Will colleges negotiate financial aid packages?

“We won’t ‘negotiate,’ but we might ‘review.”

Some colleges are open to “negotiating” their financial aid offers, but families should be careful in the language and manner of their approach.  From Smart Money:

So how do you request a “review”? When contacting your aid office to discuss your child’s package, start by avoiding such words as “negotiate” or “bargain,” says Virginia Tech’s Simmons, and don’t throw another school’s financial aid award in an officer’s face. Instead, thank them for their work and the school’s generosity, and follow up by expressing doubt at being able to meet your family’s contribution. If you haven’t already done so in writing, explain any special circumstances you have, such as recent unemployment, a death in the family or medical bills. Then politely ask if there’s anything the aid office can do to help. Once you’ve established a rapport with the officer, try casually mentioning that you have a competing offer and where else your student has been admitted. At the very least, aid officers may refer you to outside borrowing opportunities or payment plans.

I think it never hurts to ask.  Here are two schools that are unusually open about their policies.

Dartmouth College

What can admitted students do if they are not happy with their financial aid award?

The student should first contact the Financial Aid Office. In many cases, more information from the student or from his/her family, including copies of better packages from other schools, will result in award adjustments consistent with a fair and equitable treatment of all applicants. The Financial Aid Office will talk with families about financing options such as parent loan plans and monthly payment plans.

Carnegie Mellon University

We have been open about our willingness to review financial awards to compete with certain private institutions for students admitted under the regular decision plan. Unlike most institutions, the university states these principles openly to those offered first-year admission under the regular decision plan. While early decision students are not eligible to participate in this aid review process, we will meet their full demonstrated need as calculated by the university.

Related article:  Outside scholarships may cancel out financial aid given by your college (costofcollege.wordpress.com)

Federal student loan interest rate will stay at 3.4% for at least one more year

Subsidized Stafford student loan interest rate will stay at 3.4% for at least one more year.

Congress acted just under the wire Friday to save college students from paying more for student loans. The legislation—which will freeze interest rates on federally subsidized Stafford loans at 3.4 percent, avoiding a scheduled increase on July 1 to 6.8 percent—now heads to President Barack Obama for signature, the Associated Press reports.

Who will foot the bill?

Most of the money is expected to come from raising premiums for federal pension insurance. But students also will help foot the bill. Congress is looking to get $1.2 billion in savings from changing eligibility for student loans. It limits loan eligibility to 150 percent of a program’s time to degree — or six years for a bachelor’s degree and three years for an associate degree.

Who will benefit?

The move to stop interest rates from doubling is expected to affect 7.4 million students, saving each an average of $1,000 in extra financing fees.

_______________________

More student borrowers turn to subsidized Stafford loans than any other type of college loan. Roughly 9.3 million students signed up for one during the 2010-11 academic year, according to FinAid.org. The federal government pays the interest on these loans while students are in school. With other student loans—including unsubsidized Stafford loans—borrowers are responsible for all the interest.

* Interest is paid by the federal government during in-school period.

Students qualify for the subsidized Stafford loan based on financial need, which is determined in part by the cost of attending a school. More than a quarter of undergraduate students with family income of $100,000 or more received subsidized Stafford loans at colleges costing $30,000 or more in 2007-08, according to the latest data from FinAid.org.

Related:  Overview of student loan options

A recommended schedule for taking the SAT, ACT, and AP tests

The Princeton Review published a High School Testing Timeline, with recommendations for when to take what tests.  Keep in mind that PR is in the business of selling test prep.

Here are key parts of the Princeton Review Timeline, with brief explanations of our local high school’s approach* to testing posted in blue text:

THE FRESHMAN YEAR

The Princeton Review philosophy is to not take tests during the first year in high school. We don’t even think it’s a good idea to take a PSAT as a 9th grader, because the scores seem to create more, not less, stress for the freshmen and their families. The one consistent exception to this is if a freshman is doing very well in her (or his) 9^th grade Biology class, and is planning to take AP Biology before the end of the Junior year. If these two factors are in place, then we think it is a good idea for that student to take the Biology Subject Test (formerly known as the SAT II) in Ecology.

