Archive for ‘merit aid’

April 9, 2014

Want to appeal your college financial aid?  Go for it

by Grace

Ron Lieber in the New York Times has some tips for students hoping to appeal their college financial aid packages before making the final decision on where to enroll in the fall.

A change in a your financial situation holds the best chances for a successful appeal.

Your best shot with an appeal will come from a change in your family’s financial circumstances since you applied for aid. Possibilities include job loss or other reduction in income, new health expenses, death of a parent, disability of a family member, nursing home costs, natural disasters or parental credit woes that make borrowing impossible.

Adjusting need-based aid may be a more straightforward proposition, but that’s not always true since need-based awards are often based on a ‘student’s academic merit’.

Some tips:

Some schools automatically match offers from similar schools.

Cornell instantly corrects itself if you’ve got higher need-based aid offers from other Ivy League schools or M.I.T., Duke and Stanford; it will match that offer, no questions asked.

Carnegie Mellon appears to be acting similarly, noting on its site that the university has “been open about our willingness to review financial aid awards to compete with certain private institutions for students admitted under the regular decision plan.” …

Go for it.
Based on some feedback from colleges, Lieber seems to suggest that the odds are not bad that an appeal will result in increased aid.

The worst that can happen is that the financial aid office says no …

Related:  Will colleges negotiate financial aid packages? (Cost of College)

March 24, 2014

Need-based college financial aid often based on ‘student’s academic merit’

by Grace

When some colleges award financial aid, ‘even “need-based” grants aren’t based solely on need: The size of the grants also depends on a student’s academic merit’.

While families do not usually know the details of how financial aid is disbursed, colleges have access to comprehensive, detailed information about applicants in what amounts to “a massive information imbalance”.

Most colleges offer “vague and superficial” disclosures about how they allocate their financial-aid dollars, said Mark Kantrowitz, a financial-aid expert with Edvisors, which publishes websites about paying for college. “They don’t give details about the actual formulas they use.”

Schools use “financial aid leveraging” to attract stronger students.

While universities don’t want to disclose the details, they have become increasingly strategic in recent years about how they use their aid and which students get it. Aid isn’t just given to students in need, it’s also used now for what schools call “financial aid leveraging” — often to entice high-scoring students who will help a school’s ranking or to give a small, feel-good discount to attract out-of-state students who will still end up paying a higher price.

Boston University is unusually candid about its strategy of using need-based financial aid to attract stronger applicants.

If you are an incoming student, your application for a need-based BU grant award will be considered based on several factors. These include calculated financial eligibility, academic achievement, and the availability of funds for your program of study.

BU publishes informative student profiles showing average aid awards.  I ran some simplified* Net Price Calculations that further illustrate how their financial aid works.  Given the same financial need, the stronger student is would receive more need-based financial aid.

20140324.COCBUNPC4

The Straight-A Student is estimated to receive $35,500 in grants and scholarships, compared to only $12,00 for the Solid B Student.  Remember, this is need-based financial aid.  Merit scholarships may be awarded in addition to these amounts.

* In these examples, total earned income was $80,000/year.

Marian Wang,  “How Exactly Do Colleges Allocate Their Financial Aid? They Won’t Say”, ProPublica, Feb. 25, 2014

Related:  Psst – one of Duke’s so-called merit scholarships is actually need-based (Cost of College)

March 12, 2014

Public universities want more ‘smart students who can pay’

by Grace

Public colleges and universities have shifted their financial aid priorities away from need-based to merit-based awards.  Low-income students are feeling the brunt of this change, but pressure on schools to admit only college-ready students and to raise revenue will probably cause this trend to continue.

Public colleges are turning away from their mission to offer access to an affordable college education for all students.

A ProPublica analysis of new data from the U.S. Department of Education shows that, from 1996 through 2012, public colleges and universities gave a declining portion of grants—as measured by both the number of grants and the dollar amounts—to students in the lowest quartile of family income. That trend continued even though the recession hit those in lower income brackets the hardest.

Universities feel the dual pressures of raising their revenues and ratings.

Why have public universities across the nation shifted their aid?

“For some schools, they’re trying to climb to the top of the rankings. For other schools, it’s more about revenue generation,” said Donald R. Hossler, a professor of educational leadership and policy studies at Indiana University at Bloomington.

To achieve those goals, colleges use their aid to draw wealthier students—especially those from out of state, who will pay more in tuition—or higher-achieving students, whose scores will give the colleges a boost in the rankings.

Private colleges have been using such tactics aggressively for some time. But in recent years, many public colleges have sought to catch up, doing what the industry calls “financial-aid leveraging.”

