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What a $300,000 College Might Cost a $200,000 Family

College is so expensive that even the affluent can be considered needy.

Oct. 1 is opening day for financial aid season, but the Free Application for Federal Student Aid — the dreaded FAFSA that families were able to start filing on Thursday — is by no means the last aid form that many of them will fill out. If they want a discount on their favored schools’ list prices, which approach $80,000 annually at some private colleges, those forms will help financial aid administrators determine just how needy any given family is.

All that data entry can pay off, because lots of people can qualify for financial aid that is based solely on need. In fact, over a four-year span, families with annual household income of $200,000 can get a third or more of the cost knocked off an education with a $300,000 list price.

But that doesn’t satisfy everyone. Even if you have to pay a mere $40,000 per year — about what a $200,000-earning family could owe at Northwestern, Rice and Vanderbilt, according to the net price calculators on their financial aid websites — that can be a tough check to write. At the same time, outside observers often wonder why a $200,000 family is being subsidized instead of one making $20,000.

A fresh set of families encounters the undergraduate financial aid system for the first time each year, and only a small minority end up understanding exactly what is happening to them. Much of the confusion rests with the fact that there are different kinds of families, different kinds of aid and different kinds of schools.

Those $200,000 families are in the minority of people who are trying to afford college for their kids: There are far more people with much less money hoping that schools will give them scholarship money beyond the maximum $6,345 that the federal Pell Grant makes available to most lower-income families.

The families with less money often end up with less help over all by at least one measure, according to Mark Kantrowitz, publisher and vice president of research at Savingforcollege.com. He has crunched federal data to determine what percentage of their incomes go to the net price they pay to colleges, and his conclusion is that the percentage is higher for lower-income families than for people who earn more.

Then there are the two main types of grant aid — the kind you don’t have to pay back — that come from the schools themselves. Last week, I wrote about the first kind, merit aid discounts, which can be higher if your grades and test scores are better. Merit aid also entices wealthier families to pay, say, $45,000 instead of $65,000 and makes them feel good about the pat on the back that comes from having “earned” a $20,000 “scholarship.”

The second kind, need-based aid, is the subject of this column — and what would be available to a $200,000 family at Northwestern, Rice and Vanderbilt. (Rice and Vanderbilt do offer some merit aid, too, while Northwestern offers “talent” scholarships to musicians.)

Undergraduate institutions distribute need-based aid in many different ways. A few admit applicants no matter how much financial help they need and agree to meet every dollar of their need without asking families to borrow a cent. Others have the same admissions rules but do ask families to borrow.

Still more admit everyone who needs help but may not give him or her enough grant money to be affordable. And then there are those that reject at least some qualified students because of their financial need. (In Jeff Selingo’s new book, “Who Gets In and Why,” he explains what happens at Lafayette College when it struggles through that particular situation.)

Students whose parents earn $200,000 and who get into Northwestern, Rice and Vanderbilt are theoretically among the lucky ones. Those schools are resource rich and pretty generous, though they start with list prices ranging from just over $69,000 to just over $79,000.

I ran the numbers for a theoretical $200,000 family from Ohio. I gave it $200,000 in home equity, $50,000 in a 529 college savings plan and no other children in college, and used the schools’ net price calculators. They produce nonbinding estimates, but they’re usually pretty accurate.

The schools would ask this family to pay between $39,000 and $45,000 for one year. That means students from those $200,000 families can save about $25,000 per year or more off the total retail cost of attendance.

Again, these are estimates, and the numbers might change when any such family formally applies for aid, especially for those that have their own businesses, which can offer parents various ways to alter compensation.

Many colleges treat home equity as an available asset, and they have different ways of doing so. Northwestern’s net price calculator presents a worst-case outcome for a family when it comes to home equity, said Phil Asbury, the university’s director of financial aid. Once humans review an application, the result can only become more generous.

Still, even $40,000 is a lot to fork over out of $200,000. The formulas in play generally assume that higher-income families can devote a large fraction of each extra dollar that they earn, beyond what they need to cover basic necessities, to the annual college bill.

