the financial aid process described

Step 1: Applying for Admission

You should always apply for admission to 3 to 5 colleges. When a student applies to this many colleges, it increases the chance of a successful appeal and increased financial aid for a college student. Students must apply and be accepted at a college in order to receive a financial aid award.

Planning tip: Many colleges award scholarships to students who submit their admission application forms at an early date (e.g., September or October). Therefore, to get these “early bird” scholarships, the student should apply early.

Types of Early Admission Policies:

Early Action: The student can apply to a college by an early deadline (set by a particular college) to guarantee admission without obligating the student to attend that college. The student then usually files for financial aid at the college under the same deadlines as a regular student applicant.

Early Decision: The student can apply to a college by an early deadline to guarantee admission, but is obligated to attend that college under a binding contract. Early decision applicants file for financial aid early and are offered a financial aid award at an early date. Once the student is committed to the college, the student may lose some of the financial aid appeal options. Some colleges make “early decision” binding only if the financial aid offer is mutually agreeable.

Early Notification: The college notifies the student of the admission status as the admission office makes its admission decision. The student applies for financial aid in the same manner as would a regular financial aid applicant. By accepting the college’s offer of admission, the student may be limiting the appeal options. The student may not have received financial aid award letters from the other colleges that the student is interested in attending and may also be limiting the ability to appeal the financial aid awards.

Early Read: The college computes the student’s EFC early and estimates the student’s financial aid award. Since this computation usually takes place early in the fall of the year, the student must submit estimated financial information to the college.

The student should avoid allowing the college to perform an early read on the financial information. Since the student’s financial advisor could perform the EFC computation, it is of no benefit to the student to allow the college to have a preview of the financial information. If the student and the parents implement some financial strategies to lower the EFC, the college may question these strategies if they have already seen the family’s financial information.

Observation: If a student has been put on a college's admission "waitlist," the student’s chances of receiving a good financial aid award offer are reduced. Usually, colleges offer better financial aid awards to the students who were the colleges "first choice" and were admitted without being placed on the admission "waitlist." They give the "first choice" students a better offer to entice them to enroll at their college. Needless to say, this can be a very dangerous game of "financial aid roulette." Therefore, it is imperative that the student has a few backup colleges in which the student is interested in attending. It may cost a few more dollars in application fees to these colleges, but it can be very costly not to have a backup plan in case the applicant is not admitted or the financial aid award offer is insufficient.

At some private colleges, a student who applies for financial aid has a lesser chance of being admitted. These colleges admit a student who does not apply for financial aid before they admit a student who applies for financial aid. Many applicants would love to know which colleges use this type of admission policy. Unfortunately, most colleges guard their admission policies as closely as they guard their financial aid policies.

Step 2: Applying for Financial Aid

You should always file the appropriate financial aid applications. The two basic types of financial applications are the FAFSA and the PROFILE forms.

Free Application for Federal Student Aid (FAFSA)

The Free Application for Federal Student Aid (FAFSA) form is used to calculate the Federal Methodology EFC and is used by all accredited colleges. The filing deadline for this form is June 30, 2015, for the 2014-2015 college year for federal financial aid funds. Colleges may establish their own deadline for filing this form for their financial aid funds. The student may miss out on all financial aid (except the Pell grant and Stafford loan) if the student misses the college’s deadline! The FAFSA cannot be filed before January 1, 2013. The student and at least one parent must sign the FAFSA.

Planning tip: The FAFSA filing deadline (June 30, 2015, for the 2014-2015 college year) comes after the student has completed the college year. Therefore, if the student files the FAFSA after the completion of a college year, the student is eligible to receive federal financial aid (and possibly state and college aid) retroactive to the start of the prior completed college year. The federal funds may be limited to only the Pell grant and the Stafford loan. These types of federal funds are "entitlements." The student will receive the full amount of these types of funds which the student is entitled to receive.

Observation: The FAFSA may be processed faster if form is filed online with a student and parent PIN. The FAFSA is filed online at www.fafsa.ed.gov.

Planning Tip: The online FAFSA form allows the student to list up to ten colleges where the FAFSA information is to be sent. When the colleges receive this information, they see what other colleges the student has applied to for financial aid. Therefore, the student should include colleges on the list that will create competition among the colleges for the student. Listing colleges that will create competition for the student should be done regardless of whether or not the student is considering attending those colleges.