Our Local School —
Similar to above, except that many accelerated science students take AP Environmental Science in eighth or ninth grade as an alternative to biology.

THE SOPHOMORE YEAR

October: Take the PSAT or the PLAN
These tests during the sophomore year are opportunities for risk free practice that should not be missed. We do not recommend intensive preparation …

May: If you are in an AP class, then you will have the chance to take the AP in May. Some students take an AP class, but then do not take the AP exam. You do not want to be one of these students. College admissions people tend to frown upon students from AP classes who duck out on taking the AP exam.

June: Take any appropriate Subject Test
Traditionally, if a Sophomore is going to take a Subject Test in the 10th grade, it will be in either World History or Chemistry….

Our Local School —
Similar to above, with the opportunity to take the PLAN only recently becoming an option.  I’m glad they now offer the PLAN because it sets the stage for taking the ACT, which is a better choice than the SAT for some students.  Students taking AP classes are required to take the AP exam.

SUMMER BETWEEN THE 10TH AND 11TH GRADE YEAR

If you have the time, the inclination and the resources, this is the time frame best suited for test preparation. The students have learned the vast majority of the material that will appear on the SAT (and if they’ve completed Algebra II, they’ve learned all of it), and it’s a considerably less stressful time to be doing this work….

Our Local School —
Most students are advised to defer any test prep until after they’ve taken the SAT in their junior year.  According to guidance counselors, at that point a student will be in a better position to decide if he wants or needs tutoring.

JUNIOR YEAR

While many different scheduling strategies can satisfy individual student’s needs, the majority of students fall into two distinct categories: “Aggressive” and “Regulars”.

AGGRESSIVE
(Includes high academic achievers, kids with proactive parents, students who had a lot of time to prepare during the previous summer but who anticipate being extremely busy in the spring, students who want to try to achieve some flavor of National Merit status, very weak testers who may need extended preparation to achieve acceptable scores, and students who will apply as Early Decision candidates).
October – SAT followed by PSAT (may not be appropriate for weaker testers)
November – Language listening subject tests for native speakers
Winter – Refresher preparation
Mar – The second crack at the SAT, if necessary
April – Try the ACT
May – AP’s/Subject Tests
June – Subject Tests

REGULARS
Sep/Oct – Light prep (PSAT Clinic)
October – PSAT
Fall/Winter – Intensive prep (can do extended prep starting in November or begin in January, both in preparation for the March/April test in either the SAT or the ACT)
May/June – Subject Tests (if needed) or a second attempt at the SAT

Our Local School —
Similar to above recommendations on Subject and AP tests, but less aggressive on other testing matters.  Our high school generally recommends waiting until the spring of junior year to first take the SAT, followed by the ACT if the SAT score was lower than desired.  On the subject of test prep, our school appears slightly schizophrenic in their outlook.  Guidance counselors do not recommend extensive test prep for the vast majority of students, but the school administration sends the message that the highest test scores are the result of test tutoring.  My guesstimate is that at least half the students pay for some type of test prep.

SENIOR YEAR

The Senior year can become complicated because it is so late in the cycle, and the permutations are very dependent upon the individual student. From the broadest perspective, if you’re “Aggressive”, then October should be your last ACT/SAT/Subject Test attempt. The “Regular” students may take these exams up to, and including, December of their senior year and still make it in time for most colleges’ admission deadlines (including the UC schools).

Our Local School —
Similar to above, with a general recommendation to complete testing sooner rather than later.

* This is based on my experience and observations, so I make no claim that this is a comprehensive representation of their official policy.

Related:  College application timeline

Helpful FAFSA Q&A from Mark Kantrowitz

Mark Kantrowitz answered FAFSA questions from readers of the NY Times The Choice blog.

To help readers of The Choice fill out the Free Application for Federal Student Aid, or Fafsa — the form that so many families will begin tackling this month to initiate the process of receiving financial aid from the federal and state governments — Mark Kantrowitz, a financial aid expert and founder of the Web sites finaid.org and fastweb.com, is taking questions this week in our virtual Guidance Office. Mr. Kantrowitz is the author of “Secrets to Winning a Scholarship,” published last February.