But shouldn’t a $200,000 family have been saving all along? I put the question to Yvonne Romero Da Silva, who brings a Massachusetts Institute of Technology math degree and years at the College Board to her role as vice president of enrollment at Rice. (The College Board developed the aid-determination formula behind the CSS Profile, the other major aid form that many private colleges and universities use.)

Ms. Romero Da Silva could not say for sure whether the people who invented the College Board aid formula were assuming that more-affluent families would or could have been setting money aside. But the formula does give people in jobs like hers flexibility to define fairness as best they can and in their own way.

“We are not looking to pull every asset that families have at their discretion,” she said. “But there is a sense that some assets a family has could be put toward paying for a student’s education.”

If you’re a renter, for instance, would you want schools to ignore some other family’s large pile of home equity in doing the need-based financial aid math? Many private colleges and universities do examine it.

As to the question of whether the least needy are getting more than their fair share of aid, it is indeed tempting to send in every small violin from the Rice University undergraduate orchestra for its $200,000 families that have to pay $40,000. The school could devote all of its aid budget to lower-income families instead. So why doesn’t it?

Here, Ms. Romero Da Silva was politic, noting that Rice accepts every person it deems qualified regardless of financial need and discounts the bill accordingly. Not every college can afford that. Rice broadcasts its attempts at equal-opportunity generosity in plain English and round numbers on its website.

“We are not taking from one group and giving to the other,” she said.

The financial aid process can feel painful for everyone. For members of the upper-middle class, there is often an added element of surprise. Many of them don’t study up ahead of time the way lower-income people might, because few people warn those with a bit more money how complicated things can be for them, too.

When people immerse themselves in the details, they may realize earlier on that their “felt need” is much higher than what their child’s target schools are willing to offer.

So this is as good a time as any to remind everyone with younger children to do the math and test some net price calculators long before a child’s senior year. It’s also wise to do some research on schools that are sure to be affordable.

“Families always have the option of sending their kid to an in-state public college,” Mr. Kantrowitz said, addressing those parents who feel compelled to stretch for the expensive private institutions. “This is in some ways a matter of choice, not of necessity.”

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How to Predict Merit Aid in a Strange College Application Season

Untold numbers of high school seniors have had trouble finding convenient places to take standardized tests during the pandemic, while others have health issues that make doing so risky. In the spring, many of them got pass-fail grades or are grappling with other altered academic standards. And plenty of extracurricular activities may be limited or are gone altogether.

So what is a student who is seeking merit aid from colleges to do, given that such evaluations are based on those scores and grades, not to mention the very activities that are no longer possible?

To review, there are two main ways to pay less than full price for college. One is pretty straightforward, the other somewhat more mysterious.

The straightforward discount comes from need-based financial aid, when a school determines your ability to pay by looking at income and certain assets. Net price calculators on school websites predict the assistance a school might offer.

The second is merit aid, when the quality of applicants’ grades, test scores and extracurricular activities can lead to offers that have little to do with their parents’ financial standing. These renewable discounts can range from a few thousand dollars to a full ride and are often awarded without a separate application.

Like so much else, merit aid may not work the way it did 12 months ago. In this fundamentally altered admissions season, how is any college supposed to figure out who should get a discount coupon of $100,000 or more?

“I think you’re trying to get me to go pour a drink,” said Nathan Ament, chief enrollment officer at Loyola University in New Orleans, when I put the question to him before noon on a recent weekday.

Colleges offer merit aid on top of need-based aid for many reasons. They do it to woo star students, to lure out-of-state applicants to budget-strapped public universities or just to hit their enrollment and revenue goals through strategic deployment of discounts.

There can be a psychological component to merit aid, too. For students with financial need, it’s an extra pat on the back. And families that don’t meet a school’s requirements for need-based aid, but that are unable or unwilling to pay full price, can still get a discount.

While families are the theoretical winners of the annual merit aid derby, it also has losers and — perhaps — victims. Merit aid is partly an act of competition that one school pursues to the detriment of another, which then needs to fill spots some other way. It’s just business, or something like it.

But merit discounts also raise questions of equity. The good grades from rigorous high schools and high test scores that make admissions officers salivate often result from the kind of parental attention that is generally easier for the affluent.

