MONEY College

Don’t Bother Appealing a Financial Aid Award if…

Rich woman crying
Crying poor doesn't always work wonders with the financial aid office. iStock

Sometimes it doesn't make any sense to ask a college for more money. An expert explains what those times are.

I’m often approached by families who want me to help them request more money from a particular college. About a third of the time, I turn them down.

So what is it about these families that has me refusing to take their business — and their money?

It’s their unrealistic hopes. These families want a strategy. They’ve read that if you show a college a competing award, the college will match it. Or they’ve heard that you can negotiate a better award by telling the college how much the student wants to attend the school.

If these are the only reasons they want more money, I tell them they can appeal themselves. These parents will probably be unsuccessful if the award they want a college to match is in a different category of selectivity. A highly competitive college that does not give merit awards will not match a school that has awarded a student an academic scholarship. That selective college will award only need-based aid, based on the family’s income and assets; the other college uses merit awards to entice students to attend, regardless of their financial situation.

Financial-aid appeal letters are difficult for colleges to respond positively to, since a decision to change an award is limited by a college’s policies and requires consensus of the financial aid committee. There are no cut-and-dry rules of what will be accepted and what won’t. The committee can use what they term “professional judgment” and override entries on financial aid forms.

I try to put myself in the college’s shoes. I will assist a family, for example, whose primary wage earner is out of work because of an incapacitating illness that struck after the student submitted his or her financial aid forms. I’ll help a family forced to maintain two households because the family can’t move and the only job a family member can get is too far away for a commute. I’m also sympathetic to families forced to draw upon retirement funds to pay for medical bills.

In these cases, I will calculate the decrease in income available for college expenses and ask the college to lower the family’s income by this amount in their financial-aid calculation.

On the other hand, what if the parents want to appeal due to high living expenses, such as a $7,000-a-month mortgage, three $600 monthly car payments on their new SUVs, and private basketball coaching for their children? In such a case — and I really did hear from such a family — I pull out my “World’s Smallest Violin” and play a tune. I tell them their letter will be posted on the bulletin board in the financial aid office’s lunchroom, so that the financial aid officers get a quick laugh from it each time they take a break from their demanding jobs.

I get no pleasure out of helping with these types of appeals. For me to work with them, they need to pass my personal litmus test: They have to make me shed a tear after hearing what’s going on with the family — not make me run for my World’s Smallest Violin.

———

Paula Bishop is a Certified Public Accountant and an adviser on financial aid for college. She holds a BS in economics with a major in finance from the Wharton School and an MBA from the University of California at Berkeley. She is a member of the National College Advocacy Group, whose mission is to provide education and resources for college planning professionals, students and families. Her website is www.paulabishop.com.

TIME Innovation

Five Best Ideas of the Day: September 30

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. China’s real battle is for the hearts and minds of Hong Kong. And China is losing.

By Rachel Lu in Foreign Policy

2. California’s new ‘Yes means yes’ consent law is an important first step toward ending America’s campus sexual assault epidemic.

By Robin Wilson in the Chronicle of Higher Education

3. The English language makes it harder for students to learn math.

By Sue Shellenbarger in the Wall Street Journal

4. Long lines at polling places dampen turnout and disproportionately hit poor and minority communities. States must devote the resources to making voting work.

By Chris Kromm in Facing South

5. To direct financial aid where it is most needed, colleges should focus on first-generation students.

By Tomiko Brown-Nagin in TIME

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY College

3 Mistakes That Will Cost You a College Scholarship

Student in library late at night
Sam Edwards—Getty Images

A grant or scholarship can be the decisive factor in where you go school. But holding on to it for four years isn't always easy

College campuses are springing to life again as students gear up to start a new academic year. For many freshmen, the school they’ll be getting to know in the next few months will be the one that not only agreed to let them in but also offered to help pay the tuition bill. According to the National Center for Education Statistics, 59% of the 23 million undergraduate students in the United States receive some form of grant or scholarship.

But the pride of winning a scholarship obscures for many students a tough reality: Getting that scholarship renewed for your whole college career isn’t a sure thing. Every year, tens of thousands of rising sophomores, juniors, and seniors lose scholarships they had counted on.

A MONEY analysis of financial aid reports for the 2012-2013 academic year found that colleges, on average, award merit-based scholarships to 25% of their freshmen. However, only 20% of sophomores, juniors, and seniors get similar grants. At some schools, the scholarship dropoff is much more significant.

