A Question of Financial Aid

  • Using College Navigator to find Cost of Attending

  • Using College Navigator to compare quality of your financial package

  • A Word about Parent Plus Loans-Avoid

As your acceptances begin to pour in, it’s critical to review each school’s financial aid package. The best way of evaluating the offers is by placing them on a spreadsheet, or a big piece of paper, and writing down the following information for each of your schools:

Line 1: The Total Cost of Attending (tuition + room & board + books + any fees + any projected travel) [COA]

Line 2: Your Effective Family Contribution (calculated by the FAFSA form) [EFC]

Line 3: Your Need (calculated by: Line 1 – Line 2)

Line 4: The detailed financial package you’ve been offered.

The above is the fundamental financial aid formula. If you hate formulas, please read on anyway; the information might prove useful.

Now, let’s go line-by-line using Georgetown University as an example. Starting on Line 1, the cost of attending [COA], can be found in College Navigator, http://nces.ed.gov/collegenavigator/: type in ‘Georgetown,’ and click on the tab, “Tuition, Fees, and Estimated Student Expenses.” You’ll discover that tuition for 2010-2011 is $40,203, books and supplies $1,184, room & board $12,798, other fees $2,340, and, assuming you’re traveling from California to get there, possibly several times during the year, it’s safe to estimate travel costs at $2,100. The total COA for Georgetown is $58,625.

Line 2, effective family contribution, [EFC], is calculated from the information that you’ve entered on your FAFSA form. If you’re not yet a senior, you can estimate your EFC by going to finaid.org (http://www.finaid.org/calculators/scripts/estimate.cgi) or the College Board, and enter your information into its EFC calculator. Obviously, you want to have your EFC as low as possible.  For the sake of this example, let’s say your EFC is $17,000.

Line 3, your need, is calculated by subtracting line 2 from line 1. This amounts to $41,625.  Now you will see just how much of your ‘need’ has been covered by Georgetown. The good news is Georgetown is need blind and fully meets the need of US applicants. So let’s assume that Georgetown has offered you scholarships and grants amounting to $25,000 for freshman year, with the balance in work/study $2800, and loans, $13,825.  Staying in College Navigator, click on the tab, Financial Aid. You’ll find the number of students who received financial aid in 2010 is 910 students.  58% of the class received $26,794, in grants and scholarships, on average. Georgetown has given you a package that is pretty close, though you still can make a case for the additional $1,794. Now, on Georgetown’s need amount, there is no $2,100 in travel; you’ll have to negotiate with the financial aid office to get them to offset that cost. Subtracting those amounts from the $13,825, you’re now at $9,931. On College Navigator you’ll find that the average amount of student loan aid is $6,727. You’re only $3,204 apart.

A word about loans: If you must take out a loan you’ll want a federally subsidized Stafford loan or Perkins loan, if at all possible. These loans have low, fixed interest rates and the interest doesn’t start ticking until you’re finished with college (and can be delayed should you go on to graduate school).  Avoid Parent Plus loans no matter what the situation. Parent Plus is a full recourse loan (meaning the lender can get its money back anyway it sees fit, placing a lean on your house, garnishing your wages…), is not dischargeable, which means even if you declare bankruptcy the loan will not be dismissed and will continue accumulating interest and fees, and can potentially destroy your credit rating before you take one step into the workforce. (If you wish to learn more about the dangers of Student Loans please refer to Debt Free U by Zac Bissonnette, p. 61-97).

Congratulations, you’ve done a good job evaluating your Georgetown financial package. When negotiating your financial aid, treat it no differently than buying a car. You want to negotiate the lowest price possible through whatever grant and scholarship monies are available. Better still, you know they want you, after all they accepted you and they want the best yield (# students matriculating/# students accepted) percentage possible—it helps with their US News ranking. Negotiate hard, and go Hoyas.