I always learn something new from reading these types of articles.  Did you know that in completing the FAFSA, a parent’s two-year associate’s degree counts as having “completed” college?  However, this may be a trick question if a student is trying to qualify for some types of financial aid.  Here’s the explanation from Part 2.

Q.  I’m not sure how to answer the question on parent’s education level. I have an A.S. degree and took some classes at a four-year college but never got my baccalaureate degree. Have I “completed” college? – PSB

A.  The purpose of this question is to determine whether the student is the first in his/her family to attend college (i.e., the highest level completed by either parent is middle or high school). Some states and colleges provide special grants and scholarships to these “first-generation” college students. First-generation college students are at higher risk of dropping out.

Note that these questions should be answered based on the birth or adoptive parents, not step-parents, foster parents or legal guardians.

For the purpose of this question, receipt of an associate’s degree is normally considered to have completed “college or beyond.”

The question is badly worded because some programs for first-generation college students distinguish between “no college,” “some college, no degree,” receipt of an associate’s degree and receipt of a bachelor’s degree.

If you are unsure as to the proper answer, select the “Other/unknown” option.

Here are links to the complete series.

Part 1: Answers on the Fafsa, the Free Application for Federal Student Aid

Part 2: Answers on the Fafsa, the Free Application for Federal Student Aid

Part 3: Answers on the Fafsa, the Free Application for Federal Student Aid

Part 4: Answers on the Fafsa, the Free Application for Federal Student Aid

Part 5: Answers on the Fafsa, the Free Application for Federal Student Aid

Last of 6 Parts: Answers on the Fafsa, the Free Application for Federal Student Aid

Related articles

• File your FAFSA ASAP – financial aid is often first-come first-served (costofcollege.wordpress.com)

Your chances for merit aid are better at less selective schools

Less selective schools offer more merit money but less need-based money.  But if you qualify for need-based aid, your chances are generally better at the more selective schools.  [UPDATE: Tables revised to show corrected admission rates]

If you do not qualify for need-based aid, your chances for merit aid are generally better at less selective schools.  In the first chart above, moving down one step from the most selective private colleges more than doubles the average merit aid amount.  The standard advice is to apply to colleges where your test scores and grades would put you well within the top 25% of the student body to improve your odds for receiving aid.  Your statistics are viewed as a way to boost the school’s prestige.

“Schools compete with each other to attract talented students… “If you want to recruit some of those kids, one way to do it is through merit aid.”

… “Universities compete based on prestige, so if they want to increase their rankings in U.S. News & World Report, an easy way to do that is to bribe high-scoring students to come to your university with non-need-based aid,”…

In addition to boosting prestige, colleges know that relatively small tuition discounts that attract higher-income talented students often yield them more net revenue than the more generous scholarships they offer to lower-income students.

“That’s a fairly significant percentage of what’s happening, especially for universities and colleges that operate on a tight margin and where tuition revenue is an important part of keeping the lights on,” said Jonathan Burdick, dean of financial aid and admissions at the University of Rochester. “In those circumstances, giving $5,000 against a $25,000 tuition charge is just like the discounting you’d see in a retail operation to bring traffic to the door.”

The Harvard Effect is a factor, causing some colleges to feel compelled to follow Harvard and Yale’s lead in price-discounting to affluent families.

Universities say they also have been forced to pay out more aid to people who don’t need it thanks to widely publicized changes in financial-aid policies introduced in recent years by highly selective universities including Harvard, Yale and Stanford, which raced one another to give grants to families with income as high as $200,000.

* Merit aid is defined as grants “awarded to students without financial need or awarded in excess of need”.

Source data is from College Board Trends in Student Aid 2011:

Qualifying for a parent Direct PLUS loan

How can a parent qualify for a Direct Plus Loan?  While some conditions must be met, the government does not impose stringent credit requirements.

