College Life Part 13: Financial Aid Questions
A lot of you all are considering those final decisions on which college you will attend. A major deciding factor for most of you might be how much aid or scholarship you will receive from the school. Expand this post to view a NYTimes article about financial aid questions. If you have any other questions just drop a comment.
April 19, 2008, 8:36 pm
College and Money: Ask the Expert
Five financial-aid directors — Sarah Clark Donahue of Harvard, Caesar T. Storlazzi of Yale, Kent McGowan of Buffalo State College (State University of New York), Ronald W. Johnson of the University of California, Los Angeles, and Jorge Rodriguez of St. John’s University, in New York City — address reader questions, both personal and general.
The Backstory on Aid
Q. Is it true that private schools generally have far more aid assistance than state schools? — Jeff
Kent McGowan: Generally speaking, yes, for two reasons. Institutional financial aid usually comes from two sources: endowments and tuition discounting. Older, more prestigious schools typically have larger endowments, meaning a big pot of money earning interest that can be paid out as scholarships. Tuition discounting is the practice of setting a high tuition and then lowering the price for needier or more gifted students. In reality, no real money is spent on the student’s behalf; the school just collects less revenue from that student. Schools blessed with a large endowment usually don’t engage in discounting, but at most private schools, the endowment is not large enough to provide adequate assistance so discounting is common.
Contrast that with state schools, where endowments are smaller and discounting may be against state law. State schools are still the best option for many because of the substantially lower cost for every student, not just the needy or gifted. Unfortunately, when state economies erode, one of the first things that gets cut is the subsidy to state colleges. More and more have to raise tuition without endowments or discounting to fall back on. The lack of commitment on the part of state legislators is making access to college less and less a reality to lower and even middle-income families.
The Preparation Gap
Q. I assume my (two) children will be eligible for lots of financial aid because I am a single mother in a low-paying clerical job. But I’m not sure I can afford to get them academically prepared to even consider a high-quality college. I can’t afford to live in a town with a good school system. I can’t afford extra tutoring. I can’t afford anything but the cheapest music lessons, so her interest in music is waning because her performance in band isn’t competitive. I’m told that an A.D.D. assessment is going to cost me $500, which I can’t afford. I can’t afford to dress my children nicely and give them other amenities so that they fit in with academically successful peers. I read to my children, bring them to museums and make them do their homework, but I see now that I can’t really compete with families with more money. How do generous financial aid packages from Ivy League schools really help anyone who needs it? — Athena