June 6, 2007

Is it a negotiation or an appeal?

Posted in FAFSA, Parent PLUS Loans, Saving for College, Stafford Loans, Student Loan News, The Financial Aid Process at 7:57 AM by Joe From Boston


Here’s a very interesting short Q&A from the OC Register. It points out a very important fact, that appealing your financial aid package is usually for extenuating circumstances.

PLANNING: The myth of negotiating financial aid

Tom Bottorf, Columnist

Q. Our daughter is beginning USC this fall as a freshman and received only a small grant from the university. I attended a financial aid presentation recently and heard that you can negotiate with the schools for more free money. How do we go about that?

A. This is an erroneous myth that continues to be spread by misinformed speakers on financial aid. Beware of any encouragement to negotiate with a college financial aid department. This myth creates false hope for many families. They are told that whatever the award, it’s probably negotiable.

First of all, the procedure of requesting an increase in your financial aid package is called an appeal, not a negotiation. Most schools have procedures for the appeal process. A valid appeal is based on what financial aid officers refer to as special circumstances.

So what is a special circumstance? Here are a few: job loss of a parent, excessive medical costs, care for an elderly grandparent, and termination of child support. A special circumstance does not include lack of proper planning in order to meet your Expected Family Contribution (EFC).

The Free Application for Federal Student Aid (FAFSA) form doesn’t have a place for your “story”. It’s a form that asks for information about the family’s income and assets as well as non-financial data like birthdates, social security numbers, size of family, number in college, etc. The appeal process allows you to tell your story, sometimes resulting in an adjustment of what might be an artificially high EFC.

There is also a situation commonly referred to as a competitive appeal. In the event that a student has a special talent or exceptional achievement – academic or otherwise, some schools may indeed adjust their initial awards when they become aware that another competitive school has offered a more generous award. This is analogous to a typical “supply and demand” scenario where the student, because of stellar performance, has earned a high demand for talent or achievement.

Fact of the week: Princeton University, while being one of the most highly-selective schools in the country, packages exceptionally generous financial aid, including no loans, no assessment on home equity and only a 5 percent assessment on student assets.

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