Earlier this year, a friend asked our opinion about a dilemma that had come upon one of her advisees. A young woman whom she was advising had been accepted Early Decision to her first-choice school, a highly selective institution in the Northeast. Upon receiving the acceptance letter, she withdrew the applications she had submitted to half a dozen other elite institutions in order to honor her Early Decision commitment. The first in her family to attend college, she was understandably elated. Not only was she going to college, she had been admitted to the college of her dreams!
Weeks later, however, the elation turned to shock and concern when the financial aid award arrived and she found that her family was expected to contribute much more money out-of-pocket than she had anticipated.
Instead of the $5,000 she thought her family would need to pay out-of-pocket, she was told their contributions would be closer to $12,000. She was now in a bind and didn’t know what to do. She couldn’t afford her ED school and was now without options as she had withdrawn her applications to the other schools on her short list.
Expected Family Contribution
It is important to note that, prior to submitting the ED application, this young woman and her parents had completed the FAFSA (Free Application for Federal Student Aid) and subsequently received a Student Aid Report (SAR). Based on the information her family provided, the SAR indicated an Expected Family Contribution (EFC) of $5,000 for the first year. While that was a lot of money for this family, her parents were confident enough in their ability to come up with that amount that she had gone ahead with the ED application. Now, the school to which she was committed was somehow expecting more, much more.
Unfortunately, scenarios like this are likely to play out in many households in the coming weeks as colleges and universities stretch their financial aid budgets to accommodate the financial needs of students whom they have accepted. For families, the revelations can be gut-wrenching, if not downright painful.
Despite the early (October of the senior year) accessibility of the FAFSA application and the availability of “Net Price Calculators” (mandated on college websites to provide better information to families about cost and affordability) there is little precision in a process that is fraught with institutional nuances and agendas. As the young woman in this situation found out, institutions have variable means at their disposal to assess the EFC—means that can produce a range of results generated from data provided by the same family!
Moreover, colleges will apply these means in a manner reflective of the desirability of each candidate—an institutional prerogative that is lost in the online calculators.
For example, many private institutions utilize the College Scholarship Service Profile as well as the FAFSA to arrive at an EFC for a student. Rarely, however, do the two methodologies agree. In fact, PROFILE-generated EFCs can be $5,000–10,000 higher than EFCs projected by the FAFSA. In a practice known as “differential need analysis,” institutions that utilize both methodologies can then choose, on a case-by-case basis, the one that allows it to respond to the student in a manner consistent with the value it attaches to that student. By doing so, the institution can claim to meet the demonstrated needs of its admitted students without ever having to reconcile the differential in the respective need analyses to the families involved.
We saw this first-hand when a young man shared with us the financial aid awards he had received from 10 different colleges. They were so strikingly different that, if one were to “white out” his name on each award letter, you would think that each letter was being addressed to a different student! Some had very generous grants and scholarships while others were front-loaded with sizable loans. In each case, the institutions had chosen to assess and meet his financial need according to the manner in which they regarded him as a candidate.
In yet other cases, colleges will ignore the need analyses and simply elect not to meet the full need of the admitted student. Instead, they will provide a basic financial aid award that covers a fraction of the demonstrated need and fill the ”gap” of unmet need with additional loans for the student and/or the parents. However it is manifest, don’t be surprised to find this type of gapping, as well as differential need analysis, in the days to come.
As you weigh your educational options, then, in the coming weeks, it is important that you understand the terms of the enrollment agreements you are considering, including your obligation to meet the cost of attendance. Sometimes in the euphoria associated with “getting in,” it is easy to overlook the details and, in the case of managing college costs, the “devil might indeed be in the detail.”
The good news is that colleges will treat well those students whom they find most attractive. As a result, there are good deals to be found. To find them, though, you need to manage expectations and focus on finding colleges that are the best “fit” for you. Among other things, “best fit” colleges are those that value you for what you have to offer. They will admit you—and give you the support needed to meet your goals as a student on their campuses.