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Six Things to Know About Appealing Financial Aid Awards

A college’s first offer doesn’t always have to be the final one.

This is the time of year when college-bound high school seniors are receiving their financial aid packages. The results may be disappointing to some parents.

The good news is, a college’s first offer doesn’t always have to be the final one. It is possible to appeal disappointing awards. This is true, by the way, for need-based financial aid awards, as well as merit scholarship awards.

Parents will boost their chances of being successful if they understand why appeals are possible and what’s involved in the process.

Here are six things that parents need to know about squeezing more money out of a college.

1. At most colleges, it’s a buyer’s market.

You wouldn’t know it from media reports, but the majority of private and public colleges and universities struggle each year to meet their freshmen enrollment goals.

Gallup documents just how difficult it is when it conducts a yearly survey of admissions directors at public and private colleges and universities. In its most recent survey, 66 percent of admission administrators said they fell short of attracting enough students for the 2017-2018 school year.

If asked, schools that aren’t filling their freshmen seats are more likely to sweeten an applicant’s offer.

2. Know what schools aren’t panicking.

The most elite private colleges, which enjoy the luxury of being deluged with applicants from highly qualified students, are in a separate category from most of their higher-end peers. The public research universities, which tend to be the most popular schools in their states, are also less likely to worry. In this category are institutions such as the University of Michigan, UCLA, University of California, Berkeley, University of Texas and University of Virginia.

3. Share competing offers.

Families can often boost their chances for better awards if they have competing offers that are superior. Here is an example from a mom whom I heard from last month. Her daughter received a $29,000 yearly award from Susquehanna University and a $25,000 merit scholarship from Juniata College, which are peer institutions in Pennsylvania. If her daughter decides to attend Juniata, the mom will ask that school to match Susquehanna’s award.

When parents contact schools, admission offices will often ask families to scan or fax competing awards to them.

4. Parents need to look for an important number.

To evaluate the generosity of an award letter, parents must know what their expected family contribution is. An EFC represents what a household would be expected to pay, at a minimum, for one year of college.

The aid formula generates the dollar figure after evaluating the financial information that parents share in their financial aid application. If the EFC, for instance, is $33,700, that means the formula is indicating that this is how much a family would be expected to pay at a minimum for one year of college.

Colleges should be including this important figure on their financial aid letters, but it is often missing. If parents can’t find this number, they need to ask the school for it. Without it, they wouldn’t be able to determine if the award is a good one or not.

When parents possess their EFC, they can subtract it from the cost of the school to determine what their official need is.

Here is an example:

$65,000 (price tag) minus $33,700 (EFC) equals $31,300 (family’s financial need).

In this scenario, the school would ideally provide the student with $31,300 in need-based financial assistance with most of it being in the form of grants. This would be the best outcome that a family could hope for.

Let’s say, however, that the college only provides this student a $5,000 grant. That would be a miserly offer and certainly worth appealing.

5. Be careful what you say.

College admission officers really dislike it when parents use the word “negotiate” when asking for a better award, says David Levy, the former director of admissions at the California Institute of Technology.

Sure, what parents are doing is essentially negotiating, but somehow it’s distasteful when the word is used. Parents should be diplomatic when requesting greater assistance.

6. Ask how home equity has impacted an award.

The vast majority of colleges don’t use equity in a primary home when calculating need. These institutions typically just rely on the Free Application for Federal Student Aid, which doesn’t even ask parents if they own a primary home.

Just over 200 colleges, however, use a secondary aid application called the CSS Profile, which does ask about home equity. The Profile is popular with elite brand name schools and selective private institutions.

How Profile institutions assess home equity varies widely. A minority of these schools won’t consider it at all, while others use the entire home equity in their calculations. Still others will cap the amount of home equity they use.

Schools that do consider home equity will assess it at 5 percent. So if a family has $250,000 in home equity, the household’s EFC will increase by $12,500. Put another way, the student’s chances for need-based financial aid will decrease by $12,500. That’s a big hit for a family simply living in their home. 

Some schools, however, privately share that they are open to families appealing the home equity aid penalty. It’s important that you tell your clients that.

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