So how do you make sure you keep your scholarship for all four years of college? It might seem like the rules are obvious: don’t break the law, get kicked out of school, or do something else stupid. Those are definitely good guidelines. But there’s a little more to keeping college aid than simply steering clear of a contemporary Animal House remake. For example:

Grades

Most schools set grade point average (GPA) minimums to keep the financial aid flowing—even for “need-based” grants awarded based on family income.

Colleges typically require students to maintain at least a 2.0 GPA, the equivalent of a C average, to qualify for almost any kind of financial aid. Even students receiving Pell grants, which are federally funded need-based aid, will lose their assistance if they don’t meet standards of “satisfactory academic progress.” At most schools, that means earning a GPA of 2.0 on at least 12 credits per semester, though many schools will give freshmen a bit of a break.

Good grades are even more important to recipients of merit scholarships, which are awarded based on a student’s grades or talents. Most merit scholarships set higher GPA bars for renewal. The merit-based HOPE scholarship programs in Georgia and Tennessee, for example, are only renewed for students who maintain GPAs of 3.0.

And some schools have big merit scholarships that are only renewed if students maintain a GPA of 3.5, such as Baylor’s $38,500-per-year Regent’s Gold Scholarship.

But you were a good student in high school, so keeping up your grades will be no sweat, right? Newsflash: Most college classes are harder than high school classes, so students’ grades tend to take a significant dip when they make the transition to higher education. A study of the transcripts of more than 122,000 students by the National Association for College Admission Counseling, for example, found that the average student’s grade point average declined by .47, or half a letter grade, from high school to college.

That means even students with a 3.4 high school GPA—a high B+—face a real risk of losing merit aid that requires a 3.0 for renewal. No wonder that about half of Georgia HOPE recipients, and more than 40 percent of Tennessee HOPE recipients, lose funding before their senior year.

To make sure bad grades don’t cost you your scholarship, students and parents should be crystal clear about the GPA renewal requirements for any grant or scholarship. If you’re worried, ask professors for interim grade reports; if you’re in danger of slipping below the required minimum, you can get help from campus tutoring services (often free of charge), or in some cases take the class pass-fail without adversely affecting your GPA.

Besides buckling down at the library, students should also be realistic about their class schedules and their likelihood of success in a tough major. According to a study from the Southern Economic Journal, “students whose major course of study is in engineering, computing, or the natural sciences are 21 percent to 51 percent more likely to lose their (grade-based) HOPE Scholarships than students in other disciplines.” Of course, those majors also tend to lead to much more lucrative careers. So it may be worth risking a few scholarships for a lifetime of good jobs and big paychecks.

Discipline

Keeping your financial aid generally means also keeping your nose clean of any legal or academic violations. Getting incarcerated is obviously a no-no. It’s especially essential that Pell grant recipients avoid any kind of drug-related trouble. Those who’ve been busted for buying or selling drugs can be banned from the Pell program for years, depending on the number of offenses.

You’ll also want to give your college’s student handbook a close read. Breaking school rules can result in anything from expulsion to a temporary suspension. And it can also be extremely expensive.

Harvard is a cautionary tale for would be rule-breakers. The New York Times reports that students at the college found guilty of “misusing sources” (also known as plagiarism) will likely be forced to withdraw from the college for “at least” two semesters and lose credit for that term’s coursework. (Readmission is also not guaranteed.) According to Harvard’s website, a student leaving school while a semester is in progress can still be charged over $25,000 in fees depending on their withdrawal date.

In Harvard’s case, that money will generally come out of a student’s financial aid. But, like many schools, the Cambridge-based college is loath to offer more than eight semesters of support, and those who withdraw during the school year have essentially wasted one of those terms. A Harvard spokesman says penalized students who withdraw must not only apply to be re-accepted, they must also receive approval for additional aid. If their request is denied, these students would lose funding during their final semester.

Athletics

Athletic scholarships are probably the least dependable form of financial aid. In addition to meeting GPA requirements (which are generally similar to those of Pell recipients) and following university rules, the vast majority of Division I athletic scholarships must be renewed annually. That means students who get injured, stop playing well, or simply don’t fit a new coach’s vision can have their funding dropped after the year is over.

In 2009, players on the University of Kentucky’s basketball team found this out the hard way. The school brought in John Calipari as head coach, and he quickly forced out six players who he felt did not fit his system.

“It hurt because I abided by the rules. I did everything I was supposed to. … Kept up a good GPA, went to class every day, didn’t fail any tests, ” Matt Pilgrim, one of the players asked to depart, told ESPN’s Outside the Lines. “I feel like just for following my part of the contract, they should follow theirs.”

