How do need based and merit aid come together?

Paying for College
21

At this point if we have been looking at college for a few weeks we all know about the EFC. The point it most of us who would consider ourselves middle class at some point really don’t have much hope when we do one. It needs to be fixed, but that has about as much chance as fixing healthcare.

It is much too general in its assumptions about income etc. Its too black and white.

Here is an example. Lets say there was a family of 4 doing pretty well in 2008. Then the subprime crash came and one parent was laid off and did not find work for two years. During that time they could not save for college. It so happened that they had kids in a modest private school. But they could not bring themselves to pull the kids out for public school because their kids loved their friends and school much…so they bit the bullet there.

The wife took an extra job to make up the difference. But still they fell a bit into debt. The unemployed parent has only worked about half the time since that time(most of his work was outsource to india) and only on temp jobs. Most of that income was always trying to catch up from the times not working.

Yet…there was ONE year that things went pretty well. Both parents were working. THAT happens to be the year that the EFC uses to calculate aid for their child. Not the lean years before, or after, or even now.

So In this one example, I would say the EFC knows nothing about peoples lives. Its just a machine/calculator with no heart. Fine.

That family person I am talking about is me. So yeah…I am a bit jaded when it comes to the EFC

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Even though a school is ‘no loan’ in the awards package doesn’t mean they don’t participate in the federal loan program. The student and family can take the loans to cover other costs including the family or student contributions.

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@BelknapPoint , yes it’s all financial aid. However, within the context of outside scholarships reducing the amounts, the difference between what is considered financial aid, or better phrased, need based aid, and merit money can be important. Also, in being eligible for those categories of awards.

Some students not eligible for financial aid as the colleges define it. But there may be no income/asset consideration in getting merit money. And, yes, unsubsidized loans are also available to most anyone who can get through the FAFSA screening.

24

Need-based aid is financial aid.
Merit aid (academic, athletic, talent) is financial aid.
Federal subsidized loans are financial aid.
Federal non-subsidized loans are financial aid.

Which colleges don’t define any of the above as financial aid?

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@eaglerockdude, I agree fully that there are issues with the Fin aid process. All sorts of circumstances where it’s not fair. Both in benefiting penalizing people. But…Them’s the rules, for now.

Kids whose parents simply refuse to fill out the FAFSA are terribly penalized. They can’t even get the unsubsidized Direct loans and sometimes are not allowed to get certain merit money. I know such cases. Either the parent has tax problems , didn’t file, etc or just refuses to share the info, it happens. Too bad. No financial aid. If the parent gets some lump sum payout one a once in lifetime thing that year, it’s income , baby, even if it’s earmarked to start a business or provide retirement. If it’s not in the right form of receipt, schools may not budge.

Happened to my close friend. Had a barely doable financial aid package during a tough stretch until that payment came. Girl took leave that year, and they made out because they had two in college for the next three years when she returned . One of best times leaves of absences for financial aid ever! For $10k, they refused to give that year, they ended up paying $20k a year for the next three! But that the way the Fin aid office had to operate.

You can have Rockefeller as a parent but if your custodial parent gets no income , and yes, I know folks who plan this out, you can get PELL and other aid. Not a whole lot, it yes, it happens. On the other hand if your well to do non custodial parent refuses to pay a dime or even release his financial info, some schools don’t give any financial aid. Just FAFSA driven entitlements. Happens all of the time.

You have your assets in your home equity, some schools cap the amount it counts Pay off your mortgage and buy some CDs, it all counts

File your FAFSA and PROFILE on payday , before you’ve paid your bills or have some large earmarked payment sitting there, you get hit 6% on it. If your kid has sitting assets that day, even more.

So, there are rules that are not fair. You learn them the best you can and see what you can get in the way of financial aid. You decide what you are able and willing to pay. Then you let your student know, and help him find schools that fit in those cost parameters. Like picking an affordable car, I guess, but more complicated. And like driving the thing off the cliff each year and starting again. It can be a new Mercedes or used Chevy. Your choice.

On this board there are some folks who know the rules, the schools, the procedures very well and if you give the info, you’ll get some ideas and choices that may not have come up.

26

The EFC is not the amount the family CAN pay but is the number used by colleges to set the rest of FA. The FAFSA, which is used to figure out if the loans will be subsidized, if there is a Pell grant, etc. is just setting a baseline.

My financial story was similar to the OP’s in that I had no savings at all until my kids started high school. We moved twice and then, when they were jrs/sr I had 2 ‘big years’ for income in a row then that job ended. FAFSA was based off those 2 Big years. Each had an EFC of $20k and there was no way I could pay that.

However, I didn’t have to. One chose a school where her costs weren’t even that high, she had a few small merit/talent awards, and my OOP was lower than the $20k for her. Sister chose a very high COA school but had more scholarships and grants so her OOP costs were much lower than her $20k EFC also. Other FA was based off that $20k like (no) Pell grant or subsidized loans, but I didn’t actual PAY the $20k x 2.

Since my job ended, their final years in college they had EFCs of $0. It was great to have more federal FA, but neither got need based grant money from their schools. One was an athlete so couldn’t take it and the other went to an OOS public that didn’t give need based financial aid (it had different alum scholarships or state programs, but no need based aid).

So when our combined EFC was $40k I couldn’t pay it, but when our EFC was $0 is didn’t mean money came pouring out either. A Pell grant, an SEOG? Yes, but not the amount needed to pay the bill.