The math can work like this: Instead of offering, say, $12,000 to an especially needy student, a college might choose to leverage its aid by giving $3,000 discounts to four students with less need, each of whom scored high on the SAT and who together will bring in more tuition dollars than the needier student will.

Those discounts are often offered to prospective students as “merit aid.”

The student profiled in the Chronicle of Higher Ed article offered a clue to the reason many low-income students are losing out.  They are academically unprepared for college-level work.

Ms. Epps had a combined SAT score of 820 on mathematics and critical reading…

That score is below the College Board SAT College and Career Readiness Benchmark, indicating a lack of “skills and knowledge that research demonstrates are critical to college and career readiness”.  The same low SAT scores that disqualify some students for merit aid also signal they are at high risk for dropping out of college.

Problem should be addressed before the college years.

The answer is not to give more need-based aid to students who are not prepared for college, but to do a better job of educating students to be college and career ready.  That is the job of K-12 education and community colleges.

Related:  Increasing college merit aid decreases enrollment of minority and low-income students (Cost of College)

February 18, 2014

Free tuition at New York state universities for top STEM students?

by Grace

The proposed New York State budget includes a provision to offer free tuition to top students who choose to major in STEM fields.

“New this year under the governor’s budget proposal, some students at the top of their classes will have a chance to skip tuition payments entirely. Those who plan to major in a field related to the STEM (Science, Technology, Engineering and Math) subjects would receive free tuition to any SUNY or CUNY institution, as long as they remain in the state for five years after graduation to pursue their careers. The $8 million budget line is intended to help reverse the “brain drain” of the best and brightest from New York State.”

Students must graduate in the top ten percent of their high school class to qualify for the scholarships.

Details must be worked out.

Final budget approval is expected this spring.  Questions have been raised about how the requirement to stay in the state for five years after graduation would affect students who wish to attend graduate school.  One estimate predicts funding is only sufficient for 166 four-year scholarships, so it is possible that demand will be greater than supply.

Related:

January 22, 2014

The risk of promising your child that “we’ll find a way to pay” for college

by Grace

Don’t make promises you cannot keep.

In the college search and selection process, parents should think very carefully before assuring their child that “we’ll find a way to pay for it.”  That promise could be the cause of deep disappointment or crushing student debt.

In answering the question, “Should Students Apply to Reach Schools?“, Do It Yourself College Rankings discusses the pitfalls of applying to colleges that are financial reaches.

The simple answer is not to apply to any college that you can’t afford to attend.

The more detailed answer would be that it’s fine to apply to a financial reach school if everyone clearly understands that only significant financial aid would make matriculation possible should the student be accepted.  But to avoid unnecessary disappointment and stress in making the final decision where to attend, one recommendation is to get a sense about the likelihood of receiving financial aid by running the Net Price Calculator tool very early in the process.  Also consider the realistic chances of merit aid, which is often not included in the NPC estimate.

For more insight on what makes sense for your family when deciding whether to apply to a financial reach, check out the complete DIY Rankings answer.

Related:

October 21, 2013

Even with a full scholarship there’s no free lunch

by Grace

Even college students awarded a full scholarship sometimes get socked with thousands of dollars in bills.

In reality, a full college scholarship does not usually cover the full cost of attendance.  Most schools require a student to contribute at least a few thousand dollars, either from employment income or from a loan.

Colleges usually require a “minimum student contribution” when calculating financial aid.  They want students to have some skin in the game.

… This payment is often referred to as a “minimum student contribution,” which is a flat payment typically between $1,500 and $4,000 a year. The dollar amount is usually the cheapest for freshmen and the most expensive for seniors. Some schools refer to it as a “summer earnings expectation,” saying that they expect their students to work during the summer and to contribute a certain dollar amount from that income to their education costs….

… schools are encouraged to charge students. For years, the College Board has suggested a minimum student contribution, and specified a recommended dollar amount — currently $1,800 for first-year students and $2,450 for dependent upperclassmen—for many colleges to charge….

Outside scholarships are not usually allowed to replace the student contribution.

When a student gets private scholarships—from a corporation or community group, say—some schools will actually scale back their own aid offering. In other cases, even when aid is enough to cover every penny of financial need, some schools require students to still pay a portion of the college bill out of their own pockets….

Harsh impact on low-income students who are awarded full-need financial aid

The policy is a major hardship for students who can barely earn this amount or who don’t have family to help them cover this cost. When students cannot pay, many colleges suggest they sign up for student loans.