However, if too many parents won’t pay the list price, less selective schools like the Connecticut Colleges and the Oberlins have to discount somehow, even if the Yales and the Northwesterns, which are a bit higher up the competitive food chain, do not. Then, hopefully, they solve for the equity piece by offering need-based scholarships, too.

This year, test scores are in play. Every applicant seeking merit aid has to weigh the question: If I can’t find a testing center or my health is at risk if I sit in one, could the lack of a score cost me thousands in lost discounts?

The best way for colleges to assuage those concerns is to adopt a “test blind” policy that doesn’t examine scores, either for admission or for merit aid (unless required by state-based scholarships or athletic rules). Loyola University of New Orleans is doing that now.

“Like most institutions, we understood that G.P.A.s are a better and more fair predictor of success,” Tania Tetlow, Loyola’s president, said. “At a moment when students literally couldn’t take the standardized tests, it felt like the right moment to be brave and make a change.”

By contrast, the University of Alabama, which has been especially aggressive with merit aid, still requires test scores. The school will allow students to apply for conditional admission if they submit a score by May 1. A spokesman declined to comment beyond the university’s description of its policies on its website.

Given the challenges in taking standardized tests, many more schools are now test optional, but that tends to leave lingering questions in families’ minds.

Debbie Schwartz, who developed a search tool called College Insights, has a daily view into parents’ thinking via the Paying for College 101 Facebook group she started. “I think the reason that so many families are still trying to have their kids take tests is that they need merit money,” she said. While applicants may be qualified for admission, must they have a lights-out test score to get a large merit award too? “They are not sure how the schools are going to be giving it out.”

Wabash College, a test-optional (for this year at least) school for men that posts a grid showing the kinds of merit aid offers that admitted students get based on their grades and test scores, would seem to be in a particular predicament. After all, half its evaluative data could go missing. Wouldn’t it prefer that students submit scores?

The answer is likely to be no in nearly every case, according to Chip Timmons, its dean for enrollment management and director of admissions. Its plan is to take an even harder look at grade point averages in core, college-preparatory classes.

“We’re going to do this in a way that casts the student in the best possible light,” he said. “If we feel like he can do well because of a strong G.P.A., he will not be disadvantaged by not having a test score.”

What about the applicant with poor grades who plans to prove, via the aces ACT score he’ll get next month, that he has pulled it together and deserves admission with a discount?

“Historically, that guy has not done well here,” Mr. Timmons said. “We’ve learned enough to know that those aren’t good bets for us.”

Given the nuances of each school’s system, some families may remain confused. If that’s you, find the admissions representative who reads applications from your region and ask about tests or your high school’s altered grading policy.

“That is what we are encouraging,” said Loyola’s Mr. Ament, who I could tell via Zoom had ultimately resisted the siren call of a pre-lunch Sazerac.

A few schools have gone further, offering a customized financial aid evaluation (both need based and merit) to all comers, before they even submit an application for admission. The idea is to make it clear early on what the price will be if they get in, as long as parents’ financial pictures and applicants’ grades don’t change in the interim.

Whitman College is one school that invites interested students to submit academic information and financial data in advance. “We’ve been historically opaque, and we wanted to change that,” said Josh Jensen, its vice president for enrollment and communications.

Mr. Jensen added that Whitman’s offering could be especially useful for a family if the student wanted to apply during the binding early-decision round. Until the change, price-conscious students lacked certainty about what, if any, merit aid might be on offer if they were admitted.

The College of Wooster has offered a similar service for years, and its vice president of enrollment, Scott Friedhoff, did something a lot like it when he worked at Allegheny College. Wooster is also test optional.

“There is no disadvantage for a student if they do not submit a test, vis a vis merit aid,” Mr. Friedhoff said.

Should skeptical students really trust his word? “They should believe me,” he said. “We are test blind when it comes to merit.”

Families could use more blunt talk, not to mention the kind of human intervention and transparency that Whitman and Wooster offer. If you are applying to college this season, ask the merit-aid-dangling school you’re considering for a similar pre-application money read and let me know if it proves to be willing.

