College Students Face Stiff Competition for Financial Aid
USA TODAY recently ran an article about the shrinking pool of financial aid, and how there is more stiff competition than ever for the financial aid that does exist.
Here is the down and dirty according to USA TODAY:
Several states have reduced scholarships or toughened eligibility criteria for financial aid. Eligibility for the maximum Pell Grant, the largest source of federal financial aid, has also been tightened. Meanwhile, the number of families applying for financial aid has soared. More than 21 million families filled out the Free Application for Federal Student Aid (FAFSA) for the 2010-11 academic year, last fall, up 49% from two years earlier.
This sounds like depressing news, but I would give a much rosier view of the situation. Yes, the Federal Pell Grant applicant pool has grown tremendously. However, the Pell Grant is a guaranteed award. Meaning if you qualify, you earn it. Our government has set aside enough funds to cover every student that applies. This may not say good things about our government’s fiscal policy, but it should give you some comfort in applying for the Pell Grant. Also, Pell Grant funding has been secured through 2015 according to new legislation.
The article also notes that states have tightened the reins on qualifying for state supported scholarships. This is a sad trend but not one without hope. The positive trend that I have seen in recent years is that colleges have stopped relying as heavily on state supported scholarships, and they have begun relying more on school supported scholarships. Athletic departments are pumping money back into schools to be earmarked for Academic scholarships. Private donors are increasing their contributions which are earmarked for scholarships. Cost cutting measures have freed up University funds to be put back into the scholarship program. Colleges and universities have begun to realize that students are their greatest asset. Just like great employees make a company profitable, great students make a school excel. Scholarship money is one of the main lures to attract top tier students.
The USA TODAY article does go on to give three tips to deal with what they believe is a worsening financial aid situation:
1. Pay attention to deadlines.
2. Be on the lookout for private scholarships.
3. Use net price calculators as a screening tool, but exercise caution.
I actually strongly agree with all 3 of these points. We have talked numerous times here about how important financial aid deadlines are. Missing a crucial financial aid deadline could mean the difference in thousands of dollars in aid.
Private scholarships, and especially local scholarships, are in my opinion the absolute best source of financial aid. You compete against a limited applicant pool, and you can gain the support of your local community. It’s a win – win!
Finally, the article mentions the debacle that is a net price calculator. The intent was good, the end result was a confusing mess. The net price calculator was a mandate from the Department of Education for all schools to be able to give prospective students an estimate of what they could expect to pay. The net price calculator gives all students an estimate of their tuition and fees, and then subtracts an estimate of their financial aid. The problem is that these estimates are almost always way off. The calculator often does not include private scholarships, and never includes student loans. These differences are not explained to students, which gives them a very skewed view of the financial aid that they can actually expect to receive from one school versus another.
With that said, I firmly agree with this author’s suggestion to take the net price calculator with a grain of salt. It can be a good tool, but should not be your deciding factor.
Have you noticed any drop in financial aid in recent years?