The Surprising Way an Acceptance to a Top College Can Shatter Your Student’s Dreams

Here’s an all-too-common scenario for parents of college-bound students this time of year, both here in Broward County, Florida and across the country.

Q: I'm a senior and accepted to Columbia University. I just received my financial aid award but we were offered only a high fee, high rate loan that we can’t afford. Why?

A: Each spring, we receive distress calls from parents, heartbroken by their child’s acceptance into her dream school! The student has performed admirably: achieved high grades in challenging classes; extra-curricular activities; mastered the SAT and submitted college applications well before deadlines.

The good news is acceptance into a top choice college. But elation turns to depression when the financial aid award arrives – five weeks before the school requires a commitment and a scant five months before college starts. In this case, the entire award was a Parent Loan for Undergraduate Students (PLUS) loan.

The family in this example did not understand the Department of Education’s eligibility rules for financial aid. More importantly, they failed to position their finances to maximize their eligibility.

I could tell from the award letter that this family’s Expected Family Contribution (EFC) was too high. The EFC is generated when you fill out your financial aid forms (the FAFSA and the CSS Profile, typically.) This unfortunate “award" is typical for families whose EFC's are higher than the cost of attendance for a highly-selective school. The most frustrating thing was that this situation could have been easily avoided.

How? By planning ahead so that you’re not blind-sided like the family in this example. Calculate your EFC by sophomore or junior year at the latest. This way you can implement a financial plan to pay for every college on your student's list before the applications are even submitted. Although your initial EFC will often be an impossibly high number, do not despair – your EFC is controllable. The lower your EFC, the more aid you’ll receive. Schools like Columbia will fall within your reach.

The other half of the equation is understanding that some schools, particularly private, selective schools, have more money to offer than others. They award differently – some give more grants than loans. Finally, you should be aware that almost all schools reward grants and scholarships on “need,” not based on academic achievement (merit). This is critical information you must have before submitting your applications.

Understand that college financial planning is equally critical as admissions counseling and SAT preparation. After all, what good is it to bust your behind to get into the best college you can, only to learn that you go because you can’t afford it?

Andrew Lockwood, J.D. is co-owner of College Planning Specialists in Weston. His firm offers free workshops on topics such as “5 Myths About Qualifying for Financial Aid” and “The Dirty Little Secret (More Dirty Than Eliot Spitzer’s!) About Florida Pre-Paid Plans and Bright Futures” He hosts the “College Planning Power Hour” radio show Sundays, 10:00-11:00 AM on WFTL Sports, ESPN Radio, 1400 AM (online at http://www.collegeplanningradio.com/). More information is available at http://www.collegeplanningadvice.com/.