Next September, I hope to write a similar column to this one, but with a much longer list of schools that have started doing what these two colleges have already done.

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How to Ask a College for More Financial Aid

It is rarely easy to summon the will to ask for help, especially if you’re seeking more financial aid from what you believe to be your first-choice college.

But this spring, the traditional time of award letters and admission deposits, is unlike any other.

Normally there is an orderly process: Current and prospective students scrutinize their awards, and college administrators field their requests, knowing they have a certain amount of budgetary wiggle room.

The economic cataclysm caused by the coronavirus outbreak has changed all that: Large numbers of families have lost some or all of their income, or fear they soon will. And high school seniors are trying to pick a school even as there are few indications yet about whether they are signing up for what will be a virtual freshman year, at perhaps $80,000 or more.

And the colleges? They’re dealing with unprecedented uncertainty, too. Many use algorithms created by consulting firms to calculate aid offers and predict how teenagers and their families will respond. But those finely tuned models don’t have any answers for a pressing question: Just how many more families than usual will change their minds this summer amid changing public health projections and switch schools — or keep students home for the year?

Brian Zucker, who runs one of those firms, Human Capital Research Corporation, said it was futile to use last year’s behavior to predict what will happen now. “It’s a meaningless exercise at this point,” he said.

Amid this chaos, there are a handful of new services to figure out what to pay for college and how to ask to pay less, whether a student will be a senior or a freshman in the fall.

And the founders of some of these services are just the sort of renegades who can sometimes provide clarity, or at least some pointed advice, in strange days like these. They urge you to take the time you need — many colleges have pushed the decision deadline for incoming freshmen from May 1 to June 1 and may offer extensions beyond that to those who ask — and not be bashful about asking for more help.

The most transgressive new offering is TuitionFit, which allows you to upload your own financial aid award letters to see whether people like you got a better deal from your school or similar schools that you might not have even applied to. It is attempting, through blunt force, to create long-needed transparency and comparability of actual net prices.

Anayeli Martinez of Elgin, Ill., recently signed up for TuitionFit’s free service. At the moment, her son is planning on attending Iowa State University to study kinesiology at an all-in cost of around $16,000 per year — a price that already reflects a successful financial aid appeal that cited medical expenses and new educational costs for a younger sibling.

The family turned to TuitionFit for two reasons. First, the family is looking for uploads on the company’s website of new award letters from similar families that suggest that Iowa State is giving better deals to others. If they see that, Ms. Martinez will go to the school and ask it to match.

Second, TuitionFit has a feature that allows schools to shop for willing students. Colleges that have space might want to make, say, a $14,000 offer to the Martinezes for a similar academic program. (TuitionFit blacks out personal information on award letters and doesn’t reveal families’ identities to inquiring schools until a family signals that it wants to respond to a particular, personalized offer from a school.)

The possibility for eventual disruption here is enormous — even if the odds are long of gathering hundreds of thousands of award letters. So far, TuitionFit’s founder, Mark Salisbury, a former Augustana College administrator and the author of many cutting bits of commentary on higher education and its dysfunctions, has assembled over 6,000 award offers.

But even if TuitionFit doesn’t completely upend the school-picking process, it is offering perfectly practical advice that Ms. Martinez’s family is following: Be flexible. There is no telling how much maneuvering any given school might want or need to do in the coming days. Families should ask for more help, and then ask again. They should also be open to considering whether the school they’ve picked is really so perfect, if another comes with a better offer.

But let’s say you’re locked in. You’re already enrolled, or adamant about your chosen school. It is certainly still possible to appeal for more money.

Abigail Seldin, along with a company called FormSwift, has created a free offering called SwiftStudent that helps users draft a formal financial aid appeal letter and coaches them through writing one efficiently and effectively.

Several years ago, she created a tool that helped families more easily compare estimated prices using colleges’ individual net price calculators. Many selective institutions blocked her tool entirely, as if making this all easier was some kind of sin. The comparison tool is no longer available.

Presumably financial aid directors, whom Ms. Seldin consulted before starting SwiftStudent, won’t disparage her efforts this time, given that the tool is designed to make their lives easier.