As the Post-Gazette reports, some colleges are better than others at awarding longer-term aid packages. Fresno State offers exclusively four-year deals, and the University of Maryland recently announced it would also guarantee athletes the ability to finish their degrees.

Read More About Money’s Best Colleges:
The 25 Most Affordable Colleges
The 25 Colleges That Add the Most Value
The 25 Best Public Colleges

MONEY

How This Weekend’s College Football Rivals Stack Up as College Values

The college football season has kicked off. We looked at which of the schools in this weekend's games are the winners in Money's Best Colleges rankings.

  • Texas A&M v. University of South Carolina

    Left: Reveille cheers on the Texas A&M Aggies. Right: South Carolina Gamecocks mascot Sir Big Spur on his perch during the game.
    Brian Bahr/Getty Images (left)—Joe Robbins/Getty Images (right)

     

    When: Thursday Aug. 28, 6 p.m. EDT

    The Winner: Texas A&M, which came into the game ranked 21st in the AP poll, upset the 9th-ranked Gamecocks.

    MONEY’s pick for college value: Texas A&M.

    Texas A&M is one of the most affordable and highest quality public universities in the country. MONEY estimates that the total cost of a degree for freshmen starting this fall will average $86,000—$14,000 less than a degree from the University of South Carolina. Also, Aggies earn, on average, about $52,000 a year within five years of graduation, according to data from Payscale.com. Gamecocks report earning only about $41,300.

  • Penn State v. University of Central Florida

    When: Saturday, August 30, 8:30 a.m. EDT

    Oddsmakers’ pick to win: UCF is given a slight edge thanks to its returning veteran defensive line.

    MONEY’s pick for college value: Penn State

    True, Penn State is expensive—a degree costs Nittany Lions an average of $142,000, or $41,000 more than Knights pay for their degrees—but Penn Staters are much more likely to graduate and earn healthy salaries. Penn Staters report earning almost $51,000 within five years of graduation, almost $10,000 more than UCF grads.

     

  • Florida State University v. Oklahoma State University

    140828_FF_Rivalries_FSUOSU_2
    Getty Images

     

    When: Saturday, August 30, 8 p.m. EDT

    Oddsmakers’ pick to win: FSU, last year’s national champion, is also the top-ranked team this fall, and has top-notch players at nearly every position.

    MONEY’s pick for college value: It’s a tie.

    Schools within about 30 places in our value rankings are very similar, as shown by the slight differences between Oklahoma State, ranked 194, and FSU, 223. OSU’s graduation rate of 62% is significantly worse than FSUs 75%. But OSU students who do make it through tend to earn more: $44,400 a year within five years, versus FSU’s average of $41,600.

  • University of Miami v. University of Louisville

    When: Monday, Sept. 4, 8 p.m. EDT

    Oddsmakers’ pick to win: Louisville beat the Miami Hurricanes soundly in the 2013 Russell Athletic Bowl. But oddsmakers are giving them only a slight edge in the rematch.

    MONEY’s pick for college value: Louisville

    MONEY ranks Louisville No. 382 for value in the country–not great–in part because of its painfully low graduation rate of just 51% (compared with 81% for the University of Miami.) But as a public school, Louisville charges Kentuckians, on average, less than $100,000 for a degree, about half what students at the private Miami typically pay. Those high costs are one reason we ranked Miami 536 out of 665 on our list.

     

  • University of Notre Dame v. Rice University

    When: Saturday, August 30, 3:30 p.m. EDT

    Oddmakers’ pick to win: Notre Dame, even though some its best players have been sidelines by an academic investigation. The Fighting Irish are ranked 17 by the AP poll; Rice is unranked.

    MONEY’s pick for college value: It’s a tie.

    You really can’t lose with either of this schools. MONEY ranks both Notre Dame and Rice equally at 20th place for value. They both have stellar graduation rates of more than 90%. And students go on to earn salaries in the mid $50,000s within five years of graduation, according to Payscale.com. Notre Dame costs more (a degree costs about $185,000, versus $150,000 for Rice), but the higher cost was balanced out by unusually high earnings reported by Notre Dame’s non-science majors.

    See more of Money’s Best Colleges:
    The 25 Most Affordable Colleges
    The 25 Colleges That Add the Most Value
    The 25 Best Colleges That You Can Actually Get Into

MONEY College

How To Get Full Credit When You Swap Colleges

140820_FF_COLLEGETRANSFER
B.O'Kane—Alamy

Transfers typically lose an entire semester's worth of credit and tuition, a new federal study has found. Here are three ways to avoid missing out on that money and time.

The more than one million Americans who transfer from one college to another each year find that about 13 credits on average—or about a semester’s worth of courses—are refused by their new school, a new analysis by the Department of Education has revealed.

Depending on the college, that means you typically spend anywhere from about $1,300 to more than $13,000 in tuition for classes that don’t get your closer to a degree when you transfer.

The federal study, which examined a large sample of college transcripts dating back to 2003, found great variation in the amount of lost credit. About 40% of transfer students lost all of their credits when they transferred. On the other hand, almost a third got credit for all of their courses. Overall, about 35% of college freshmen ended up transferring, the study found.

“This is pretty disturbing confirmation of problems in our system of higher education,” says David Baime, spokesperson for the American Association of Community Colleges. Other studies show that such wastes of time and money cause many students to give up and drop out, Baime notes.

The good news, Baime and other experts say, is that the new research, along with new laws and new web tools, can help your improve the odds of transferring all of your hard-earned credits.

Choose the Right Starting and Target Schools

More than 80% of students transferring out of for-profit colleges lost all of their credits when they jumped to a public or private non-profit school, the federal study found. (Noah Black, spokesperson for the Association of Private Sector Colleges and Universities, says that many schools’ transfer rules have changed recently. he added: “The question should be posed to other institutions as to why they are not accepting of credits from accredited institutions,” such as the for-profit colleges that make up his group.)

But the typical student at a public community college who transferred to a public university paid for 38 credits at the two-year school, and got credit for about 30 at the university, a loss of 21%. The researchers found that private colleges generally gave transfer students from public colleges credit for about two-thirds of their courses.

David Bergeron, vice president for postsecondary education at the Center for American Progress, notes that students who take a community college curriculum that qualifies them for admission to a selective private college also tend to win credit for most of their courses. “So try to go for the most selective college you can,” Bergeron says, adding that a growing number of private colleges are recruiting and awarding aid to community college transfers students. “Families should be exploiting that,” he says.

Check New State Laws

A growing number of states, including Florida, Pennsylvania, and Connecticut, are requiring colleges to make credits more transferable among public colleges, Baime notes.

Take Advantage of New Web Tools

While budget cuts have forced some public colleges to cut back on counselors who might help you figure out which courses will transfer, there are a growing number of web tools that you can use to find the courses that will be approved for transfer. One site Baime recommends is CollegeFish.Org, which is sponsored by Phi Theta Kappa, the International Honor Society of Community Colleges. And many colleges, such as the University of Virginia, now have tools that allow you to look up the transferability of each community college course.

 

 

 

 

MONEY Ask the Expert

Why You Might Want More Than One College Savings Account

Robert A. Di Ieso

Q: I have college savings for my children in both education savings accounts (ESAs) and 529s. Is there a difference in the way those accounts are calculated for potential financial aid? Would there be any benefit to consolidating into one type of account? — Mike Spofford, Green Bay, Wisc.

A: The good news: There is no difference in how Coverdell ESAs and 529 savings plans factor into your child’s student aid, says Mark Kantrowitz, publisher of Edvisors.com, a website that helps people plan and pay for college.

Both of these education accounts are considered qualified tuition plans. So as long as they are owned by a student or a parent, the plans are reported as an asset on financial aid forms and have a minimal impact on your aid eligibility (federal aid will be reduced by no more than 5.64% of the value of the account). What’s more, your account distributions are not considered income, Kantrowitz adds.

Education savings accounts and 529s share other appealing features: Your savings grows tax-deferred and withdrawals are tax free as long as the money goes toward qualified education expenses. If you spend it on anything else, you will be hit by income taxes on the earnings as well as a 10% penalty.

One of the biggest differences is how much you can put in. ESA contributions max out at $2,000 per child per year, while 529s have no contribution limits. However, if you put more than $14,000 a year into your child’s 529—or $28,000 as a couple—the excess counts against your lifetime gift tax exclusion and must be reported to the IRS. You can get around that by using five-year tax averaging, which treats the gift as if it were made over the next five years.

Coverdell ESAs give you more investment options—from certificates of deposit to individual stocks and bonds to mutual funds and ETFs; you’re usually limited to a small number of mutual funds in a 529 plan. But you don’t need that much investing flexibility, Kantrowitz notes, since you want to keep risks and fees to a minimum over the short time you have to save for college.

Another key difference is that ESA funds can be spent on K-12 expenses; 529s must wait until college. ESAs also come with age restrictions. You can contribute only while the beneficiary is under 18, and to avoid penalties and taxes you must spend the funds by the beneficiary’s 30th birthday (with a 30-day grace period).

