Financial Aid Applications Rise by 10 Percent
Like a Midwestern tornado, the economic downturn appears to be touching down and wreaking financial aid havoc for some colleges while leaving others unscathed. Financial aid officers at Boston College, the University of Central Florida, and Washington University in St. Louis all report no dramatic increase in requests for scholarships. But foot traffic and calls to the aid office have spiked 50 percent this January at Prairie View A&M University in Texas. And "the line is out the door" at Quinsigamond Community College in Worcester, Mass., says Iris Godes, assistant vice president of enrollment management. Enrollment is up by about 6 percent, but financial aid applications are up 23 percent so far in 2009. Godes, who has been working in college financial aid offices for 21 years, says people who have lost jobs and savings in the economic downturn are now scrambling for new money to pay for college. "I have never experienced in my life this anxiety level of parents," she says.
Nationally, 1.4 million more students filled out the Free Application for Federal Student Aid (the most important aid application) in calendar year 2008 than in 2007, a 10.4 percent increase, the Department of Education reports. Likewise, the College Board says its scholarship database experienced a 30 percent jump in visitors in December 2008 compared with 2007.
The biggest federal aid programs guarantee Pell grants and Stafford student loans to all students who qualify, no matter how many people apply. And some colleges have announced that they are pouring more money into scholarships next year. Boston College, for example, has announced it will cut its overall spending by 2.5 percent to free up $3 million extra in financial aid. And the University of Toledo announced it will offer free tuition to low-income B students from many major Ohio cities.
But those increases don't appear to be making up for the many smaller aid programs—including Federal Supplemental Education Opportunity Grants and Perkins loans, as well as school-based scholarships and charitable grants—that expect to have limited or reduced funding this year. As a result, many aid officials say demand is starting to outstrip supply for some kinds of scholarships, forcing some schools and charities to make cuts.
Arkansas State University-Jonesboro, for example, has been so swamped that it has already cut off applications for merit scholarships for next fall, says financial aid director Terry Finney. The state of Rhode Island is reducing the amount of grants it will hand out to needy students. And many charities have said the declines in their investments are forcing reductions in the size and number of scholarships they'll award this year.
"Demand has never been greater and money never been lower," worries Godes.
Reader Comments
Use financial aid more effectively with good career planning help
There are a lot of ways to play the financial aid game to one's advantage - and I'll leave that advice up to the financial experts. But as a career professional, I will offer this smart strategy: It makes sense that students who have realistic and appropriate career and educational goals are most likely to stay in school and graduate on time (thus, saving college expenses and launching them in their careers more successfully).
So -- one of the best ways to increase a family’s chances of making a wise investment of their college savings/loans ($60K - $200K over 4 yrs.) is to have a student (age 16+) participate in a personalized, comprehensive career assessment that includes interests, values, personality and most importantly, objectively measured aptitudes. Research says that aptitudes, or natural talents, are the best predictors of performance on tasks (which make up jobs). A credentialed consultant can synthesize the results and discuss them with the student and his/her parents, and give 6-10 career recommendations that are a best fit for the student. (Fit=Do well and enjoy.)
Just like a vacation, where once you know where you’re going, you know how to pack – when a student can identify a career direction that is an ideal fit for them, they will know better how to put a plan into place: how to select a college, which majors prepare them best for the chosen career, how to sniff out great internship or research opportunities.
This process and the assessments used did not exist when parents were 18, and career decisions were not as complex as they are with today’s overwhelming array of choices. But excellent career assessments and planning services do exist now, and is a smart way to prepare a student for college success and use family savings, grants, and loans most effectively.
Differing impacts of economy on institutions
I suspect that the differing impact of the economy on our students is attributable to how adequately our students were being aided in the first place. If an institution does not have the resources to suppelement federal and grant aid with institutional money, then their students are living on the edge to begin with and their families are no doubt tapped out.
At UNC-Chapel Hill, our costs are low ($16,300 all inclusive for one year, for an in-state student). Further, we meet the full documented need of all needy students, with a package composed of 65% in grant/scholarship aid and the remainder in work-study and loans. This is true for both in-state and out-of-state students (whose annual costs, all inclusive, are about double that of an in-state student). So we have few mid-year requests for supplemental aid this year.
Conversely, a number of my colleagues at higher priced, but less well-resourced, institutions tell me that they are struggling with numerous mid-year requests for additional aid. The reason: they were unable to meet the students' full need in the first place, and now those students and families are "really on the edge." I think these differences among intitutions help to explain why ". . .the economic downturn appears to be touching down and wreaking financial aid havoc for some colleges while leaving others unscathed," as Ms. Clark puts it.
It is hard to tell what will happen next year, as I expect it will be more difficult everywhere given current economic trends. Our aid applications at Chapel Hill were up 13% this year, and we think the increase (in expectations, if not real need) will certainly outstrip that number going forward.
Seeking FA beyond highly selective colleges
An interesting point to consider regarding the "tornado effect" of increased applications hitting some colleges and not others is the reality of how net cost is driving this year's college search for many families. Interest in public colleges and universities here in Masaachusetts is up substantially this year. We've realized this at MEFA as we are just finishing college financing presentations at over 300 high schools, attended by about 40,000 parents and students statewide. Lower-cost is a major issue drawing more families to explore public instituions. The other harder to detect issue is that families are becomming more aware of the fact that institutional merit aid is often awarded based on a relative comparison among applicants. They realize the 'safety school' is much more likely to award a merit scholarship than the 'good fit' or 'reach schools' on the student's application list. In my opinion, many of these safety schools are going to experience a jump in the yield rate of applicants who have been offered merit aid this year.
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