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College Financial Aid Officers Grapple With Aid Allocation

-by Thomas Hauck

Many colleges and universities take great pride in having a “need-blind” admissions policy. With the goal of making higher education accessible to qualified students without regard to financial status, many colleges encourage low-income students to apply with the assurance that the college will be able to offer the student a combination of grants and loans that will make education affordable.

With the global economy in a downward spiral and college costs at historic highs, students and families may be not be able to make critical college decisions without keeping their financial situation at the forefront. According to a recent report by the National Association for College Admission Counseling (NACAC), while most colleges and universities still admit students regardless of their socio-economic status, less than one-third of all colleges are able to offer financial aid packages that meet the full financial need of all of the students they admit.

For many institutions, “gapping” has become the norm. That’s when a college admits a student, and informs the student that a certain amount of funds are required to enroll. The college offers a package that is less than the total, and he student must somehow make up the “gap.”

Differential Packaging

NACAC commissioned the report to examine the ways in which financial aid decisions are made during the admission process. William McClintick, NACAC President, noted that while the concept of need-blind admission was developed to ensure that qualified students were accepted regardless of financial need, colleges are now grappling with difficult aid allocation decisions, and admission practices have emerged that utilize differential financial aid targeting.

What’s “differential” financial aid? It’s when various students are offered smaller or larger aid packages (with more or less grant aid vs. loan obligations) based upon the student’s perceived desirability to the school. Colleges that practice differential packaging offered preferential aid packages most frequently based on academic merit (93%), particular talents (50%), and income level (39%). Differential packaging of financial aid awards is heavily utilized by private colleges, and much less so by public universities.

While differential packaging may be well-intentioned, it invites queries from stakeholders who are concerned about rising college costs, fairness in college pricing, access for low-income students, and the distribution of institutional aid.

The amount of financial aid offered to a student may depend upon standardized admissions test scores. While test scores are used by nearly four in five colleges, the NACAC Commission on the Use of Standardized Tests in Undergraduate Admission reiterated the requirement (included in NACAC’s Statement of Principles of Good Practice) that schools should not use admission test scores as the sole measure of financial aid eligibility.

There’s another trend growing: differential tuition. Some colleges are raising tuition for business courses and certain other subjects, such as science and engineering. The higher fees are justified by the belief that some grads will immediately make higher incomes (business) or that the programs cost more to deliver (science and engineering).

As the economy tightens, enrollment management and/or financial aid managers increasingly control financial aid and admission policy, shifting authority away from faculty, presidents, and boards of trustees. College families need to remember that financial aid, like college admissions, is becoming increasingly competitive, and that parents and students should compare what different colleges will offer and consider consulting a college planning specialist.

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