FAFSA Filing Methods

There are three ways to file a FAFSA: (1) by manually completing the paper form and mailing it to the FAFSA processor, (2) by downloading a PDF FAFSA, completing it an mailing it to the FAFSA processor, and (3) by filing on the Internet by contacting: http://www.fafsa.ed.gov.

Student Eligibility

To receive aid from the federal student aid programs, the student must meet the following 10 standards:

1) Show Financial Need
The student must have financial need, except for some loan programs.

2) Have a High School Diploma
The student must have a high school diploma or a General Education Development (GED) Certificate, pass a test approved by the U.S. Department of Education, or meet other standards the state establishes that are approved by the U.S. Department of Education.

3) Be Enrolled in College
The student must be enrolled or accepted for enrollment as a regular student (one who is enrolled in an institution to obtain a degree or certificate) working toward a degree or certificate in an eligible program (a course of study that leads to a degree or certificate and meets the U.S. Department of Education’s requirements for an eligible program).

To get federal financial aid, the student must be enrolled in an eligible institution, with two exceptions: (1) If a school indicated that the student must take certain coursework to qualify for admission into one of its eligible programs, the student can get a Direct Loan or a Federal Family Education Loan (FFEL) (or the student’s parents can get a PLUS Loan) for up to 12 consecutive months while the student is completing that coursework. The student must be enrolled at least half-time and must meet the usual student aid eligibility requirements. (2) If the student is enrolled at least half-time in a program to obtain a professional credential or certification required by a state for employment as an elementary or secondary school teacher, the student can get a Federal Perkins Loan, Federal Work-study, a Direct or FFEL Stafford Loan, (or the parents can get a PLUS Loan) while the student is enrolled in that program. Students may not receive aid for correspondence or telecommunication courses unless they are part of an associate, bachelor’s, or graduate degree program.

4) Be a U.S. Citizen or Eligible Non-citizen
The student must be a U.S. citizen or eligible noncitizen to receive federal student aid. Citizen/Eligible Non-citizen is defined as:

U.S. citizen
● Includes a citizen of the 50 states,
● the District of Columbia,
● Puerto Rico,
● The Virgin Islands,
● Guam, and
● The Northern Mariana Islands.

U.S. national
● Non-citizen nationals (i.e., natives of American Samoa or Swain’s Island);
● Certain residents of the Pacific Islands,
● Permanent residents of the Trust Territory of the Pacific Islands (Palau).

U.S. permanent resident
● has an I-151, I-551, or I-551c (Alien Registration Receipt Card)

If the student is not in one of these categories, the student must have an Arrival-Departure Record (I-94) from the U.S. Immigration and Naturalization Service (INS) showing one of the following designations in order to be eligible:

● “Refugee”
● “Asylum Granted”
● “Indefinite Parole” and/or “Humanitarian Parole”
● “Cuban-Haitian Entrant, Status Pending”
● “Conditional Entrant (valid only if issued before April 1, 1980)
● “Family Unity Program deportation relief granted”
● “Illegal aliens and certain agricultural workers with temporary resident status under the
● Immigration Reform and Control Act of 1986

If the student has only a Notice of Approval to Apply for Permanent Residence (I-171 or I-646), the student is not eligible for federal student aid.

If the student is in the United States on an F1 or F2 student visa only, or on a J1 or J2 exchange visitor visa only, the student cannot get federal student aid. Also, persons with G series visas (pertaining to international organizations) are not eligible for federal student aid.

Note: Citizens and eligible noncitizens may also receive loans from the FFEL and Direct Loan programs at participating foreign schools. Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands, and Palau are eligible only for Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOGs), or Federal Work-Study.

5) Have a Valid Social Security Number
The student must have a valid Social Security Number.

6) Make Satisfactory Academic Progress
To be eligible to receive federal student aid, the student must maintain satisfactory academic progress toward a degree or certificate. The student must meet the school’s written standard of satisfactory progress. If the student is enrolled in a program that is longer than two years, the following definition of satisfactory progress also applies: The student must have a C average by the end of the second academic year of study or have an academic standing consistent with the school’s graduation requirements. The student must continue to maintain satisfactory academic progress for the rest of the course of study.

7) Certify the Aid Will Be Used for Educational Purposes
The student must sign a statement on the Free Application for Federal Student Aid (FAFSA) certifying that the student will use federal student aid only for educational purposes.

