assistance—a kindly maiden aunt or Sugar Daddy, perhaps?). Seriously, though, once evaluators get past that page one, there’s not much thought given to how the aid question was answered.

Nonetheless, we advise Common App candidates to make two sets of copies of that first page: one with the “yes” or “no” box marked for the colleges that are not need-blind, and one that leaves it blank for those that are. However, when it comes to allegedly need-blind institutions asking on their own applications, you should do their bidding and respond. Chances are, the question is asked for processing purposes in order to be sure that appropriate forms have been filed in the financial aid office.

Thus, when such an institution insists they are “need blind,” what they are really saying is, “Even though we know you are asking for money, it isn’t going to influence our decision.” Most of the time this is true, though there is undoubtedly a bit of tweaking (and peeking) going on at some schools, especially during that difficult period when the very final decisions are made and borderline candidates are tipped in or out of the admit pile.

One might argue, of course, that those finaid “yes” or “no” responses might influence admission officials at least subconsciously. While we can’t deny the possibility, the question this raises is “In what direction will they be swayed?” If you’ve read A is For Admission, Michele Hernandez’s account of her four years as a Dartmouth admissions pro, you can’t have missed her repeated insistence that admission folks tend to scorn those applicants who’ve had an easy life and a silver spoon, while they applaud the similar successes of the less advantaged candidates. While Hernandez may belabor that point excessively (and perhaps not fully accurately) there is at least a grain of truth in the fact that, for every admission official who may think, “Gee, this kid looks pretty strong and won’t cost us a nickel because he’s a no-need. I like that,” there’s another bleeding heart who’s saying, “Wow. This guy comes from a family that requires aid, but he’s still managed to climb to the top of his class and does hours and hours of community service, to boot.”

In other words, the pros and cons of checking those aid boxes will work out to a wash, more or less. With all the things there are to worry about on the admissions roller-coaster ride, this isn’t one of them.

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Question: I’m really having a hard time understanding my financial aid papers. I noticed on my budget worksheet that certain amounts are calculated for room and board (I live off campus), personal expenses, dependent care, and transportation. How is this supposed to benefit me, and was it necessary to calculate this in my budget?

When a college prepares a budget sheet such as the one you describe, what they are really doing is showing you the figures on which they have based the amount of aid they are awarding you.

Typically, the aid that colleges give out to cover non-tuition expenses (such as your room and board, dependent care, transportation, etc) comes in the form of loans that must be repaid. Look over the itemized estimates on your budget sheet. Do you think the numbers are fairly accurate? If you feel that they are high, that could mean that you will require less loan than the college expects you to take out, so that could be good news for you.

If, however, you find the numbers are low in one or more areas, then you should contact the financial aid office at your college as soon as possible and explain your reasoning. Hopefully, they will adjust your aid to reflect the new figures you present, but you have to be prepared for the possibility that they will question them. For example, if the figures you cite for rent, childcare, etc. exceed the norms in your area, the college may be hesitant to up your aid to cover them (not necessarily—just want you to be ready to do battle, if need be!).

Thus, the budget worksheet “benefits” you to the extent that it enables you to see the estimates that the financial aid folks used when they calculated your aid package. Sometimes such budget sheets can be helpful to students, too, because they provide a sense of typical costs in the categories listed. If the amounts you are paying are much greater, it could mean that the college miscalculated, but it could also mean you’re getting a bum deal somewhere along the way and might want to check out better options.

Best wishes to you as you wade through the financial aid quagmire. It can sometimes seem like an education in itself, can’t it?

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Question: My husband and I are 54 and 53 respectively and want to increase our contributions to our TSP 401(K) plan and Roth IRAs. Our daughter, who is applying for September 2003 college admission, is also applying for financial aid. Is it wise to increase contributions to our retirement accounts this year? What are the pros and cons of doing this?

This response to your very good question begins with a giant disclaimer. It is difficult to give accurate, specific financial suggestions without knowing a lot more about your family’s situation and the colleges on your daughter’s list. Only a bona fide financial advisor who is privy to your personal information can give you advice that will help you make the best decisions. Moreover, college financial aid methodologies do vary from institution to institution. In other words, this free advice comes with a you’re-getting-what-you’re-paying-for caveat!

