Front-Loaded Financial Aid – How Will You Know?

Have you heard about front-loaded financial aid? This is where a college attracts your student by offering a great financial aid package for the first year and then drops aid off for subsequent years. Is this something you need to be concerned about?  If you can’t afford to pay full sticker price for your student’s college, you need to understand and be concerned about colleges front-loading financial aid packages!

Why does front-loaded financial aid happen?  According to Mark Kantrowitz, senior vice president at Edvisors, in an article on The Hechinger Report, “institutions offer more to first-year students and their parents as a kind of “leveraging; they’re using financial aid as a recruiting tool.”  Colleges are doing whatever they can to recruit students they are interested in.  In many cases, throwing extra aid at the target student will increase the chances he or she will ultimately select that school.

Sometimes what looks like front-loaded financial aid is actually due to a change in a family’s financial circumstances.  For need-based aid, many things beyond just family income can impact the size of the financial aid offer, including:

• Number of students in college at the same time
• Number of total dependents
• Overall net worth
• Assets in your child’s name

Tips to Avoid Front-Loaded Financial Aid

1. Understand what part of the financial aid package offered by a college is income dependent – This would be need-based scholarships and grants.  Anything that is not strictly based on “merit” (GPA, ACT/SAT scores, class rank) has a need-based component.
2. Ask questions about anything labeled a “grant” – These can be vague and hard to find listed on the college’s website.  Questions to ask include – What is the grant based on – need or merit?  Is the grant renewable or is it for the first year only?
3. Make sure you understand the renewal qualifications for any scholarships offered to your student – Does the student need to maintain a specific GPA in college?  Is the renewal automatic?  Does the student need to request the scholarship each year or fill out any paperwork in order to renew it?
4. Think about what might change in your financial picture over four years of college – Are there years when you will have more than one student in college and years when you will only have one?  This will make a big difference in financial aid eligibility.  Make sure you run a Net Price Calculator for each potential school with each different scenario that may occur.  This will give you a preview of how your financial aid eligibility may change.
5. Ask direct questions about front-loading – Don’t be afraid to question the financial aid office.  Make sure you are talking to someone in a position of authority, like the Financial Aid Director.  Ask straight out if you are guaranteed the same amount of aid for your student’s second year and beyond.  You may not get a direct answer, but you can gauge a lot by how much of an attempt is made to avoid answering the question!

Front-loaded financial aid can make a college look really attractive for the first year.  Make sure you know the full story so that you can avoid any surprises for the second and subsequent years.  Know what aid is renewable and know what is one-time only.  For renewable aid, know the renewal qualifications and make sure your student understands that he or she needs to meet those in order to continue to be able to afford the school.