The College Search: Need-Based Aid (Institutional)

Hear tips on picking a college from Liz Eshleman, director of College Planning and Placement at Devon Preparatory School.

May 12, 2010 7:31:55 AM PDT
Need-based aid is money a college (or the U.S. Government) awards to students, based on their ability and that of their family to shoulder the cost of tuition, room and board, and books.

It can come in the form of grants, or low-interest loans that in some cases do not have to be paid back until after a student leaves college. In this blog, I'll concentrate on the institutional aid; that is, the grant money a college coughs-up from its own coffers to students who are having a hard time figuring out how to afford the cost.


Institutional Grants are awarded at the discretion of individual colleges, and are made known to you in the acceptance package you receive when you're offered admission. Aid of this sort can be offered in conjunction with federal aid or loans, or it can be a stand-alone offer of assistance. In either case, it's the college footing the bill, and different universities use very different formulas for determining who gets this financial help. In fact, the nice thing about institutional need-based aid is that you don't necessarily have to meet the same dire financial constraints as with federal aid to qualify. It depends on the school, the student, and how much of this sort of "free money" a given university has decided to make available. Some schools are more motivated than others, in this regard.

In general, though, institutional need-based aid has become increasingly popular in recent years, as more and more schools move to diversify their student bodies with a wider socio-economic mix. At one Ivy League open house we attended, for example, an admissions officer flatly guaranteed that every admitted student who couldn't afford the cost was going to get at least some help from the school, and that a fairly large percentage of applicants would be included. On another Ivy's website, we found a boast that well over half the student body was receiving some level of this sort of help, even families who were making over $200,000 a year! While most university wells will not run so deep, the point here is that need-based aid is a real possibility for many prospective students, even at some of the more exclusive campuses around the country. Personally, I wouldn't discount an elite school based solely on the assumption that it's not affordable. You might be surprised.

A possible pitfall

Beware! Need-based aid differs from Merit Aid in one very important way. While Merit Aid is usually guaranteed for an entire four or five-year college career (assuming GPA requirements are met), need-based aid is fluid and is reviewed and redistributed each year. This means the dollar amount can change, depending on the changing fortunes of a student's family. For example, you may receive what appears to be a very generous aid package for year one, only to see it slashed or eliminated in year two, because dad got a promotion, or sis graduated college; any easing of a family's financial burden can trigger a drop in aid. Of course, it's also possible to see an increase in aid if something bad happens (ex.: a student's parent loses his or her job). It's vital, when considering any need-based aid package, to consider what factors led to the offer, and whether your family's situation is liable to change in a way that could affect your aid package.

In most cases, every student who is offered admission is considered for need-based aid, assuming they have completed their FAFSA in a timely fashion. As always, it's important to check the financial aid section of a given college's website to confirm how the aid process works, and whether there are any extra steps required to ensure that you're considered. Deadlines for having your FAFSA completed are often listed online (February 15 is a popular date for that).

How you qualify

What factors come into play? To determine aid eligibility, financial aid officers will consider salary and savings of both student and parents, the amount of money in any 529 college savings accounts, assets (which may or may not include the parent's home), as well as non-monetary items like other siblings in college, and the proximity of the parents to retirement age. Some college websites include an online calculator to help you determine ahead of time how much aid you can expect.

The most important point here is that need-based aid is becoming more and more popular, and again, you shouldn't rule out trying for a more expensive university solely because you think you can't afford it. You should, however, go into the process with an understanding that if a given school's opinion of your ability to pay differs greatly from your actual comfort level, you're heading to another school. Try not to allow emotions to enter into the equation. Be smart. But I would encourage less affluent students and families to give a couple dream schools a shot, since you may be surprised by how motivated some of these places are to include strong, financially-challenged candidates.

Some colleges may even waive your application fee if you can demonstrate financial need, a possible indication that they understand your situation and are willing to help. It's definitely worth investigating, since the fewer fees you have to pay, the more applications you can afford to submit.

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