8) Not Be in Default of a Federal Loan
The student must sign a statement on the FAFSA certifying that the student is not in default on a Federal loan and that the student does not owe money back on a Federal student grant. Default is failure to repay a loan according to the terms agreed to when the student signed a promissory note. Default also may result from failure to submit requests for deferment or cancellation on time. The consequences of default are severe on a federal student loan.

9) Be Registered With Selective Service
If required by law, the student must register, or arrange to register, with the Selective Service to receive federal student aid. The requirement to register applies to males who were born on or after January 1, 1960, are at least 18 years of age, are citizens or eligible noncitizens, and are not currently on active duty in the U.S. Armed Forces. (Citizens of the Federated States of Micronesia, the Marshall Islands, or Palau are exempt from registering.)

Male students 18 through 25 years of age, who have not yet registered with Selective Service can give Selective Service permission to register them by checking a box on the FAFSA. They can also register through the Internet at: www.sss.gov.

10) Not be Convicted of Possessing or Selling Illegal Drugs
The student cannot leave this question blank on the FASFA. When filling out this question, the student should not include any convictions that may have happened when they were juvenile or convictions that may have been removed from their record. The student should answer “no” if they have never been convicted of possessing or selling illegal drugs or if they have completed an acceptable drug rehabilitation program since their last conviction. An acceptable drug rehabilitation program includes at least two (2) unannounced drug tests, and it must be qualified to receive funds from the government or from a federally- or state-licensed insurance company, or be administered or recognized by a government agency or court, or a federally- or state-licensed hospital, health clinic, or medical doctor. Students who have been convicted of possessing or selling illegal drugs will receive worksheets with their Student Aid Report to determine whether they are still eligible for federal student aid. A student who is ineligible for federal student aid because of a drug conviction may still be eligible for state or institutional aid.

PROFILE Form

The Financial Aid Profile (PROFILE) form is used by some private colleges to calculate the Institutional Methodology EFC. The filing deadline for this form is December 2013, but may be filed at any time before this date, for the 2014-2015 college year. As with the FAFSA, certain colleges have their own deadlines for filing this form. The PROFILE may require the applicant to answer questions in addition to the basic application questions. These questions are known as "Section Q Questions" and unfortunately, there are no instructions on how to accurately answer these questions.

The individual college determines what questions will be asked of applicants to their particular college. There are two supplemental forms to the PROFILE that a specific college may require:

1. Business/Farm Supplement
2. Non-Custodial Parent Supplement

Application Forms Must be Filed in Order to Appeal

A family should file the FAFSA and PROFILE forms even though they do not initially qualify for financial aid. An appeal cannot be made to the Financial Aid Officer (FAO) for increased financial aid unless these forms have been filed. Also, unless the application forms have been filed in prior college years, some colleges (usually high-priced private colleges) will not consider the student for future financial aid.

College Financial Aid Deadlines

Many colleges’ financial aid deadlines are February 15th or before. Few families have their tax forms completed by this time. Because much financial aid is based on a first-come basis, the chances to receive financial aid increase by estimating the financial information on the application forms and later reporting the actual figures as corrections to the Student Aid Report.

Other Financial Aid Application Forms

Institutional application forms are required at some colleges. These forms are required in addition to the FAFSA and possibly the PROFILE. These applications may require additional information that is not requested on the FAFSA or PROFILE (such as the value of retirement accounts).

State application forms are required to be filed in some states. These forms are used to determine the student’s eligibility for state financial aid programs.

● Student Aid Report
● Indicates the student’s EFC (upper right corner)
● Correct estimated or incorrect information
● Send copy to colleges
● Request an award letter

Step 3: Receive and Review the Student Aid Report

In four to six weeks (7-10 days when electronically filed) after filing the FAFSA form, a student should receive the Student Aid Report (SAR) form. This SAR form indicates the student's EFC on the upper right corner of the first page. Errors or estimated tax information must be immediately corrected or updated on this form and the form re-filed. If an amended tax return is filed later in the year, the financial aid office should be contacted. There are three reasons that the student must update the information on the original FAFSA:

The student must update the dependency status if it changes at any time during the award year. The one major exception is, should the dependency status change as the result of a change in the applicant’s marital status, the student may not update the dependency status. For example, a dependent student who marries after the financial aid application is filed cannot be considered an independent student because of the marriage that year.

If a student has been selected for verification and the household size has changed at any time during the college year, the student must update the FAFSA household size at the time of verification. If the change is a result of a change in the applicant’s marital status, the information may not be updated.