You can get around this age limit by changing the beneficiary to an under-18 close relative of the beneficiary. Or you can roll it over into a 529 plan with no tax penalty. (You cannot roll your 529 into a Coverdell ESA, however.) In fact, later-in-life education is one of the only reasons to consolidate plans. Otherwise, says Kantrowitz, there is no compelling reason to combine your two savings accounts into one.

MONEY College

How Families Are Keeping a Lid on College Costs

Even though the price of a degree is steep, a new report finds that Americans are coming up with ways to limit the damage.

Despite the rising sticker price for a college education, American families are keeping higher education spending in check, according to Sallie Mae’s annual study of how students and their parents pay for college. One key reason: families are working hard to keep costs down.

This past academic year, families devoted an average of $20,882 toward a college degree, about the same amount they’ve paid for the past three years, and well below the 2010 high of $24,097.

“Even though we read stories about tuition going up, families are really holding the line on how much they’re spending,” says Sallie Mae’s Sarah Ducich, co-author of How America Pays for College. “They’re just not willing to write a blank check, and they are taking determined steps to make college affordable for them.”

They also relied less on debt. Borrowed funds covered an average of 22% of college costs this year, down from 27% the previous two years and the lowest level in five years. One of the main reasons for that, says Ducich, is that more students, especially low-income ones, were awarded grants and scholarships.

Overall, families are employing a number of cost-cutting measures, with the average family taking five different steps to bring expenses down, the report found. Among the biggest ways to trim education budgets:
  • Enrolling in two-year schools: In 2014 34% of students were enrolled in two-year public colleges, vs. 30% last year. That let them spend $10,060 less than four-year public school students did on average, and $23,843 less on average than their peers at four-year private schools.
  • Shopping by price: Two thirds of families reported eliminating colleges because of high costs. “This cost curve is something we saw jump post-recession, and it’s stayed at this high since,” Ducich says. Another 12% transferred to a less expensive school, up from 9% who did so last year. (For help finding a good education at the right price, check out our new ranking of the best college values.)
  • Changing majors: One in five families admitted to swapping majors to pursue a field that is more marketable, a trend that’s been steadily rising since 2012.
  • Lowering “fun” spending: Two-thirds of students said they cut personal spending to help shoulder college costs, vs. 60% who said the same last year.
  • Staying local: A full 69% of students opted for in-state tuition to save, and more than half chose to live at home or with relatives to cut down on housing bills.

More on how to save on college:

 

MONEY College

Why Your College-Bound Kid Needs to Meet Your Financial Planner

Parents showing jars of money
Jamie Grill—Getty Images

Sheltering children from tough money choices now can lead to unhappiness later on.

When I schedule a meeting with parents to talk about college costs, I always ask if the student will be attending the consultation.

About 80% of the time, the parents say no. Their usual response: “He’s too busy,” or “We would rather not include her.”

That’s a big mistake.

What I do is help estimate the final costs that the parents will be facing, taking into consideration projected financial aid, merit awards and the family’s current resources. Those costs can vary widely, from $5,500 a year to attend a community college while living at home to over $70,000 per year to go to a private college such as New York University.

Students should be involved from the start, so they can understand the financial issues that their parents will be facing. Students need to see the great disparity in cost outcomes among the different colleges on their wish list.

When I meet with the whole family, we can narrow down the types of schools that would be affordable to the parents as well as meet the academic and social needs of the student.

That way, we can avoid a situation in which a high school student, ignorant of any financial implications, pursues whatever college he is interested in. Then, in April of his senior year, when all of the acceptances and awards arrive, his parents review the options and say, “We can’t afford any of these.”

At that point, the only choices are for the student to attend a school he’s not happy with (such as a local college commuter school), or for the parents to go into deep debt in order to finance an education they cannot afford.

So I try my best to convince the parents to invite their student. Perhaps the parents are trying to shield their finances from their children. Eventually, however, the kids will be part of the parent’s estate planning. The earlier the children know about the parent’s financial situation the better. If a family limits the college search to the types of colleges that meet all needs (financial, academic, and social), then the only outcome in senior year will be a happy one for both the parents and the student!

——————————-

Paula Bishop is a certified public accountant and an adviser on financial aid for college. She holds a BS in economics with a major in finance from the Wharton School and an MBA from the University of California at Berkeley. She is a member of the National College Advocacy Group, whose mission is to provide education and resources for college planning professionals, students and families. Her website is www.paulabishop.com.

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