Now, having said all that, here are some thoughts: the down side of putting money into your 401K (we’ll get to the Roth in a minute) is that whatever money you are deferring goes into the financial aid formula as “untaxed income.” This could mean that your daughter will receive less aid than if the same amount was counted as taxed income. (One way or another, it still counts as your income. It’s not being “hidden” from the financial aid guys.) The other drawback to putting money into the 401K is that you will have less cash available to handle your expected family contribution to college costs.

On the plus side however, is that if you are at your peak incomes right now (maybe likely given your age group?), then you will be getting the top tax savings on retirement deferrals.

College financial aid officers rarely sympathize with parents who object to counting retirement deferrals as “income.” The good news, however is that most colleges do not count the accumulated retirement assets already in place in any financial need formula—just the income you’re putting in there now.

The main thing to understand is that money you are deferring in the years you are applying for aid is not hidden from the financial aid formula. In fact, it is counted heavily since it is not offset by taxes.

Roth IRAs are different because they are for education. Those amounts in a given year are not usually counted as income but as an asset. That is an advantage because assets don’t go to the bottom line the way income does. So the Roth deferrals will not reduce your eligibility for need-based aid (or the amount you will probably receive) as much as the 401K deferrals. Additionally, the Roth monies can be used to pay for education without incurring withdrawal penalties, as is the case with the 401K.

Again, your best bet is to talk to a financial advisor, but hopefully this will give you some sense of how this confounding process works.

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Question: Is it better to get an A in an easier course, or risk getting a lower grade in an advanced course? I’ve got a 4.0 now, and I’m interested in schools like Columbia and Yale. There are some math and science courses at my high school that I can probably get through but I’m not sure I can ace them.

Read the rest of this entry &raquo

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Question: Can you explain the different kinds of scholarships that are available?

This is an area of great confusion for both parents and students. The two key words to keep in mind when thinking about scholarships are merit and need.

Merit-based scholarships go to students who are superb academic performers. They are usually awarded on a competitively. Examples of these are the National Merit Scholarships. Competition can be very keen for some larger merit-based awards and because of the subjective evaluation process, the best-qualified candidate does not always win.

Need-based scholarships go to students whose financial resources do not enable them to afford the full cost of the college or university to which they’ve been accepted. These scholarships are available at many schools and can be quite large depending on the financial-aid resources of the particular college. Need-based scholarships are sometimes the only way that students can afford to attend costly schools.

There is another, more elusive category of college scholarships. I call these restrictive specialty scholarships. Most colleges have a special group of awards (usually provided by graduates of the school) that bestows money upon enrolling first year students according to unique considerations. For example, church-affiliated colleges may have some specially endowed scholarships for young men and women who are members of that denomination. Other specialty awards might go to students from certain geographic areas. The variety of requirements and restrictions can be wide.

To find out what scholarships you, as a high-school senior, might qualify for, check with your college advisor. Sometimes one general application will suffice to apply for the full range of merit/need-based scholarships your school and community offer. Many private scholarships are advertised in the local newspaper every year, so be alert to their listings. And–as always–turn to your public library or the Web for current books and listings of other scholarship sources.

Start early and look diligently. Finding scholarship money for college takes time.

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Question: Our family’s income is in the $20-30,000 range. We have two teenagers who will be ready for college soon. We live from paycheck to paycheck. How can we possibly afford a four-year, private college education?

Welcome to the club. Your situation is typical of thousands of American families. The problem is the lack of quality financial aid information and families’ reluctance or inability to dig out that information.

What you may not realize is that families looking to find a good, private four-year college or university have two things going for them. First, there is a tremendous pool from which to choose and, second, it’s a buyer’s market. Depending on your selection requirements, there are probably six-to-ten (or more) excellent schools you could consider as candidates. Don’t let cost alone be your decision point.

My personal advice to parents about financial aid has always been, “Send your son or daughter to the best and most expensive school he or she can get into.” This generally causes great concern for parents, especially the “most expensive school” part. There’s some logic to this argument, though.

In general, schools that have higher costs have better financial aid programs. The word to keep in mind is “endowment.” College endowments contain the money received from loyal alumni every year during the campaign known as Annual Giving. This pool of funds is then invested as carefully as possible to get the largest return on investment. Interest generated from the endowment is then used, in part, as a source of financial aid for needy students. Obviously, this is a simple explanation of a complex process.

The best situation is to have your son or daughter accepted to a school that maintains a policy of meeting your family’s full demonstrated financial need. More about that later. Right now, the best thing you can do is get as much information as possible. If you have access to the Internet, you’ll find much helpful data there.

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