You have to run the numbers to see if you’ll be better off at a school where the cost is lower but there aren’t merit awards or need based FA, or go to a college with a lot of merit money but a higher COA. There isn’t one answer. I had one kid at each type of school at the same time, and their FAFSAs were identical. The one at the cheaper school actually paid more OOP, but that’s because the daughter at the private school had a very large merit award and athletic scholarship. The need based parts of her award (federal Pell, subbed loans) were a small percentage of the bill, even with an EFC of $0.

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My cousin’s son got full PELL, $10500 in Direct loans because parent was turned down for PLUS. That, a little state money , AOTC, and some extended family help made it possible to go away to school. $50k in debt when he was done, he expected to pay it off in 10 years, has 4 years down. Deducted the interest and got AOTC that last year which helped. He’s finally gotten a career type job, but by working multiple jobs and lining lean, he stayed on top of his loans, got the school experience he wanted and now the job.

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Thanks. This thread has kinda weaved all over the place but I think my question has been basically answered.
“In general, merit aid is going to be subtracted and then financial aid applied but call to confirm.” A bit of a bummer as my son has been led to believe his hard work in high school will help pay for college costs and it likely won’t provide much. I get it. I’m not the only one in this boat.

Just for kicks I ran a NPC at my school, Brown U. 47,000 a year out of pocket. What in the world? Apparently they took home equity into account and counted 529 college savings accounts like regular cash. Cray-cray as my 8th grader would say.

Thanks for the responses. I must admit this has been utterly depressing but I understand this is what all parents struggle with. As a person who has worked in public schools for the last 23 years, I think this generation will be the end of the “we all HAVE to go to a 4 year college” thinking. 200k in undergraduate debt (using Brown U example) is just unconscionable.

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Brown assesses parents between 2-5% of assets after allowances for certain expenses. Assets do include primary home equity value and 529 accounts owned by the parents.

It can be particularly onerous for those who live in areas where housing costs are very high or who have owned their houses forba long time, or lucked into them through inheritance. I know families who are income poor but land rich due to family property that generates their small income.

30

The cost of a college is the cost of tuition, fees, (room and board if living on campus), minus aid.

So people here are saying, figure out what number you are comfortable paying and then try to research schools that come in at that price point.

If a school gives full tuition for a certain test score and GPA, then the remaining costs would be room, board, fees, travel.

Or let’s say an instate public costs $20,000 a year, but offers a small merit scholarship.

Or the student commutes, and saves on living expenses at the school.

Some private schools give merit and need based aid, but might still be too expensive, depending on if they consider you needy and how much need they meet.

31

Thanks to all! Helpful albeit depressing. One last related question… my son has been cramming VERY hard this summer for the July ACT thinking that a better performance might help with merit aid. I know higher test scores might help gain admission to a more selective private school but the sobering truth shared many times over here on this website is that getting into schools might be easier than paying for the “big name” schools. So is this thinking flawed? Is a high ACT score likely to add merit $? His SAT score of 1360 is good but not great and he thinks he can study his way to at least a slightly higher score.

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Research merit scholarships at the schools he might be considering and see if it makes a difference. Also, whether it’s likely he’ll bring up the score significantly.

For example, if he applied to Pitt, what increase would get him consideration for the Honors College and scholarships.

For one of mine, we stopped thevtrsting because I didn’t think any likely increase was going to make any difference. For another, his scores and grades were high enough, that it was unlikely that the scores would nudge up a bit. But for a couple of my kids, retesting made a difference of whether he would get into a school or not.

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Yes, some schools give more money for higher scores/gpa. Just an example

http://www.uwyo.edu/admissions/scholarships/non-residents/rms.html

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Bringing this back to life… Son was able to increase his ACT to 34 with some extra study time at home. He has gotten into all of the schools he applied to but this was somewhat expected as the “reach” schools for him would be schools that do not offer any aid beyond need and the CSS Profile kicked out a number of 47,000 per year! Yikes we didn’t see that coming. Must be some of the home equity algorithms.

Anyway, son has received a couple merit awards (25k at one private school and 18k at another private school) but with both of them having COA at roughly 70k, it almost doesn’t feel like a cause for celebration.

Unless we applied to outlier schools, it seems that his merit awards won’t take his yearly cost below 40k (which is close to our EFC) and thus he is going to end up at our state flagship or Utah (depending on award).

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Is this significantly worse than what the college’s net price calculators told you?

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Yes. Considerably. It must be related to home equity I guess.

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But wasn’t the 47,000 number what you got from Brown last year when you put the numbers into their NPC? How is $47k at Profile schools surprising at that point?

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Not sure what you mean. FAFSA spits out a number. CSS Profile does not spit out a number.

Are you saying that a Net Price Calculator gave you that number?

39

Did he apply to Alabama? He’d get nearly free tuition there taking your OOP costs to below $20k per year.

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UA Scholarships



Out-of-State Merit Scholarships for 2020-2021

First time freshmen admitted by May 1, have a qualifying score on the ACT or SAT in February, and have at least a 3.0 cumulative high school GPA through December of the senior year will be eligible for the following merit-based scholarships:

Scholarship Test Score  GPA Yearly Value
Presidential    32-36 ACT or 1420-1600 SAT  3.50+   $26,000
UA Scholar  30-31 ACT or 1360-1410 SAT  3.50+   $20,000
Found  29 ACT or 1330-1350 SAT  3.50+   $15,000
Found  30-36 ACT or 1360-1600 SAT   3.00-3.49   $15,000
Collegiate  28 ACT or 1300-1320 SAT 3.50+   $10,000
Capst   27 ACT or 1260-1290 SAT 3.50+   $8,000
Capst   28-29 ACT or 1300-1350 SAT  3.00-3.49   $8,000

https://scholarships.ua.edu/freshman/out-of-state/