Watch Out -- Financial Aid High Jinks
Good morning!
I'm in the midst of three college drop-offs over a grueling,10 day stretch, but wanted to tell you about two financial aid-related stories that caught my bleary eyes over the past couple of days.
The first was about alleged price fixing among elite colleges.
The second related to incredible, nauseating amounts of cash spent by public universities on the most STUPID stuff.
Sadly, neither of these stories is breaking news. This stuff has been going on longer than the 21+ years I've been a college advisor.
The first story was about U Chicago paying $13.5M to settle allegations of financial aid price-fixing. I'm embarrassed to say that I don't quite get the plaintiff's point. According to the summary I read, it looked like the allegation was that U Chicago colluded with 16 colleges, including Brown, Columbia, MIT and Duke.
But the collusion was not about U Chicago sharing their applicants' files and coming up with identical awards, they way the Ivies used to do back in the old days.
The allegation was that U Chicago and the other 16 colleges used a shared methodology to calculate financial aid awards. I don't understand why this is an issue, on few fronts:
- Approximately 2,000 colleges adhere to the Federal methodology, behind the FAFSA (Free Application for Federal Student Aid). They're sharing a methodology too. Are they also price-fixing somehow?
- Even if, arguendo (one of my favorite lawyerly words) U Chicago and the other colleges use the same methodology, that does not mean that they each offer identical financial aid awards. Over the years, I've seen individual clients get into Yale, Brown and some of the other 14 colleges in question, but with dramatically different financial aid packages from those respective colleges.
- In the past, I've played off one college's offer against another, in effect saying, "Brown gave us X, can you meet or exceed that offer?" To me, that's fostering competition, not dampening it, as the suit alleges. But nobody called me to be an expert witness either. What do I know?
The second story, about U Kentucky and a few other big state colleges blowing tens of millions on video gaming rooms, Tempur-Pedic mattresses and granite countertops for their dorms ,and a long list of other ridiculous amenities, falls into the "same old, same old" category for me. I've been complaining about this crap, and yelling that it's all got to end for more than a decade.
Then I sit through another year when it doesn't.
As long as families can borrow the whole thing from the Department of Ed for college -- without any underwriting -- then default or think their loans will be forgiven, colleges have no financial reason to reign in their costs.
Some argue that they have a moral obligation to do so, but I'm an amateur at ethics (Damnit Jim, I'm a college advisor, not a philosopher) but I don't see this trend changing without some major, apocalyptical economic event occurring. Which could happen too, I suppose. (Another area of amateurism for me.)
But there's potential good news. As I mentioned in passing, many colleges will negotiate their offers. It's a dirty little secret that very few families pay Sticker Price.
Colleges raise their tuition every year, but they also increase their tuition discounts year over year. You just need to know how to and where to find them.
We're gearing up for another year of financial aid consulting (which includes preparation of all financial aid applications). To learn more and, if interested, schedule a time to chat to see if you'd be a good fit for our program, here's where to go:
- Andy Lockwood
P.S. This is a big year for financial aid. The Department of Education is rolling out a huge overhaul of the FAFSA, and a lot of the rules and regs behind it. It's a tall order even for us to keep up with.
But even harder for the poor folks in the financial aid offices who are going to be stuck trying to make heads or tails of things.
I predict a messy, messy year, including major FAFSA website down times and outages, mistaken data going into financial aid calculations and more fun stuff.
If you want help, here's where we lay it all out for you:
