Posts tagged ‘Financial Aid’

May 7, 2013

‘Rich’ families get a sweet financial aid deal at the most selective universities

by Grace

For students who win the college admissions lottery and get in to the most selective universities, high income may not be a barrier to receiving financial aid.  Here are some examples.

HARVARD

2011-12 School Year:  About 240 families earning $180,000-200,00 received financial aid.

Beginning with the Class of 2016, families with incomes between $65,000 and $150,000 will contribute from zero to ten percent of income, and those with incomes above $150,000 will be asked to pay proportionately more than 10%, based on their individual circumstances. Families at all income levels who have significant assets will continue to pay more than those in less fortunate circumstances.

PRINCETON

2011-12 School Year:  99% of families earning $180,000-200,000 who applied for financial aid received grants that averaged $23,600.

Applicants receive aid based on their families’ financial need. We do not use income cutoffs when determining whether to award aid.  Any student whose family feels unable to afford the full cost of attendance is encouraged to apply for aid.

YALE

2011-12 School Year:  99% of families earning $150-200,00 who applied for financial aid were approved.  Grants for those 505 families averaged $26,500 each.

  • Families whose total gross income is less than $65,000 are not expected to make any financial contribution towards their child’s Yale education. 100% of the student’s total cost of attendance will be financed with a Yale Financial Aid Award.
  • Families earning between $65,000 and $200,000 (with typical assets) annually contribute a percentage of their yearly income towards their child’s Yale education, on a sliding scale that begins at 1% just above $65,000 and moves toward 20% at the $200,000 level.
  • There is no strict income cutoff for financial aid awards. Many families with over $200,000 in annual income receive need-based aid from Yale.

UNIVERSITY OF CHICAGO

2012-13 School Year:  59% of families with incomes above $120,000 who applied received financial aid.

The average University of Chicago aid applicant receives $37,500 in scholarships each year.

$160,000 income puts you in the top 10% of families in the United States.

Related:

January 8, 2013

FAFSA deadlines 2013-2014

by Grace

Upcoming FAFSA filing deadlines, courtesy of StudentAdvisor.com:

The FAFSA is the first and most crucial step to getting the money you need to help you pay for college. However, the most important part of the FAFSA is filing on time. We’ve found it difficult to find the 2013-2014 FAFSA deadlines, so we have located and organized the most updated federal, college and state financial aid deadlines for 2013-2014 school year.

Federal Deadline:
The FAFSA application deadline for the 2013-2014 school year must be submitted by midnight Central Time, June 30, 2014. Any corrections or updates to an existing FAFSA application can be submitted by midnight Central Time, September 24, 2014.

College Deadlines:
Some colleges set a different financial aid deadline than the state and federal FAFSA deadlines. They may also have additional FAFSA forms their financial aid department needs from you in order for you financial aid application to be considered complete. If the college deadline is significantly earlier than the state and federal deadline, have that deadline take priority. You should also ask your college about their definition of an application deadline – whether it is the date they receive your FAFSA, or the date your FAFSA is processed.

State Deadlines:
To be considered for state financial aid like grants and need-based scholarships, you should submit your FAFSA before your state’s deadline. Each state has a different FAFSA deadline for this…. Keep in mind that your state of residence is often used to determine your eligibility for state-funded financial aid.

In New York, aid continues to be distributed until funds are depleted, so it makes sense to file your FAFSA right after the January 1. Deadlines for other states can be found at StudentAdvisor.com.

Related:

June 21, 2012

Can rich families qualify for college financial aid?

by Grace

At what point is a family “too rich” to qualify for need-based financial aid?  The answer varies, but generally speaking the higher the cost of a particular college the better the chance of getting financial aid for that school.

At some elite, expensive colleges and universities, a family making $150,000 to $200,000 could qualify for a decent chunk of need-based aid. There are a lot of factors at play, but it would be unusual to get $25,000 or so in need-based aid in some cases. A family with two children in college simultaneously could qualify for need-based aid with even a higher income because the financial aid methodology assumes that parents can’t pay as much money when they have multiple children in college.

So yes, in some cases it is possible to qualify for need-based aid even with an income approaching $250,000.  Try the Net Price Calculator to check if you might qualify for financial assistance, but be forewarned that aid may come in the form of a loan.

March 14, 2012

‘Higher Education Bubble May Explode in Taxpayers’ Faces’

by Grace

“61 percent of folks with a student loan are not paying,” notes Andrew Gillen, Ph.D., of the Center for College Affordability and Productivity. Many of the non-payers are still in school, but many others have long since graduated, but are failing to make payments on their student loans. “To give you sense of how unhealthy this is, consider that after the worst housing price crash in our history, 28% of mortgages were underwater.” In short, it looks like there is a huge higher education bubble about to explode in taxpayers’ faces.

Oh, goody.

Related:  46% of people under 30 have outstanding student loans averaging $23,000

February 22, 2012

The ‘problem’ of extra money in your 529 plan

by Grace

If you’re lucky enough to have left-over money in your 529 plan, there are ways to handle that problem.  Besides paying for traditional two- or four-year colleges, other options exist for 529 funds.

  1. Vocational educationmoney in a 529 plan can be used to pay for postsecondary vocational or technical training at schools eligible for financial-aid programs administered by the U.S. Department of Education. This includes schools that teach a variety of trades, such as automotive and aerospace maintenance, hairstyling and computer skills. 
  2. Graduate school – 529 funds can be used for postgraduate education
  3. Change the beneficiary to another family member – siblings, first cousins, parents, or grandchildren
  4. Leave the money in to grow tax-free – as long as there is a living beneficiary
  5. Charity – donating the proceeds to charity allows you to take a tax deduction if you itemize deductions

Tax penalties waived if a scholarship covers college costs

Say there is money left over in a 529 account because your child got a big scholarship that reduced his or her college costs. In that case, money withdrawn would be subject to tax on the earnings but the 10% penalty would be waived, as long as the withdrawal doesn’t exceed the amount of the scholarship. The penalty on withdrawals also would be waived if the beneficiary dies or becomes disabled.

August 18, 2011

Financial aid department’s job is ‘to supply the college with as many paying freshmen as possible’

by Grace

Heed this warning when your dream college offers abundant financial “awards” that will enable you to attend their exalted institution.

There are other siren songs out there. A school’s financial aid adviser isn’t always a freshman’s best friend. While seldom openly stated, their job is to supply the college with as many paying freshmen as possible. Budgets even at schools like Brown and Duke will only balance if over half of their students foot the full bill. Few colleges offer actual cash assistance – at best, like car dealers, they dangle discounts – so they steer less affluent students to loans. So-called aid officers do this for one reason: the money you borrow goes into the college’s coffers. Paying it later will be your problem.

Reminds me of this one.  When is an ‘award’ really a loan?

The Debt Crisis at American Colleges – The Atlantic

August 6, 2011

‘Fears of a bubble in educational spending are not without merit’ – Moody’s

by Grace

Mike Riggs at Reason writes about Moody’s recent report on student lending.  The situation is looking very similar to other recent industry bubbles.

“These subsidies are kind of like propping up the auto industry with cash for clunkers, or the housing industry with cash for first-time buyers . . . We have this financial aid system that is keeping the system alive.”  –  Howard Horton, President of the New England College of Business and Finance

The future for today’s colleges and their students?

To his credit, Kantrowitz anticipated a future in which would-be students shy away from expensive higher educations, due to the double-whammy of high debt and and gloomy job prospects. But he puts that future at least 20 to 30 years away, when today’s college graduates are likely to still be paying back student loans and thus reluctant to extravagantly finance their own children’s educations as well. Moody’s sees that problem coming to a head possibly within the next decade, and anticipates that the aftershock of declining demand for higher education will hurt both college towns and big cities, which rely on students (and their borrowed money) to keep businesses afloat during down times.

My grandchildren’s* college experience may be completely different from the one their parents have.

* Not that I’m assuming grandchildren in my future!

August 5, 2011

Family income matters for ‘merit’ awards at the University of Rochester

by Grace

Are a family’s financial circumstances considered when the University of Rochester awards merit scholarships?  Let’s look at the facts.

From the University of Rochester website:

Merit-based scholarships range in amount from $2,000 per year to full-tuition. They are awarded to students who demonstrate outstanding academic achievement and potential, regardless of financial circumstances.

We distribute merit-based aid regardless of a family’s demonstrated financial need.

But here’s what Jonathan Burdick, Rochester Dean of Admissions and Financial Aid, writes in a candid blog post about “12 steps that mattered for earning merit scholarships”.

We had a “progressive tax” in our merit. On average, each four dollars less in family income increased merit awards one cent. Not much impact per student, but noticeable overall.

According to this, a family’s “financial circumstances” are a factor in the distribution of so-called merit awards.  I see a contradiction, even if unintended.  Is this curious correlation a simple coincidence?  What should families believe?

Here’s what Daniel de Vise of the Washington Post writes.

“Need-based” aid is fairly easy to predict; many colleges spell out their formulas so plainly that a student can calculate a likely aid award based on her or his household income. “Merit” aid is comparatively opaque, meted out in rough proportion to the applicant’s academic credentials.

Opaque, indeed.  In reviewing college merit aid policies I have seen many instances of “hybrid” aid, where schools make it clear that both financial need and merit are considered.   However, I have not been alone in wondering if some colleges also take financial need into account when dispensing what they label as merit aid while never disclosing this significant fact to families.  It seems that the University of Rochester may have given us an example of this covert and confusing practice.

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