How Pledges Can Fail

There are a number of ways that an apparently sound and affordable financial aid package might fall short in practice:

Lower income students don't get admitted. The most generous financial aid pledges tend to be at campuses that are very difficult to get into. While some campuses make special efforts to seek out and enroll students from lower income families, the number of such students that the campuses consider "qualified" is often very low. By requiring high SAT scores and other criteria that tend to be associated with wealth, campuses can automatically exclude from admission most young adults from lower income backgrounds.

EFC may be unrealistic. Most campuses require the student’s family to first come up with the amount that the federal or institutional formula indicates the family is “able to pay.” That expected family contribution, or EFC, is based on parent and student income, assets, and other factors. For lower income students, it is unlikely the EFC amount is sitting in a savings account waiting to be spent on college. Therefore, some families need to borrow just to cover the EFC. If the parents are unwilling or unable to borrow, then the student may have to take out loans themselves.

Some colleges make assumptions based on both parents’ income even if the student lives with only one parent. If the non-custodial parent is unwilling to provide the support that the college thinks he or she should provide, the student may need to fill that gap with loans.

Another issue is that some low-income students should have a negative EFC, because they essentially serve as a breadwinner for their family. But the minimum EFC is artificially set at zero, so financial aid does not account for the student’s need to send money home. (Some colleges do attempt to account for this.)

When students run into any of these situations, it is worth a visit to the financial aid office to see if an adjustment to the aid award can be made.

Student budget may be inadequate. The financial aid package is based on the college’s estimate of the overall costs of attendance. If their estimated cost of books, commuting, food, or rent are lower than students actually face, then the financial aid package will fall short and additional borrowing or work may be unavoidable. Colleges are required by the federal government to produce realistic student budgets, so students should report situations where the budgets are clearly inadequate, and seek adjustments to their aid.

Students may spend more than they should. There is no evidence that students today are any more likely to waste money than any previous generation. But at every college there are students who learn the hard way that they need to budget more carefully. While colleges cannot control student spending, they can provide supports such as basic money management and financial literacy training to help students make informed choices.