The Illusion Of College Financial Aid

Guest blogger Paul Wrubel studies and counsels students on college financial aid. He can be reached at his firm,


Again this year, millions of hopeful Americans completed the FAFSA and CSS Profile forms in order to qualify for need-based financial aid.  They paid attention to deadlines and tried to follow the rules out of an innate sense of honesty and a desire to play it straight.  They did their job.


For their troubles, the promised outcomes rarely if ever occurred.  Financial aid awards across the nation reflected a different reality with different rules.  Families at any income and a few dollars left in the bank, were routinely short-sheeted by the colleges’ aid awards.  If a family reporting an income of $65,000 were judged by their financial aid award, you might guess that the family had an income of $90,000 or even more.  For millions of American families the college financial aid system is a cruel hoax.


For years, I have led the chorus to simplify the FAFSA so that families can more readily apply for need-based aid but with every passing year, it is clear that would merely add to the growing chorus of disillusioned Americans.  What real benefit is there to be admitted to a theatre for free if the play is bad?  Simplification of the financial aid paperwork would merely add to the audience of disappointed and increasingly angry college-bound students and their families.  But the illusion runs much deeper than paperwork.


Just this week, I spoke with a family who had submitted precisely the same financial and demographic information to three private colleges, two in Massachusetts and one in Oregon.  Each college received exactly the same numbers.  Two colleges responded with offers that suggested a family contribution of $19,000 and $32,000 while a third proclaimed that the family did not qualify for one cent of aid making their family contribution a whopping $52,000+ or an assumption of an income of around $200,000.  Same numbers, same formula, different outcomes.  Why?


The mechanics of the system aside, the issue is money.  Colleges can’t offer aid if they don’t have the money.  The primary reason for this fiscal deficit is that the federal government and in some cases the state government who may have had a hand in creating the system, have failed to contribute sufficient funds to ensure its ongoing viability.  Federal and state contributions in support of need-based financial aid haven’t begun to keep pace with the realities of inflation or any accepted measure of cost-of-living adjustments.  While college costs for families have risen by more than 100% over the last couple of decades, during that same period the per-pupil influx of public aid has increased only about 20-30%.  Family incomes may have grown by an even smaller increment in that time frame.  The outcome of this scenario leaves the colleges holding the financial aid bag and they simply don’t have the resources to deal with it.  So families try their best to fill in the gap and they usually do so by cashing in their retirement funds or pulling equity out of their homes or taking on more work if they can get it.  All of this, of course, will come back and haunt this nation when it has to come to grips with the long-term fallout, an impoverished generation of senior citizens financially neutered by unexpected college costs, a large and growing population that will be on the retirement public dole for thirty or more years because we as a society failed to adequately support their kids during a mere four years of college.


There is a solution but it will likely have to come from people who are not stakeholders in the current mess.  It won’t come from the bureaucrats who have jobs because of the complexity and the Wizard-of-Oz nature of the current system; it won’t come from Congress because they may have to admit that they had created a monster and Congress rarely acknowledges fallibility; it probably won’t come from colleges because under the present system there are no rules beyond procedural issues and not a scintilla of enforcement oversight relating to meeting the calculated financial needs of families; it won’t come from the usual think-tank suspects who tend to reform embedded systems rather than create new models based upon new paradigms reflecting the lives and realities of actual people; and it won’t come through prayer. It will be the creation of a group of really smart, focused people who can rise above toxicity of politics and their own self-interest, people who care deeply about and understand the value of education and people who have a visceral appreciation of the pressures on families, on colleges and on public fiscal resources and policies.


Whatever we do we had better do it quickly.  Time is not our ally in this matter.  Colleges will begin to close, talent waiting to be developed and refined tends to have a short shelf life, and families will continue to be impoverished by college costs every minute of every single day. The meter is running and the fate of this great democracy may be hanging in the balance.    

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