Does Applying for Financial Aid Affect Your Chances of Admission?

Does Applying for Financial Aid Affect Your Chances of Admission?

Does applying for financial aid ever limit one’s chances of

acceptance to a college? Do colleges give any subtle preference to

students who state on their application that they do not need

financial aid? For example, would it be advantageous for a student

whose parents earn $150,000 and have adequate savings to tell a

college costing $30,000 that they do not intend to seek financial aid?

— Mary M.

Most colleges practice need-blind admissions, where they do not

consider a student’s financial need when deciding whether to

grant admission. But very few colleges are completely need-blind, as

financial need often affects the admission of wait-listed,

international and transfer students. Accordingly, full-pay qualified

applicants are somewhat more likely to be admitted at some colleges,

affecting up to 5% of the admitted students. Note that even if a

college practices need-blind admissions, that doesn’t mean that

they’ll provide enough aid to cover the student’s full demonstrated

financial need. Students should never forgo applying for aid just to

get in, if they need financial aid to help pay for college.

A 2008 study by the National Association for College Admission

Counseling (NACAC) reported that 81% of private colleges and 93% of

public colleges practiced need-blind admissions. An additional 6% of

private colleges practiced need-blind admissions for the regular

admissions pool, but then became need-sensitive when admitting

students from the waiting list. The NACAC study reported that only 10%

of private colleges and 2% of public colleges were need-aware

throughout the entire admissions cycle. (Some colleges refer to

need-sensitive admissions policies as “need-aware”. The two terms are

synonymous.)

Other studies have reported lower percentages of need-blind

colleges. For example, one study reported that half of the nation’s

top colleges have need-blind admissions policies. The difference is

due to the distinction between a need-blind admissions policy and a

need-blind admissions practice. Many colleges practice need-blind

admissions even if they do not have a formal need-blind admissions

policy.

But just because a college practices need-blind admissions doesn’t

mean that all students are admitted without regard to financial

need. Even need-blind colleges have a tendency to switch to

need-sensitive admissions when admitting international students,

transfer students and students on the waiting list. This typically

affects up to about 5% of admitted students.

(Section 568

of the Improving America’s Schools Act of 1994 provides a temporary

antitrust exemption to colleges that coordinate their institutional

need-based aid policies provided that all students at the colleges are

admitted on a need-blind basis. The exemption has been extended three

times and currently runs through September 30, 2015. The requirement

that colleges must be completely need-blind is one of the reasons why

only two dozen colleges participate in the

568 Group. Most of the 568 Group

colleges have adopted more generous

no loans financial aid policies.)

Need-blind admissions doesn’t guarantee that the college will provide

enough financial aid to meet full demonstrated financial need. The

2008 NACAC study, for example, reported that only 18% of private colleges

and 32% of public colleges meet the full demonstrated financial need

of all students. Many colleges practice gapping, where they leave

students with unmet need. (Often the colleges will use the unsubsidized

Stafford and Parent PLUS loans to fill the gap.) This can lead to an

admit-deny situation, where a student is admitted but can’t afford to

attend the college.

Need-blind admissions also doesn’t mean that the admissions is

wealth-blind. A college might ignore financial need for low-income

students, but then grant an admissions preference for high-income

students. Most colleges define need-blind as meaning that financial

need has no role in the decision to deny admission to low-income

students. As such, financial need is not treated as a negative

characteristic for low-income students. But colleges can treat a lack

of financial need as a positive characteristic for high-income

students and still consider themselves to be need-blind. For example,

some need-blind colleges will admit full-pay but borderline candidates

or grant wealthier students more attactive financial aid packages.

This combination of admissions and financial aid policies drives

low-income students away from the more selective colleges and the more

advanced degree programs. As a result, wealthier students are overrepresented

at these colleges. According to data from the National Postsecondary

Student Aid Study (NPSAS), 34.9% of the students at very selective

4-year colleges have family adjusted gross income (AGI) under $50,000,

compared with 45.8% of students at moderately selective 4-year

colleges, 54.1% of students at minimally selective 4-year colleges and

63.8% of students at open admission 4-year colleges. In contrast,

34.5% of students at very selective 4-year colleges have family AGI of

$100,000 or more, compared with 22.6% of students at moderately

selective colleges, 16.0% of students at minimally selective colleges

and 10.5% of students at open admission colleges. In effect

greater selectivity is manifested as a preference for wealthier students.

