Important Financial Aid Policies
Need-Blind Admission vs. Need-Aware Admission
Under a need-blind admission policy, the decision to accept a student is made solely on the applicant’s qualities and the contribution he or she would make to the college. No account is taken of the possible ability to pay when deciding to admit an applicant. If accepted, the student’s financial aid application is then reviewed by the aid office with a mandate to provide the necessary resources to allow the student to attend the college.
Need-blind admission means that students from all economic backgrounds undergo a similar process. However, the criteria applied by the college for determining need occasionally may result in an aid package that does not cover the full amount that the student’s family is in a position to pay, a situation that is referred to as "gapping."
Example of Need-Blind: Brown University:“Need-blind admission simply means that an applicant's ability to pay for their education will not be a factor in the admission decision. In other words, a candidate's financial need will not be taken into consideration when deciding to admit, waitlist, or deny an applicant.”
Colleges that do not have the financial resources to be need-blind apply a need-aware (or “need-sensitive”) admission policy and take account of the ability of the applicant to pay the full cost. In the early rounds of admission, an attempt is made to accept a mix of full-pay students and those who are desired on their merits but need financial aid (which they will receive).
Once most of the available aid funds are committed, the remaining acceptances are weighted toward an ability of applicants to pay all or most of the full cost and poorer students needing aid risk being rejected.
Need-aware colleges frequently claim that they meet the financial need of all admitted students. But, a factor in the decision to admit is whether applicants can afford the school—either with their own resources or with an aid package available from the college.
Example of Need-Aware: Colgate University: “Colgate is committed to meeting the demonstrated financial need of all admitted students; and financial aid awards typically consist of grants, a student loan, and a campus job opportunity.”
Need-Based Financial Aid vs. Merit-Based Scholarships
Many colleges give their financial aid solely on the basis of demonstrated need that cannot be met by the student and his or her family. The aid is not based on academic merit, athletic ability or special talents. It remains available so long as the financial need exists.
It also is common among many colleges (typically those that are not the most highly-competitive academically) to give a combination of need-based and merit-based aid.
Example of Solely Need-Based Aid: Wesleyan University: “Wesleyan's financial aid program awards assistance solely on the basis of financial need to US citizens and eligible non-citizens. No aid is based on academic merit, athletic ability or special talents.”
Merit scholarships are awarded for academic, athletic and other extracurricular achievement. The awards are given to a small percentage of all students, frequently without regard to financial need, and normally are subject to continuing fulfillment of certain conditions.
Example of Merit-Based Scholarships: Wake Forest University: “Each year Wake Forest awards merit-based scholarships to less than 5% of its first year applicants; the recipients will benefit greatly from a Wake Forest education even as they contribute significantly to the intellectual and civic life of the campus. These scholarships, among the highest honors given to Wake Forest students, are renewable through four years, subject to satisfactory academic, extracurricular, and civic performance. Some merit-based scholarships consider demonstrated financial need as a determining factor.”
Grants, Loans and Student Jobs
Financial aid packages typically consist of a combination of grants, loans and student jobs.
Grants are outright gifts from the college or other sources and do not need to be repaid.
Loans typically are made by some combination of the college, federal and state government agencies. Loans usually start bearing interest and requiring repayment upon graduation. Several colleges have eliminated or substantially reduced the loan component of their aid packages.
Student jobs are normally on the campus and in a variety of forms. They typically contribute about $1,000-2,500 of the student’s overall financial needs.
Example of No Loans in Aid Package: Colby College: “Loans are not part of the aid packages of students who need financial assistance as determined by the College. Students may still elect to borrow, depending upon personal and family circumstances, but their election to assume loans will be entirely their option.”
Example of Loans in Aid Package: Connecticut College: “Part of your financial aid award may be in the form of loans or a work-study job. If you meet certain financial criteria, the loan portion of your financial aid will be reduced or eliminated.”
Treatment of Outside Scholarships
A recipient of scholarships or other means of financial assistance from any source other than from the college from which he or she has been awarded financial aid must immediately report such funds to the college. All colleges have this requirement and, if the college financial aid package includes any Federal grants or loans, it is also required by Federal law. This requirement applies to scholarships received at the RHS graduation. Failure to report can result in withdrawal of all financial aid from the college.
Each college has a policy on the treatment of such sources of funds. Most commonly they are first used to reduce some or all of the loan and work-study component of the aid package. Under no circumstances are they allowed to reduce the expected family contribution.
Example of a College’s Policy on Outside Scholarships: Tufts University: “The University reserves the right to adjust its award, in compliance with federal regulations and institutional policy, if outside aid is received after it is estimated that a student’s need has been met. You are required to notify the aid office if you receive any outside aid, or if the outside aid award differs from the amount estimated on the aid notice. Outside aid will not replace your family contribution. Your loan and/or campus work will be reduced before any necessary adjustment is made to Tufts grants, therefore it is to your advantage to apply for all outside aid for which you may qualify in order to decrease or eliminate your loan debt.”
FAFSA and CSS Profile
The Free Application for Federal Student Aid (“FAFSA”) and the College Scholarship Service Financial Aid Profile (“CSS Profile”) are the most commonly-used forms to apply for financial aid. The FAFSA is used to determine eligibility for federal aid and the CSS Profile is used to determine eligibility for private institutional funds. Both applications are necessary to establish eligibility for all available sources of financial aid.
There are variations in the way the two applications gather information and evaluate criteria to determine need. Whereas Federal financial aid is calculated based on a strict formula across all students nationwide, the CSS Profile allows colleges to calculate aid eligibility for their own programs based on whatever criteria they set. Hence, the questions on one school’s CSS Profile may vary significantly from another school’s. In general, the CSS Profile asks for more detailed information than the FAFSA.
The FAFSA is a federal form prescribed by Congressional legislation. Its calculations, known as the “Federal Methodology,” are solely to determine eligibility for federal aid, including Pell Grants, Supplemental Educational Opportunity Grants, Perkins Loans, Stafford Loans and Federal Work-Study Jobs. The FAFSA takes into account the family’s income, assets, benefits, family size and number of household members in college. The income information is based on the tax returns of the prior year and an estimate for the current year. Within three weeks of filing the student receives a Student Aid Report (“SAR”) that gives the family’s “Expected Family Contribution” (“EFC”).
The CSS Profile, a service of the College Board, is required by many private colleges and universities to determine eligibility for non-government financial aid, such as the institution's own grants, loans and scholarships. The CSS Profile takes into account factors not considered on the FAFSA form, such as the value of a parent’s home, insurance contract values and annual retirement plan contributions. It includes an expected minimum student contribution (which is fulfilled by summer and school-year jobs).
The CSS Profile provides a nominal computation of a family's EFC through a series of calculations known as the “Institutional Methodology”. However, colleges utilizing the CSS Profile are free to vary from this nominal computation, because they are not bound by law in their assessment of "need". One example of variance among colleges is the way home equity contributes towards EFC. The College Board’s nominal computation assumes that 5% of home equity is available for the EFC. However, some colleges choose not to assess home equity at all.
There are several on-line calculators that families can use to enter their data and determine their EFC under the Federal or Institutional Methodology. Examples include the FAFSA4caster and the College Board EFC Calculator. In addition, many colleges provide a calculator that reflects the school’s specific aid criteria, such as that of Williams College.
Parents and students who anticipate a need for financial aid are advised to start work early on the FAFSA and the CSS Profile. The FAFSA is due between January 1 and February 15 and the CSS Profile is due between October 1 and February 15. Filing early in these periods will increase the likelihood of a timely reply concerning financial aid.