From the Federal Student Aid government website:

The parent borrower must not have an adverse credit history (a credit check will be done). If the parent does not pass the credit check, the parent may still receive a loan if someone (such as a relative or friend who is able to pass the credit check) agrees to endorse the loan. The endorser promises to repay the loan if the parent fails to do so. The parent may also still receive a loan if he or she can demonstrate extenuating circumstances.

More details from FinAid:

An adverse credit history is defined as being 90 or more days late on any debt or having any Title IV debt (including a debt due to grant overpayment) within the past five years subjected to default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off.

Unlike most private lenders, the government does not use FICO scores in determining eligibility for federal student loans.

Other information

• Interest paid may be tax deductible, depending on the payer’s AGI and other details.
• The annual limit on a PLUS Loan is equal to the student’s cost of attendance minus any other financial aid the student receives.
• The interest rate is fixed at 7.9%. Interest is charged from the date of the first disbursement until the loan is paid in full.
• Repayment begins 60 days after the funds are fully disbursed, and the repayment term is up to 10 years. … Parents have the option of deferring repayment on Parent PLUS loans while the undergraduate student on whose behalf they borrowed the PLUS loan is in-school and for a six-month grace period after the student graduates or drops below full-time enrollment. 

Related articles

• Overview of student loan options

Overview of student loan options

This useful summary of the most common student loan options comes from The College Helper

1. Federal Student Loans

A. Perkins Loans – Students can only qualify for this loan if they display exceptional financial need.  These loans are available to both graduate and undergraduate students.  Perkins loans are given through the college or university you will be attending.  Unlike other types of student loans, they will be repaid directly to the university.

B. Subsidized Student Loans – Students qualify for these types of loans based on financial need.  The requirements aren’t as stringent as the Perkins loans process, but you still must qualify. The interest on these loans is deferred (or postponed) until after you graduate.  What this means is that even though you are responsible for repaying this loan 6 months after graduation, the interest attached on these loans does not begin to accrue (or accumulate) until after that 6 month point.

C. Unsubsidized Student Loans – Any student can qualify for these types of loans.  The only requirements are that you must be a student and enrolled at least part-time.  The interest on these loans accrues (or accumulates) immediately, which means that the total loan value could really add up over time.

2. Federal PLUS Loans

Federal PLUS loans are loans that are taken out by parents to cover their child’s educational expenses.  The maximum amount that any parent can borrow is the cost of attendance, minus any financial aid that the student has already received.  The repayment period for these loans starts 60 days after the funds have been dispersed to the school and the repayment period can be up to 10 years.

3. Private Student Loans

Some students opt to go with private loans, rather than Federal student loans.  Your qualification for these types of loans is based on your credit score.  These loans must also be used for educational purposes only.  If you do decide to go with private loans, please READ THE FINE PRINT…every company has different loan terms and conditions.  Take your time to evaluate a lot of different companies and compare prices before taking out a private loan.  These types of loans should only be done as a LAST RESORT.

MORE:  For maximum borrowing amounts and interest rates on federal loans check out FinAid Student Loans.

File your FAFSA ASAP – financial aid is often first-come first-served

Do not procrastinate in filing your FAFSA because it could mean less financial aid.

“There are several states [and colleges] that have a first-come, first-serve basis where they have a limited pool of funds and when they run out of money, they stop awarding money,” says Finaid.org and FastWeb.com publisher Mark Kantrowitz.

The FAFSA form to use if you plan to attend college between July 1, 2012 and June 30, 2013 became available online on January 1, 2012.  The federal deadline for filing is June 30, 2013, but state and college deadlines are usually earlier.  For example,  the cut-off date for Connecticut is February 15, 2012.  You can check deadlines for all states by going to the FAFSA website.
…
BACK TO BASIC$

What is FAFSA?

The Free Application for Federal Student Aid (known as the FAFSA) is a form that can be prepared annually by current and prospective college students (undergraduate and graduate) in theUnited States to determine their eligibility for student financial aid (including the Pell Grant, Federal student loans and Federal Work-Study).^[1]

Despite its name, the application is the gateway to be considered for the nine federal student aid programs and the 605 state and most of the institutional aid available. The U.S. Department of Education begins accepting the application beginning January 1 of each year for the upcoming academic year. Each application period is 18 months; most federal, state, and institutional aid is provided on a first come, first served basis. Students are advised to submit a FAFSA as early as possible for consideration for maximum financial assistance.