If a student has been selected for verification and the number of household members enrolled in postsecondary education has changed at any time during the college year, then the FAFSA must be updated as of the time of verification. If the change is a result of a change in marital status, the information may not be updated.

When the student updates the SAR information for any of the previous three reasons, the other data on the SAR may not be updated.

Note: If a student is not selected for verification, household size and number in college cannot be updated.
Planning tip: In order to increase the chance of receiving grants, which are limited in the amount available to students, a copy of the SAR should be sent to the FAO with a request for a financial aid offer.

Note: The College Scholarship Service (CSS) Data Acknowledgement Report is similar to the SAR. It gives parents and students a chance to verify their data submitted on the Profile, but does not allow for corrections. The CSS Data Acknowledgement Report does not provide the EFC for the Institutional Methodology; it is only used for data confirmation.

Step 4: Verification of Information

Verification of the applicant’s information is required of at least 30% of the financial aid applications filed. If a student is picked for verification, there will be an asterisk accompanying the EFC amount on the SAR. Verification can vary from merely providing a tax return to sending in detailed family financial information (at some private colleges).

Observation: If an applicant uses estimated numbers on the FAFSA, the chances of being verified increases. However, since several types of financial aid are limited and are disbursed on a first-come, first-serve basis (especially at private colleges), the applicant should use estimated numbers if it increases the chances of a better financial aid award.

Also, inconsistency of the data submitted on the application may lead to verification. What types of inconsistencies trigger verification? A dependent student who claims a one-parent family but shows income for both mother and father. A dependent student who claims a two-parent family but lists the household size as two. The student or family lists investments, but lists no interest or dividends. Conversely, the student or family lists interest or dividend income and no investment assets. There should be a correlation of the income listed on the application and the assets. If real estate is listed, but its value falls below the Commercial or Residential index multiplier, verification is almost a certainty.

Step 5: Receive and Review Award Letters

The Award Letter states the amount of the financial aid and the types of financial aid offered to the student. A student may accept, deny, or appeal any part of an award letter.

Do not let a college pressure the student into accepting an award letter before the student has time to compare all aid award letters. It is best to try to get an extension of time to accept the award letter. The extension of time allows the student more time to compare and/or appeal the award letters. Most colleges allow the student until May 1st to respond to the award letter. Should a particular college refuse to grant an extension of time, the student can accept the award letter; this acceptance safeguards the aid award letter. Nevertheless, the student's acceptance of the award letter does not commit the student to attend that college. However, acceptance of the award letter will probably reduce the chances of successfully appealing the award letter.

Example: A student had applied and been admitted to three colleges. He received a financial aid award offer from College X on February 15th. The award contained an $8,000 per year scholarship for the four years of college. The award offer had an acceptance deadline of March 1st. The student had not yet received his award offers from College Y or College Z. The student contacted College X and requested an extension of time to accept its award letter. However, the college denied his request and restated that the deadline for accepting its award offer and scholarship was March 1st. The student then contacted Colleges Y and Z and asked them to send their award offers to him before March 1st so that he could compare all three colleges' award letters. Colleges Y and Z informed the student that they would be unable to send him their award letters until after March 1st. At this point, the student was faced with a high-pressure decision. Should he accept College X's award offer by March 1st, without knowing what College Y or College Z would offer him, or should he wait until he received their award offers and miss the deadline (and lose the scholarship) for accepting College X's offer? The student signed and accepted College X's award offer. By accepting the offer, he safeguarded the award offer and scholarship. Nonetheless, the student was not obligated to actually attend College X. The student then had time to receive the award offers from College Y and College Z, and to review and compare the award offers from all three colleges.

Step 6: The Appeal Process

When a college's award letter does not meet the student's financial needs (either in the total amount of aid or in the type of aid), the student can appeal the award to the college. Most colleges have an appeal process that allows students to request a review of their financial aid eligibility and corresponding financial aid award offer. Each college determines its own regulations for this process, and students should be aware of a particular college's procedures.

Planning tip: If the student appeals an award letter, the student should be specific in requesting additional funds. The student should clearly state the reasons for the appeal, and request a specific amount of money. The student should write the request and submit any required documents with the letter of appeal. Then the student should contact the financial aid officer (FAO). It is preferable that the contact be made in person; if this is not possible, the contact should be made by a telephone call. The "personal touch" is important to a successful appeal.

