Washington Monthly - September/October 2014 - 68

tool through the IRS to pre-fill answers to many of the
questions. These changes have significantly reduced the
average time students and families take to complete
the application.
But the simplification of the FAFSA has been cause
for concern among selective colleges who are hesitant to
part with any institutional aid dollars. This has pushed
many institutions to require the PROFILE in order to determine institutional aid eligibility. Since FAFSA simplification has removed some questions regarding a family's assets and savings, institutions have adopted the
PROFILE to understand exactly how many assets a family owns-including in many instances their house and
the make and model of their car-before giving them
any aid.

#7
THE ORDER THAT YOU LIST COLLEGES
ON THE FAFSA MAY COME BACK
TO HAUNT YOU.
Even if a student is lucky and only has to fill out
the FAFSA to get financial aid, he should be wary about
the order in which he lists the colleges where he'd like
to send the application. According to a recent article in
Inside Higher Ed, "Some colleges are denying admissions
and perhaps reducing financial aid to students based on
a single, non-financial, non-academic question that students submit to the federal government on their [FAFSA]." It turns out that colleges see exactly the order the
student listed the schools on the FAFSA and have become
savvy at admitting, wait-listing, and packaging aid depending on the student's ordering.
Enrollment managers and management firms-the
people charged with figuring out just how many students
to admit to "yield" a class-have discovered that students often choose colleges on the FAFSA in preferential
order. Inside Higher Ed reported that Augustana College,
for example, found that 60 percent of the students who
list the school first on the FAFSA end up enrolling, compared with 30 percent of those who list it second, and
just 10 percent of those who list it third. Like Augustana, some schools look at a student's "FAFSA position"
to determine admissions decisions-completely unbeknownst to the student. A school does this to improve
its yield rate, to ensure that it is able to enroll exactly the
class it wants.
Some schools may also be taking the "FAFSA position" into account when awarding their own financial aid
dollars to students-providing less generous aid packages to students who list the college first on the FAFSA.
These colleges don't want to waste precious institutional
aid dollars on students who are already likely to attend
without the help.
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September/October 2014

The problem is that not all students necessarily list
schools in preferential order, or there may be very little
difference among a student's number one, number two,
and number three option. Worse yet, the whole process
is completely opaque to students. They have no idea that
their chances of being admitted and receiving a generous financial aid package may ride largely on the order in
which they list schools on the FAFSA.

#8
FINANCIAL AID AWARD LETTERS
MAY MAKE OPTIONS SEEM MORE
AFFORDABLE THAN THEY REALLY ARE.
Colleges don't always come clean about how much
students and families are going to have to pay to attend
an institution. The "financial aid award letters" that colleges send aid applicants they've accepted often make
their schools look more affordable than they really are.
One problem is that many colleges and universities package both grants and scholarships with loans and
work-study allowances. This blurs how much students
and parents are going to owe, often leading them to believe they are getting a great deal when in reality they are
taking on a large amount of debt. Some colleges and universities include Parent PLUS loans in the "aid" packages they offer students, in order to bring their purported
price down to zero. The Parent PLUS loan, which parents
borrow on behalf of their children, come with a higher interest rate and less repayment flexibility than other federal student loans. Additionally, parents have to undergo a credit check to get a Parent PLUS loan. This means
that a student and his or her parents may accept the financial aid package, put down a nonrefundable deposit to
the institution, and then suddenly find themselves facing
steep gaps in financial aid if the parent gets rejected for
the loan.
Adding to the confusion over financial aid packages
is that each institution has developed its own award letter, making it difficult for students to make an apples-toapples price comparison among the institutions to which
they've been accepted. This could lead them to make a
suboptimal choice in terms of which school will provide
the best aid package while also still being a good fit academically and socially.

#9
SOME AID PACKAGES
ARE DESIGNED TO DISSUADE YOU
FROM ENROLLING.
Many colleges offer extremely generous aid packages
to the students they most desire, and leave large funding
Washington Monthly - September/October 2014

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