Critics say the policy also underscores how the system is stacked against poorer students: Most colleges will accept a check from any other external source, like a student’s wealthy uncle, for this required payment, but they will not allow a private scholarship to pay this bill, even though the end result for the schools is that they still get paid the same amount. For some students who receive scholarships through the UNCF’s Gates Millennium Scholars program, these contribution requirements equal 5% to 22% of their families’ annual income, says Larry Griffith, senior vice president at the UNCF.

Low-income students may scramble to pay the required student contribution.

Beatriz Barros, a freshman at Cornell, thought her family would only be required to pay $1,400 for her college bills, which was the EFC figure the federal government had determined. But shortly before the school year began, Barros says, Cornell sent her a bill, which showed that her family would be required to pay $5,500 for the year and she would have to pay a separate $2,600 for her summer earnings expectation. Meanwhile, Barros had been awarded a scholarship from the Gates Millennium Scholars program that was large enough to cover her summer earnings expectation, but she says the school’s financial aid office declined to accept it, saying it was a required payment that she would have to make on her own. To pay for her and her family’s extra costs, Barros signed up for federal student loans, abstained from flying home for Thanksgiving, and cut back on her meal plan. “I definitely didn’t expect the bill to be that large—you hear about getting the Gates scholarship and you say, ‘Cool, I don’t have to graduate in debt.’ And then you find out you won’t get to do that and it’s a bit heartbreaking,” she says.

These students sometimes have to forego non-paid internships in order to get a paying summer job.  This puts them at a disadvantage when it comes time to find a job after graduation.

October 14, 2013

Rich students get more college merit aid

by Grace

The richer you are, the higher your chances are of receiving merit aid.

Stephen Burd writes in Higher Ed Watch:

Newly-released data by the U.S. Department of Education’s National Center for Education Statistics (NCES) show that a student’s chances of receiving merit aid increases as his or her family’s income rises. In fact, students from families making more than $250,000 a year are more likely to receive merit aid than those making less than half of that.

20131009.RichStudentsMerit2

Source: Higher Ed Watch

Overall, one in five students with family incomes of over $250,000 a year obtained merit aid from their colleges in the 2011-12 academic year. That’s compared to about one in seven students from families that make between $30,000 and $65,000, and one in six from families with annual incomes between $65,000 and $105,000.

Using merit aid to compete for students who can afford to pay ‘full freight’

These results are not entirely surprising. As I’ve written in the past, four-year colleges, both public and private, are increasingly using their institutional aid dollars to compete for students who can otherwise pay full freight. This strategy has been particularly appealing to public colleges and universities of late as a way to make up for declining support from their states.

Related:

October 2, 2013

Merit-based college financial aid criticized as ‘Freebies for the Rich’

by Grace

In the New York Times, Catherine Rampell argues against the trend of state universities shifting more of their financial aid from need-based to merit-based.

‘Freebies for the Rich’

Over the years, many state-university systems — and even states themselves — have shifted more of their financial aid away from students who need it toward those whose résumés merit it. The share of state aid that’s not based on need has nearly tripled in the last two decades, to 29 percent per full-time student in 2010-11. The stated rationale, of course, is that merit scholarships motivate high-school achievement and keep talented students in state. The consequence, however, is that more aid is helping kids who need it less. Merit metrics like SAT scores tend to closely correlate with family income; about 1 in 5 students from households with income over $250,000 receives merit aid from his or her school. For families making less than $30,000, it’s 1 in 10.

Schools are doing this because the math works out for them.

Raising the tuition and then offering a 25 percent scholarship to four wealthier kids who might otherwise have gone to private school generates more revenue than giving a free ride to one who truly needs it. Incidentally, enticing these students also helps boost a school’s rankings….

According to Rampell, it’s bad for the economy, bad for the merit aid recipients, and bad for needy students.

This is obviously troubling for the students who need help, but it is also bad for the state economies that public colleges are supported by and are supposed to help advance. While merit aid sounds like an effective way to combat brain drain, there is no conclusive evidence that it works. One recent study by economists at Cornell and the University of Chicago found that “nearly all” of the spending on state merit-based scholarships had little effect on keeping students in state after they graduated. Merit aid may not even be a good deal for those who earn it. A recent study by researchers at Harvard Kennedy School looked at a scholarship program in Massachusetts in which high-scoring students get tuition waivers at in-state public colleges. It found that taking the scholarship actually reduced a student’s likelihood of graduating because they ended up at a school with a completion rate lower than one of the other schools they could have gone to. Peer effects matter, it turns out. The long-term costs of going to school among those who are more likely to drop out could outweigh the upfront benefits of a cheap education.