Professional Judgment

In the appeal letter, the student should ask the FAO to exercise “Professional Judgment.” If the student is to successfully appeal an award letter; the student must fully understand the concept and definition of Professional Judgment. Professional Judgment is the authority given to the college FAO to change the family's financial data in any way that would more accurately measure the family's ability to pay for educational costs. Professional Judgment may only be made in special circumstances, and only when the family provides adequate documentation of these special circumstances. To understand the concept of Professional Judgment, various Sections of the Higher Education Act (the Congressional act which contains the federal financial aid rules and regulations pertaining to Professional Judgment) are listed as follows:

HEA Section 479A states: “Nothing in this part shall be interpreted as limiting the authority of the financial aid administrator, on the basis of adequate documentation, to make adjustments on a case-by-case basis to the cost of attendance or the values of the data items required to calculate the expected student or parent contribution (or both) to allow for treatment of an individual eligible applicant with special circumstances.”

Section 479A continues, “However, this authority shall not be construed to permit aid administrators to deviate from the contributions expected in the absence of special circumstances. Special circumstances shall be conditions that differentiate an individual student from a class of students. Adequate documentation for such adjustments shall substantiate such special circumstances of individual students. In addition, nothing in this title shall be interpreted as limiting the authority of the student financial aid administrator in such cases to request and use supplementary information about the financial status or personal circumstances of eligible applicants in selecting recipients and determining the amount of awards under this title.”

A financial aid administrator shall be considered to be making a necessary adjustment to the expected family contribution if:

● The administrator makes adjustments excluding from family income any proceeds from a sale of a farm or business assets of a family if such sale results from a voluntary or involuntary foreclosure, forfeiture, or bankruptcy or an involuntary liquidation; or

● The administrator makes adjustments in the award level of a student with a disability so as to take into consideration the additional costs such a student incurs as a result of the disability.

HEA Section 472 states: “For a student with one or more dependents, an allowance based on the estimated actual expenses incurred for such dependent care, based on the number and age of such dependents, except that: A) such allowance shall not exceed the reasonable cost in the community in which the student resides for the kind of care provided; and, B) the period for which dependent care is required includes, but is not limited to, class-time, study-time, field work, internships, and commuting time.”

HEA Section 484 states: “In order to receive any grant, loan, or work assistance, a student must be maintaining satisfactory progress in the course of study the student is pursuing in accordance with the provisions of this Section. For the purpose of this Section, a student is maintaining satisfactory progress if: A) the institution at which the student is in attendance, reviews the progress at the end of each academic year, or its equivalent, as determined by the institution, and B) the student has a cumulative "C" average, or its equivalent or academic standing consistent with the requirements for graduation, as determined by the institution, at the end of the second such academic year.”

Any institute of higher education at which the student is in attendance may waive these provisions for undue hardship based on:

● the death of a relative of the student;
● the personal injury or illness of the student; or,
● special circumstances as determined by the institution.

Following are some areas where professional judgment does NOT apply:

● An administrator may not use professional judgment to make an otherwise ineligible student eligible. For example, an administrator may not use professional judgment to waive general student eligibility criteria.

● An administrator may not use professional judgment to circumvent the law or regulations.

● The Department of Education has stated that professional judgment may not be used to include expenses related to post-enrollment activities to the student's cost of attendance. For example, professional licensing examination fees (such as bar examinations or medical licensing examinations) are not allowable costs, as they are considered related to post-enrollment activities.

● The Department of Education has stated that professional judgment may not be used to circumvent the Supplemental Educational Opportunity Grant (SEOG) selection criteria.

● Professional judgment cannot be used to make an independent student a dependent student.

Professional Judgment can be utilized to either increase or decrease one or more of the family's financial data elements (income and assets) used in calculating the EFC.

Professional Judgment can only be used if the Student Aid Report has been filed and the EFC calculated.

Special Circumstances

Professional Judgment is not limited to the situations mentioned on the financial aid application form (elementary and high school tuition, unusual medical or dental expenses, dislocated worker, unemployed worker, unusually high child care expenses, or other unusual circumstances). It could include circumstances that were considered to be "special conditions" in previous school years, such as divorce, separation, or the death of a parent or spouse after the application was filed. If these situations occur, the college's FAO must be contacted to see if the aid award can be increased.

Professional Judgment can also be used by the FAO in other situations as follows:

● Adjust the COA to take into account special circumstances such as medical needs or excessive travel costs.