Related articles

• Get ready for the new federal student aid application (cbsnews.com)
• “How Do I File the FAFSA in January When Tax Returns Can’t Be Filed That Early?” (centralscholarshipbureau.wordpress.com)

‘Gotta love rolling admissions’

In the college applications process, rolling admissions are a way for a student to have a decision in hand as early as September of his senior year.  That can be a relief during a stressful time, knowing he has at least one good college option.  As a bonus for top students, news of merit awards sometimes accompanies the decision letter.

Dr. StrangeCollege gives us a good working definition of ‘rolling admissions”.

Rolling Admissions, often offered by large, public universities, provides a larger window for the application submission, followed by reported results within a few weeks. For example, a student could apply to Indiana University in the Fall and hear back from them in four to eight weeks. They provide deadlines for scholarship considerations, and applications received after April 1 are accepted on a space-available, case-by-case basis.

Here are other examples, including some schools that “roll” unofficially: Northern Arizona University, University of Alabama, University of Pittsburgh, Tulane, Drexel, Ohio Wesleyan

When making up a college search list, it might be a good idea to consider schools with rolling admissions.  In addition to the advantages, families should be aware that early notifications can mean that spaces can fill up early in the admissions cycle, possibly creating headaches for regular decision applicants.

Of course, parents of procrastinators can sympathize with this comment.

Rolling admissions would be great – if only I could get my kid rolling on his apps.

Some basics on how colleges use financial need in admissions decisions

Here are some terms used to describe the ways in which colleges may incorporate student financial need into admissions decisions.  This generalized information can serve as an introduction to a topic that comprises many shades of gray and is often confusing to families.

NEED-BLIND ADMISSIONS  —  Students are evaluated and admitted without regard to their financial need.  Virtually all public schools fall into this category and many private schools are mostly need-blind, but may use financial need to decide the fate of  borderline, wait-listed, international, or transfer students.  Additionally, this explanation by Mark Kantrowitz shows how the waters can be muddied by a school’s preference for wealthy students.

Need-blind admissions also doesn’t mean that the admissions is wealth-blind. A college might ignore financial need for low-income students, but then grant an admissions preference for high-income students. Most colleges define need-blind as meaning that financial need has no role in the decision to deny admission to low-income students. As such, financial need is not treated as a negative characteristic for low-income students. But colleges can treat a lack of financial need as a positive characteristic for high-income students and still consider themselves to be need-blind. For example, some need-blind colleges will admit full-pay but borderline candidates or grant wealthier students more attractive financial aid packages.

NEED-AWARE, NEED-SENSITIVE, OR RESOURCE-AWARE ADMISSIONS  —  A student’s financial need is typically considered in the school’s acceptance decision.  Enrollment management techniques are employed as a way to make sure the student body generates a sufficient  level of income for the school.  If you can pay your own way you are more attractive than a needy applicant, at least on that basis.  Consequently, a student who does not need financial aid may have an edge in getting accepted over an otherwise equally qualified student.  (“Need-aware” and similar terms are increasingly being used to describe many colleges that self-identify as “need-blind”, in the belief that only schools that ignore financial factors for ALL applicants are truly need-blind.)

FULL-NEED SCHOOL  —  One that claims to meet the student’s full financial needs, defined as the Cost of Attendance (COA) minus the Expected Family Contribution (EFC).  It is worth noting that many families are surprised to learn that the school’s determination of financial need is often lower than the family’s own assessment.  Also, the school may decide that a loan “award” will be used to meet all or part of the student’s need.

GAP STUDENT  —  Student whose financial needs are not fully met by the college.  The gap student is at higher risk for dropping out.

ADMIT-DENY ADMISSIONS  —  What “need-blind” actually means to a student unable to afford the college to which he was admitted.  If the school offers insufficient financial aid to cover the gap between the COA and the EFC, the student is effectively “denied” admission.