But if the high achievers did not accept merit aid, where would they go to college?  I don’t think it can be assumed that they could afford the higher-ranked, higher-priced schools.

Financial aid, however, has a hugely positive impact on whether low-income students graduate. Among needier kids, the six-year graduation rate is 45 percent when grants cover under a quarter of college costs versus 68 percent when they cover more than three-quarters, according to Mark Kantrowitz, the publisher at Edvisors.com, a network of college-planning Web sites. If you look at comparable stats for high-income students, the amount of aid makes almost no difference. Their graduation rates are around 78 percent either way.

This NYT editorial is part of the ongoing debate on the trend of awarding increasingly more college financial aid based on merit, with some college presidents taking steps to reverse the trend amid criticism that merit aid is unfair.

Related:  Increasing college merit aid decreases enrollment of minority and low-income students (Cost of College)

September 17, 2013

These colleges want you!

by Grace

20130912.COCUncleSamWants1

As high school seniors are considering where to apply for college, here are some good reasons to look at a list of top schools published by Forbes.

  1. They are on the Princeton Reviews list of “Best Colleges”
  2. They offer tuition discounts to qualifying applicants.
  3. They had trouble attracting enough freshmen during the last application season.

Forbes calls them 50 Great Colleges Desperately Seeking Students.

With the “free-market pricing” integral to the college admissions process, even higher-income families may find significant tuition discounting at these colleges.

Talk to college admissions officers at these “space available” schools and you begin to get a glimpse of free-market pricing that goes on behind the scenes at private and public colleges.  The fact is, regardless of a family’s income or asset level, many colleges make deals with families, offering significant rebates to their advertised prices.

Take for example, private liberal arts-oriented Juniata College in Huntingdon, Pennsylvania.  The school is located in a leafy rural hamlet two hours east of Pittsburgh and has an undergraduate enrollment of around 1,500.  It’s listed in Princeton Review’s 377 Best Colleges  2013 Edition as being known for its pre-med offerings and small classes and a great theatre program.  The cost to attend Juniata per year is estimated at nearly $48,000.

However 99% of incoming undergraduates receive tuition rebates or grants from the college. If your teen has SAT scores for math and critical reading that add up to at least 1200 and has a decent GPA, you should expect out of pocket costs of no more than half the advertised amount per year, even if your annual household income is more than $200,000.

Here are some of the schools on the list:

  • New College Of Florida – Sarasota, FL
  • St. Johns College — Annapolis, MD
  • Missouri University Of Science & Technology — Rolla, MO
  • St. Johns College –Santa Fe, N
  • University of Maryland — College Park, MD
  • Lewis & Clark College — Portland, OR
  • Knox College — Galesburg, IL
  • Illinois Institute Of Technology – Chicago, IL
  • Marlboro College — Marlboro, VT
  • Beloit College — Beloit, WI

The complete detailed list has information about costs and grant aid, as well as 75th percentile SAT scores that can give an indication about the stats needed to qualify for tuition discounts.

Related:  Tuition discounting grows to all-time high at private colleges (Cost of College)

September 3, 2013

Financial aid for high-income families at Duke University

by Grace

Duke University’s financial aid statistics show that even “rich” families are eligible to receive help in paying for college.

20130815.COCDukeFAIncome1

Since the numbers for each income group are not provided, we don’t know how many families are in the top categories.  Based on information from other sources, a reasonable estimate would be that 400-800 families whose incomes are $130,000 or more are receiving financial aid averaging about $20,000 per year.  These figures comprise need-based and merit-based financial aid, including athletic scholarships.  That’s about 6-12% of total Duke undergraduates.


AWARD STATISTICS FOR DUKE’S 2011-12 ACADEMIC YEAR

20130815.COCDukeFAPiecChart1


Total Enrolled Undergrads:
 6,813

Total Aid Recipients: 3,469

% of Total Aid Recipients
Merit Aid Students: 6.1%
Athletic Aid Students: 7.3%
Need-based Grant Aid Students: 86.6%

% of Total Enrolled Undergrads
Merit Aid Students: 3.1%
Athletic Aid Students: 3.7%
Need-based Grant Aid Students: 44.1%


Duke is one of only two of the top ten universities that give out merit scholarships.   Although not very common, in some cases it is possible to qualify for need-based aid even with an income approaching $250,000.

How Duke Does Aid is a short, informative video on how financial aid works at Duke.

Related:  Psst – one of Duke’s so-called merit scholarships is actually need-based (Cost of College)

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