Podcast: How do colleges award financial aid?
How do colleges decide which students should receive financial aid and how much they should receive?
Despite the increase in colleges using net price calculators and other reforms to make the process more transparent, financial aid remains a mystery to parents and students–it’s still a “apply, wait and see” type of game.
Now, colleges are being called out for ambiguous financial aid policies, particularly in how they choose to disburse institutional aid.
Colleges unclear about financial aid policies
In the podcast below, ProPublica’s Marian Wang and editor Eric Umansky discuss how current regulations allow colleges to remain ambiguous about their financial aid policies, how low-income students are getting left behind, and the difficulties parents and students have in predicting college costs in today’s college application process.
Wang says that universities are supposed to be detailing how financial aid gets disbursed and how they determine the amount of aid you get, but they’re not doing their jobs.
What are schools’ priorities? When they pick who gets financial aid from the institution and who doesn’t or who gets more and who gets less, they’re actually choosing winners and losers. And we want to better understand that.
Colleges use financial aid to rise in rankings
The federal formula for financial aid is the same across the board and based heavily on income and other financial factors. But according to Wang, institutional financial aid is different–and we still don’t know why some colleges choose to give more financial aid to one student over another.
And transparency isn’t the only issue. Investigations from ProPublica and other organizations have found that colleges often use financial aid to benefit themselves, rather than the students that need it the most.
For example, merit aid isn’t only based on “merit”–it’s used for “financial leveraging” to attract students that fit what the institution wants, such as a rise in rankings, or higher average SAT score.
This type of behavior, combined with the lack of knowledge most parents and students have about colleges’ individual policies, make it difficult to predict how much college will cost, leaving them more susceptible to overpaying for college and not applying to the right schools.
Understanding how financial aid works
We’re happy to hear that more people are calling for open financial aid policies from colleges, as this will provide a more level playing field for parents and students in the college application and financial aid process.
While financial aid is impossible to predict without applying to a college and looking at a family’s full financial picture, over their 40 years of experience our counselors have gained a better understanding of how to make college affordable and maximize students’ financial aid packages.
If you’re interested in a free financial aid consultation, give Rick and Andy at 1-888-234-3907 or send us a message.