For many years, one financial aid principle seemed fair enough: If you had two or more family members in college at the same time, the aid formula would let you take the money you could afford to pay and divide it among the number of people in school.
But on Jan. 1, a new federal law went into effect, and the formula changed. A million families with, say, two or more siblings in college simultaneously could pay thousands of dollars more per year as a result.
Now, colleges face a choice: Make up any shortfall with their own money, or cross their fingers and hope that families will borrow more or find some other way to pay. Which one will they choose? If only more of them would tell us.
In recent weeks, I examined 20 college and university websites, large and small, public and private, big endowments and not-so-big. Only six were clear on how things would change (or not) for families with multiple members in college.
Another six sites included factual errors (including one directly under a banner that said “Bringing Clarity to the Cost of College”) or outdated information that was so obvious I spotted it in just a minute of reading.
In their defense, this is a truly awful year to be a financial aid administrator.
That new federal aid formula is part of an overhaul of the dreaded FAFSA form, which stands for Free Application for Federal Student Aid. On Jan. 30, the Education Department issued a surprise announcement saying schools would not get data from the FAFSA until at least early March.
That means many aid offices can’t begin to calculate firm price quotes for admitted students until then. And without a final price, it’s impossible for many prospective students to choose among schools. Returning students may get late, unpleasant surprises as well.
So first, a brief word on what is happening and why.
To get federal financial aid, you have to prove you’re eligible by filing the FAFSA.
This year’s formula change includes excellent news for many families. One alteration will allow many more people to qualify for a full Pell Grant for lower-income families (currently $7,395 per year) or a partial one.
According to the Department of Education estimates, 610,000 students who would not have gotten a Pell Grant before will get one. And 1.5 million students who would not have otherwise qualified for the maximum grant could get one.
This is fantastic. “There will be more winners than losers,” said Phillip Levine, an economics professor at Wellesley College and the author of “A Problem of Fit,” a book about the complexity of college prices.
But because the law that included the changes was one of those in which federal legislators felt the need to cover as much of the cost as possible by making cuts elsewhere, there did indeed need to be losers. This is where the families with more than one person in college come in.
Say a family has two children in college at once and can afford to pay $25,000 per year total, according to the figure that the FAFSA and its formula produce. Last year, that got split in half — the assumption being that a family could pay $12,500 per child. Now, it doesn’t get halved, which could theoretically double the annual cost for that family.
So why is this merely theoretical?
It’s helpful here to think about your college as a business. It needs a certain number of customers delivering an average amount of annual revenue per person. If the customers are students — and those students drop out — that’s bad. Revenue would fall.
So just because the federal formula the schools lean on suddenly says many families should pay a lot more, it doesn’t mean a school will automatically stick your family with higher bills. It just might lower the price — or give you more scholarships that you won’t have to repay.
“Colleges aren’t in a position to raise costs without risking enrollment, whatever the FAFSA does,” said Ann Garcia, a financial planner in Portland, Ore., and the author of “How to Pay for College.”
In a typical year, you might be able to rely on a college’s net price calculator — a cost estimate tool that schools are required by law to put on their websites — to predict the price you would pay next year. But given the uncertainties surrounding the FAFSA changes, they’re less likely to be accurate right now.
So, if you’re worried about how much aid you’ll receive with multiple family members in college this year, the best thing to do is to ask the school about its plans. Has it updated its calculator? Is it following the new FAFSA formula when determining what families with two or more members in college will pay? If not, is it just leaving a gap for families to fill?
It also can’t hurt to ask for more time. Matthew Feinstein, executive director of NJ LEEP, a college access program in Newark, is already encouraging families to request extensions on any and all deadlines relating to financial aid or scholarships. At least 10 schools have already extended their decision deadline to June 1 from May 1, according to an online spreadsheet created by Danny Tejada, founder of the counseling and mentoring company We Go to College.
Once a school quotes a price for next year, ask more questions if it was different from what you had expected and more than you could afford.
“As always, our team is willing to exercise professional judgment on a case-by-case basis for students and families with extenuating circumstances,” Keith Williams, executive director of Michigan State’s office of financial aid, said in an email.
A few points about Mr. Williams’s offer: First, even at large state universities, human beings want to help. Use them. Get them on the phone. Show up in person to talk to them if you can, rather than leaving them alone with your faceless financial data. Also, be patient and polite; this may be the most stressed-out semester of their entire career.
Second, “professional judgment” is code for the process that occurs when you ask for more money, or other aid adjustments are necessary or possible. And if the price in the so-called financial aid award letter seems too high, by all means make the ask.
Mark Kantrowitz, the author of “How to Appeal for More College Financial Aid,” said your request would be most effective if it focused on as many changes in circumstances as possible. Has your income fallen recently? Say by how much and starting when. Paying for an aging parent’s care? Itemize it.
Professor Levine, in a paper he wrote with Jill Desjean for the Brookings Institution that includes an aid-projection estimator that anyone can use, lays out the possibility of frightening results for many middle-income families with more than one member in college. Five-figure annual swings to the negative are possible.
But if you check out his work, remember that it only considers aid eligibility. What any given school will actually do is another matter entirely.
“As recently as the late fall, the people I spoke to were still talking about exactly what they were going to do,” Professor Levine said. “The reason there may not be a lot of communication is that it’s not obvious that any of these answers are written in stone.”