● Override the student's dependency status to make a dependent student considered independent. However, if a FAO's information indicates that an independent student is receiving substantial support from parents, the FAO may adjust one or more of the data elements in the EFC calculation, such as nontaxable income.
Planning tip: The student should try to get a FAO to override the dependency status on the FAFSA. If the FAO at a particular college overrides the dependency status, the student will be considered “independent” not only at that college, but also at all the other colleges that were applied to by the student.

Planning tip: The parent should ask the FAO to consider using their professional judgement when they have converted a regular IRA into a Roth IRA. This is because the amount converted is reported as taxable income on the tax return. The conversion to the Roth does not actually produce more income or assets, but the income on the FASFA shows higher income. The FAO may lower the income and taxes paid to the amount that would have been reported if no Roth conversion had been made.

● Adjust the income and assets of a family located in a Federally declared natural disaster area. If there is a substantial loss of income in the current year, as a direct result of a natural disaster, the FAO should be contacted. If there is a loss, or damage, to assets as a result of the natural disaster, the FAO should be contacted. In both cases, adequate documentation of the loss should be provided to the FAO. If this is correctly done by the family, the FAO could use Professional Judgment and adjust the income and assets which were originally reported on the student's financial aid application.

● Any other "special circumstance" that the family and/or its financial advisor can negotiate with the FAO to adjust the EFC data elements.

Other Special Circumstances

Following are examples of other special circumstances:

Example 1: A parent was able to convince a FAO that his "unreimbursed business expenses," shown on Form 2106, should reduce his income because they were actual "out-of-pocket" expenses against his income.

Example 2: A parent was able to convince a FAO that the bonus he received from his employer in his "base year" was a one-time event and that it distorted his normal income level.

Example 3: Parents convinced a FAO that their income and expenses did not clearly indicate their ability to contribute to their child's college education. The parents showed the FAO that their income was inflated due to a required retirement withdrawal for a parent who had been recently released from his job. They also proved to the FAO that they had excessive medical bills for a handicapped sibling.

Example 4: A student convinced the FAO that his employment income would be much less during college years than was reported on the FAFSA.

Note: If a Subchapter S corporation or trust issues a K-1 to the parents, but does not distribute the cash, this situation should be appealed to the FAO.

Planning tip: The appeal of an award letter has a much greater chance of success if the student has the type of merit (academic, athletic, musical, etc.) that the college needs to fill its enrollment needs. In the appeal letter, the merit of the student should be emphasized to the FAO. This is especially true at private colleges which seek to attract students with merit.

Planning tip: If an appeal is to be made to the college, if at all possible it should be made in person by the family. It is harder for the financial aid officer to say “no” to the appeal if the family is sitting across the desk. If it is not possible to appeal in person, the financial aid officer should be contacted by telephone. Again, the “personal touch” should be incorporated into the appeal.

Appeal to the College’s Best Interest

An appeal can be made based on the college's best interests; a college has certain enrollment goals that it wants met each year. Following is a list of some strategies that may help the student achieve a successful appeal based on the interests of the college:

● Due to their higher cost of attendance, private colleges find it difficult to compete with public colleges. To attract good students, the private colleges have been known to give sizable tuition discounts. An appeal to the FAO to "reward a good student" can often result in additional financial aid. In this appeal situation, the student should academically be in the upper 25% of the college class. The admissions officer (the salesman for the college), the coach at an NCAA Division III college, or another college official may be enlisted by the student to help with this appeal strategy.

● When applying to a private college, the student should also apply to other colleges that are competitive in the same area or location, athletic conference, or intellectual fields. Many colleges compete against each other, not only in athletics, but also in attracting good students to their college. Application to many colleges can increase the student's opportunity to receive a good financial aid award.

● Making application to at least six colleges will allow the student to compare awards, and to make a request to a college with a lesser award to match the highest award received. A student should have a good award in hand to use this type of appeal.

● Many private colleges today have declining enrollments, primarily due to their high cost and competition from lower cost public colleges. Empty seats do not pay the college's operating costs, so the student should find the private colleges that have declining enrollments and appeal for more financial aid. Many times colleges will give a "tuition discount" to fill an empty seat.

● Upper-middle class or wealthy families often assume they must pay full price for college. However, there are many unadvertised alumni or special grants at a college's disposal to attract future benefactors. A trip to the financial aid office to inquire about these sources of financial aid (or tuition discounts) can often provide positive results, if it guarantees the student's future attendance and possible future contribution to the college's endowment fund.

