The realities of helping families finance college
Posted by Matt Malatesta
As you know, colleges and universities don’t often speak openly about financial aid policies. It’s a touchy topic many choose to avoid.
Why? Because colleges must often make hard choices.
Most choose one of two approaches to admissions and financial aid: “need blind” or “need aware.” Need blind schools don’t consider an applicant’s financial need when making admissions decisions, but many are not able to meet applicants’ full need with their financial aid packages without adding unrealistic work-study or loan options.
Need aware schools do consider finances in their admissions decisions, but this control can give colleges the ability to meet full need for all accepted applicants.
Some are a combination of both. Neither approach is perfect.
We’re raising this topic – which I also hope to explore in a panel at the College Board Forum in Miami this October – because we think it’s crucial for high school counselors, parents and students to understand. Finances are such a big part of the college decision process, and such a barrier to many who wish to pursue higher education. It’s a controversial subject, but worth engaging.
First, counselors and students should understand that very few colleges and universities have unlimited financial aid budgets. Maybe 20 institutions in the country operate with unlimited aid funds – schools like Harvard and Yale. They can meet the full need of all the students they accept. They are truly need blind and meet full need.
But the vast majority of American colleges and universities must manage to an annual financial aid budget. And this means they’re choosing either the need blind or need aware approach.
I’m not convinced either is entirely right, but I do believe most schools are trying to do the right thing. Colleges and universities are fundamentally mission-driven institutions committed to the public good, striving to do what’s best for students and families. But every school has constraints and must balance its mission with its fiscal health.
At Union, we have a pretty generous financial aid budget – about $30 million per year. But we are need aware, meaning a student’s ability to pay is factored into whether or not he or she will be accepted. Some don’t think it’s fair, that some students might be rejected because they can’t pay. But here’s our perspective: once we admit you to Union, we will find a way for you to attend. We will put together a realistic financial aid package based on your family’s ability to pay, and you will most likely be able to afford our school.
That’s comforting to students. An acceptance letter from a school like Union means they can actually go. They’re really in.
Need blind schools make admissions decisions independent of a student’s ability to pay. But many aren’t able to commit to meeting full need, so accepted students may or may not be able to attend. Finding the money for school can be stressful and students and families may take on inadvisable, high-interest loans to make it work.
So how can families assess their options? I advise them to ask the one question no one ever asks during a college tour: “Do you manage to a financial aid budget? And if so, how?” The answer will illustrate how the school makes financial aid decisions. Other good questions include: “What is your graduates’ average debt? What is the average scholarship award?”
Families should also take advantage of the net price calculator tool, which all higher education institutions are federally-mandated to offer online. With accurate financial data entered by families, these calculators can estimate how much aid a student will receive from a school and what the real out-of-pocket cost will be. But since schools have some flexibility in how they calibrate their calculators, there are choices here, as well: should they estimate awards conservatively, at the risk of scaring off applicants? Or estimate more generously, with the potential of disappointing families when the real package is awarded? It’s a tough issue to grapple with.
The bottom line: a school’s financial aid policy and philosophy is important. Our hope at Union is that counselors, parents and students will become better educated about financial aid in order to make well-informed decisions when assessing and choosing a college.