Your chosen school might have advice, too. During any appeal, Job 1 is heading to the school’s financial aid website and seeing if it has useful guidance, such as a particular form for reconsideration requests. The University of Denver, for instance, has an excellent page explaining what sort of changes in financial circumstance are grounds for appeal when asking for more need-based aid.

Your school may also offer money in another form: merit-based financial aid. It’s generally based on academic performance, leadership or other skills. And Todd Rinehart, the University of Denver’s vice chancellor for enrollment, said in an interview that there was nothing greedy about asking for more of that, too, even if you aren’t in the middle of an unfolding crisis.

How can that be? Let’s say you want to lower your annual cost from $50,000 to $45,000 by asking for $5,000 more merit aid. If the school figures that its cost to educate each student is, say, $38,000, your $45,000 can still help the students who can afford to pay only $25,000. If that’s the case, the college may still want you to come and stay until graduation.

Schools like Denver also understand that there may be similar colleges offering you more merit aid. If that’s the case, it certainly can’t hurt to send a polite, measured request pointing out your other, better offers. Also include any proof that your academic performance or standardized test scores have improved; a school may have a formula to help administrators determine merit awards, and you may have vaulted to the next level in the months since you applied for admission.

If this sounds like too much, more hands-on assistance is available.

A start-up called Edmit — founded by Nick Ducoff and Sabrina Manville, two former college administrators — has a free college-shopping and pricing tool. For a $99 annual fee (though some families pay nothing through partnerships with schools) plus $30 for every 30 minutes, you can get access to its network of advisers, who will hop on the phone and coach you through any appeals you want to make.

Ms. Manville offered a couple of words of advice in an interview this week, in the form of a do and a don’t.

First, don’t wait to ask for more money if you truly need it. There is no telling what may happen to aid budgets in the coming months, given a likely deluge of families seeking relief from financial pain.

Once you do that, however, take a deep breath. “Wait as long as possible to put down a deposit,” Ms. Manville said, and don’t be afraid to ask for an extension, either. The longer you’re able to wait, the more likely it is that you’ll know how your top contenders will handle the fall semester.

And then there’s the possibility you end up the subject of a bidding war.

Some schools may get desperate if they’re falling short of their enrollment goals. That may make them more willing to offer new or additional discounts. In fact, Ms. Manville said, Edmit has already heard from users who are getting unsolicited boosts in merit aid offers from schools where they have not yet committed.

May all of that and more come to you, too, in the coming weeks and months.

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Tips for Decoding College Financial Aid Offers

After the college acceptance letter comes the financial aid offer. But beware: The offers are not always easy to decipher, and different colleges often use different jargon for the same types of aid or loans.

Despite calls for colleges to adopt more uniform, user-friendly formats, institutions remain free to devise their own aid letters, and the information they include varies. Some don’t clearly label student loans and often omit details about the total cost, making it a challenge to figure out how much you’ll have to pay.

A study in 2018 by the New America think tank and uAspire, a nonprofit group that promotes college affordability, examined thousands of award letters and found that not only was the financial aid insufficient for most students, they often used confusing terms. Among the colleges that offered a common type of federal loan, for instance, researchers found more than 100 terms for the loan, including two dozen that didn’t even mention the word “loan.”

“As a result,” the report said, “it is exceedingly difficult for students and families to make a financially informed college decision.”

Legislation to create a standard aid template has stalled in Congress. It’s possible, advocates say, that the bill will be included in a reauthorization of the Higher Education Act, the law that governs federal support for students, colleges and universities.

The Department of Education has suggested an aid template, but using it is mostly voluntary.

The Federal Student Aid office has recommended that colleges include the cost of attendance in aid letters and clearly distinguish between grants and scholarships, which don’t need to be repaid, and loans, which do.

Rachel Fishman, deputy director for research at New America’s higher-education program, said that it was unclear just how many colleges had updated their formats, but that “anecdotally,” some had made improvements.

More colleges are recognizing the problem, but “we still have a ways to go,” said Lindsay Ahlman, associate director of research with the Institute for College Access and Success, a nonprofit that advocates for low-income students.

For now, there’s still room for confusion, so students should carefully review their award letters — and subsequent bills — to make sure they reflect costs and aid correctly, student advocates say.

Elie Kapengut, 18, a freshman at Rutgers University, said his first aid letter from the school had included student loans. He didn’t want to borrow, though, so he didn’t take the required steps to accept the loans. A revised aid letter showed that the loans had been removed, he said.

But a later statement included an apparent credit for more than $2,700, mysteriously labeled “FINAID DUNSB OFFERED,” Mr. Kapengut said. It was listed alongside other credits from scholarships, and the balance on the bill was calculated as if the funds had been applied.

The money turned out to be a loan, Mr. Kapengut said, so he visited the school’s financial aid office and had it removed. It didn’t end up costing him more than a bit of a “hassle,” he said — but it did seem that some students might end up borrowing money unwittingly.

Rutgers said in an emailed statement that its student aid award letters follow the federal Education Department’s recommended template. All students who file the FAFSA, the federal application for student aid, receive the same electronic award letter, which includes a section for loans. The loans section displays the amount borrowed and provides an option for the student to decline the loan.

“If a student does not complete the form to decline the loan from the award letter, the loan will appear on the student’s term bill,” Rutgers said.

To compare aid offers, student advocates recommend that you first determine the total cost of attending each college, including “direct” costs like tuition, fees, on-campus housing and meal plans, and “indirect” costs like books, supplies, transportation and other expenses. If your aid letter doesn’t include a breakdown of these costs, call the financial aid office, visit the college’s website or try tools on the Education Department’s College Navigator.

Next, subtract any “gift aid,” which includes grants — including federal need-based Pell grants — and scholarships.

This will give the “net” cost to you of attending the school — the amount you will have to come up with from savings, income or borrowing. Calculate this amount for each college.

“Do the math, and make an apples-to-apples comparison,” said Laura Keane, chief policy officer for uAspire.

Doing so will help you avoid being dazzled by a big aid offer, which may not seem quite so large if it covers only a portion of the total cost. “If you get a $40,000 aid package but the school costs $60,000, you still need to come up with $20,000,” Ms. Fishman said.

It’s especially important to make sure you understand what amounts are loans, Ms. Ahlman said. “Beware of aid offers that look too good to be true,” she said.

And make sure, Ms. Fishman said, to ask whether scholarships and grants are renewable for four years. Some colleges front-load scholarships for the freshman year to entice students to attend. But if the gift aid goes away and the cost of attending rises, you may find yourself strapped before finishing your degree.

The Department of Education offers comparison tips on its website, and the National Association of Student Financial Aid Administrators offers a worksheet, which you can print out, to help keep information about different colleges organized.

Here are some questions and answers about student aid.

When can I expect my financial aid offer?

That depends on the college, the application deadline the student chose and how early the student completed required student aid forms, including the federal form known as the FAFSA, for Free Application for Federal Student Aid.

“It absolutely varies,” Ms. Keane said.

In general, for students who apply under a traditional “regular decision” timeline, acceptance letters will arrive by the beginning of April and award letters around the same time or shortly afterward. Students who apply under early-decision programs or to schools with rolling admissions, however, may get award letters earlier.

How much can I borrow for college?

In general, an undergraduate can borrow up to $5,500 in federal student loans as a freshman, $6,500 as a sophomore and $7,500 each during the junior and senior years, for a total of $27,000 over four years. (Students can borrow more if they take more than four years to graduate; also, the limits are higher for independent students.)

If families need to borrow more, parents can borrow federal PLUS loans, which carry higher interest rates, up to the total cost of attending. Families can also seek private student loans from banks and other lenders, but those loans lack important consumer protections available with federal loans, like the option for payment plans based on the borrower’s income.

Do any colleges guarantee tuition rates for four years?

Four-year tuition guarantees, sometimes called “fixed” tuition, can help families budget for college. They aren’t widespread, but they’re out there, so they are worth asking about. The University of Arizona and the University of Illinois system are among the institutions pledging that freshmen will pay the same tuition rate for their four-year undergraduate degree.

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