● Almost every college has special grants and scholarships for minority students. An appeal could be made based on a student's minority status.

● Some colleges cater to their alumni and offer special grants for a second, third or even higher generation alumni students. Some colleges offer grants for first generation students. If the student is the first in the family to attend college, this may be an opportunity for a successful appeal of the original financial aid award offer.

● Most private colleges try to achieve "cultural diversity" in its student enrollment. In an attempt to accomplish this, the college may offer financial aid to entice certain students to enroll at the college.

Example: A North Dakota farm boy may be desired at Columbia University (located in New York) because he will add to the cultural diversity at Columbia. Columbia may offer the farm boy an attractive financial aid award to entice him to attend their college. However, a native New York city boy with more merit than the North Dakota farm boy may receive a less attractive award because at Columbia he would not add to the cultural diversity of the student body.

Appeal Tips

The "golden rule of appeals" is that if the student does not appeal for additional financial aid, there is a 100% chance that the student will not receive a better financial aid award.

The family should provide enough documentation to the FAO to "make it easy for the FAO to say yes" to the award letter appeal. Most FAOs are overworked and do not have the time to spend gathering documentation to grant the appeal.

Faced with increasing competition for the best students, colleges will award additional monies if a student can give them a convincing reason to do so.

Observation: Recent New York Times, Kiplinger Personal Finance and Chronicle of Higher Education articles indicated that there is an increasing amount of competition among colleges, especially the private ones, to attract good students. In the once orderly world of financial aid, colleges avoided bidding against each other and standards of financial need were well established. That world is unraveling, replaced by a more competitive environment. One financial aid officer lamented that currently, it's a "let's make a deal" environment. This increased competition is leading to more attractive financial aid packages for students. This trend is especially true for students of middle-income families. Princeton, for instance, excludes home equity from its financial aid calculations for most families earning $90,000 or less, and discounts the value of the home for other families. Yale's aid formulas do not consider the first $150,000 of a family's assets when calculating a family's expected family contribution. Stanford now uses "private outside" scholarships to replace loans, instead of scholarships and grants, in a financial aid award. Stanford also caps home equity at three times household income. Harvard, among others, are solely basing EFC on family’s income without regard to assets.

In an explicit offer of negotiation, Harvard stated it expects some of its admitted students will have particularly attractive offers from institutions with new financial aid incentive programs. Students should not assume that Harvard would not respond to the other programs. The trend toward increasing competition among colleges and negotiation is expected to continue. It will reach from the "Ivy League" colleges to colleges nationwide.

Example of Appealing an Award Letter

The following appeal letter and corresponding award letter show that appealing an aid award letter, based on special circumstances and student merit, can assist a student in obtaining additional financial aid.

Mr. John Doe
Director of Financial Aid, University of XYZ
100 N. Main Street
Plentywood, MT 59254 3-24-2013
Dear Mr. Doe:

We have recently filed for financial aid (FAFSA), and would like to bring our family's unusual financial circumstances to your attention. My total 2011 income reported on the FAFSA was estimated at $224,700. However, this dollar amount is grossly inflated due to a one-time bonus of $70,000, which will not be repeated.

It also reflects a non cash flow, paper transaction, resulting in taxable income of $83,700. This extraordinary books-only income is a result of a $36,700 tax entry from an irrevocable trust and a $47,000 tax entry from a non-participatory Subchapter S Corporation (both of which I have absolutely no control over), and have cash flows that are irrevocably exempt from my use until I reach the age of 65 years.

According to a Financial Aid Administrator at ABC University, under a rule called professional judgment, my paper income can be ignored since it cannot be used for college expenses, and my one-time bonus of $70,000 can be eliminated from income and treated as an asset.
Based on ABC's discretionary review of my special circumstances and the preliminary information from our FAFSA, our family would be eligible for $12,474 in financial aid from ABC University.

My daughter, however, would very much like to attend the University of XYZ and has been avidly pursued by your soccer coach. Due to the higher cost of your school, and the pursuit of my daughter’s athletic abilities from the University of K, W State University and University of ABC, as well as a number of other Division II schools, it would be financially difficult for us to consider your school as a viable option.

If you would consider matching ABC's ruling, it would ultimately allow us to select the University of XYZ over all other schools. I would appreciate a response as soon as possible so that we can make the appropriate arrangements for my daughter's future.

Sincerely,

John Doe