Similarly, data from the 2007-08 NPSAS demonstrates that 27.2% of

students pursuing Bachelor’s degrees had family adjusted gross income

under $25,000 in 2007-08, compared with 40.6% of students pursuing

Associate’s degrees and 51.5% of students pursuing Certificates. A

quarter (24.9%) of students at non-profit colleges had a family AGI

under $25,000, compared with a third (33.4%) of students at public

colleges and three-fifths (58.0%) of students at for-profit

colleges. For-profit colleges tend to have open admissions policies. A

fifth (19.7%) of students at very selective 4-year colleges received

the Pell Grant in 2007-08, compared with 25.2% of students at

moderately selective 4-year colleges, 30.2% of students at minimally

selective 4-year colleges and 34.2% of students at open admission

4-year colleges.

Some need-blind colleges use financial aid and other discounts to

attract wealthier students. The 2008 NACAC study reported that 63% of

private colleges and 15% of public colleges use preferential

packaging, where more desirable applicants will get a more attractive

mix of grants, work-study and loans. Preferential packaging is mostly

based on academic merit or a particular talent or skill of interest to

the college, but about two-fifths of it is based on income. This

leveraging of the financial aid package helps the colleges financially

because they get more net tuition revenue from a wealthier family than

a low-income family even after accounting for the extra grant aid to

the wealthier student.

Institutional aid — money from the colleges own funds —

has increasingly been shifting away from need-based aid because of

preferential packaging. For example, data from the National

Postsecondary Student Aid Study (NPSAS) demonstrates that 45% of

institutional aid dollars were need-based and 55% were non-need or

merit-based in 2007-08, compared with 65% need-based and 35% non-need

or merit-based in 1993-94. Moreover, while 85% of non-need or

merit-based aid was awarded to low-income families earning less than

$50,000 in 1993-94, this dropped to 32% in 2007-08. In 2007-08,

need-based aid represents 55% of financial aid to low-income families,

44% of financial aid to middle-income families and 30% of financial

aid to high-income families. Wealthy families still get some financial

aid, but most of it is not based on financial need.

The most selective colleges appear to be the only colleges opposing

this shift away from need-based aid. According to data from the NPSAS,

56% of institutional financial aid dollars were need-based at very

selective 4-year colleges in 2007-08, compared with 37% of

institutional financial aid dollars at less-selective 4-year colleges.

Even so, 44% of institutional financial aid dollars at very selective

4-year colleges were non-need or merit-based, and enrollment at these

colleges is still tilted in favor of wealthier students.

Colleges are increasingly under financial pressure, so need-blind

admissions policies may change. For example, Tufts University

suspended its need-blind admissions policy recently, and Williams

College ended need-blind admissions for international students. On the

other hand, Hamilton College just switched from need-sensitive to

need-blind admissions.

While some colleges have admissions preferences for wealthier

students, few if any public and non-profit colleges have admissions

preferences for low-income students. The selectivity of the more elite

colleges puts talented but poor students at a disadvantage in the

admissions process. Low-income students do not have the luxury of

participating in extracurricular activities or athletics, nor can they

afford SAT-prep classes, because they have to work at one or more

part-time jobs to help their parents put food on the table. Frankly, a

low-income student who succeeds academically despite adversity is much

more impressive than a wealthier student who had every opportunity

handed to him or her. It’s a mystery why the most selective colleges

don’t do more to admit and enroll talented low-income students.

The bottom line is that there might be a slight admissions advantage

for wealthier students who do not have financial need, especially for

wait-listed students. Ask the colleges you are considering whether

they practice need-blind admissions, and whether that need-blind

admissions policy or practice includes students who are wait-listed.

Nevertheless, you should still apply for financial aid if you need

it. It does a student no good to be admitted if he or she can’t afford

to enroll. Some families figure they’ll dig deep to cover the costs

the first year, hoping that the college will pick up the tab after

that, but this may not be realistic. Some colleges front-load the

grants, meaning that they award more grants during the first year and

less grants in subsequent years. Other colleges restrict institutional

grants to just students who applied for aid the first year, leaving

you with mostly loans to cover your costs.

Even if you don’t apply for financial aid, the colleges can infer

something about your family’s finances by looking at your zip code or

the parent’s occupation.

Source: Fastweb

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