The "Other" Gap

When talking about college, more and more people discuss the option of taking a "gap" year, i.e., the year between graduating from high school and starting college when students may elect to travel, perform community service, take classes at a local community college, participate in a formal Gap Year program, or do something completely different. Yet, there is another "gap" involving college that more families need to address - the "gap" between the financial aid package that a student receives from a college and the remaining money that is due to the school that's NOT included in the EFC or Expected Family Contribution. Unfortunately, financial "gaps" are increasingly becoming the norm at most colleges and universities, making this issue a crucial one that has be taken into account when high school seniors and their families decide between admission offers.

First, how is financial need calculated? All students and their families should complete the FAFSA (Free Application for Federal Student Aid).  Once the FAFSA is submitted, the government uses a special formula (using a family's income, assets, and investments, among other things) to calculate an EFC. It's important to note that an EFC is not necessarily the actual number that a family will be expected to pay every year to support a student's post-secondary education. However, it's still an important number, since the EFC tells financial aid offices and families what they can be  reasonably expected to spend on the student's education (this becomes important when determining financial need, since some families may have the assets to spend on their children's education, but don't want to liquidate those assets to pay for school - these families should expect to see a relatively high EFC, since the government believes that the responsibility to pay for college rests primarily on the student and on the student's family).  Next, a college or university will take its "Cost of Attendance" or COA (what it actually costs each year for a student to attend this school, including everything from tuition to books to travel to clothes) and subtract the EFC from the COA. In short, COA - EFC = Financial Need. 

Second, a student's "financial need" does NOT necessarily equal the student's financial aid package that is awarded by a school! In fact, most schools no longer guarantee or promise to entirely cover a student's financial need. Here's a fictional example based on real-world numbers. Senior Jimmy has been accepted to Boston University and he's thrilled! However, before his parents are willing to send in his deposit committing to attend BU this fall, they want to discuss finances. Jimmy pulls up BU's website on his laptop, and sees that the estimated COA for BU in the 2018/2019 academic year for a resident student is $72, 618.  He then gets out both his admission letter (which lists all merit aid that he's received from BU) and his financial aid package letter (which lists all of his federal student loans, work study awards, and possibly also shows the merit aid from the admission letter). Let's say his combined aid package from BU looks like this:

- Boston University Scholarship X  => $25,000
- Subsidized Stafford Loan (highest limit for dependent students) => $3,500
- Unsubsidized Stafford Loan (highest limit for dependent students) => $2,000
- Federal Work Study Award => $2,000
TOTAL FINANCIAL AID PACKAGE: $32,500

Sounds great, right? $32,500 is a lot of money! And that's true, but Jimmy has forgotten to subtract this amount from the COA. Once he's done that, he sees that there's still $40,118 that he will have to pay each year to attend BU! His parents remind him at this point that their EFC is $20,118. Even with that EFC,  $20,000 still will be due to Boston University in order for Jimmy to matriculate there. This $20,000 is the "gap." 

Here's where students and their families get into trouble. Once a student accepts an admission office (and, by implication, the specific financial aid package), that student should expect to receive approximately the same package every year, provided that the student maintains required satisfactory academic progress for both the scholarship and the federal loans. The limits for borrowing money from the federal government will increase slightly with each year, but that will barely cover any expected increases in tuition, fees, and the general cost of living. Moreover, loans HAVE to be paid back - this is not "free" money. This means that this $20,000 gap will be there for 4 years, meaning that, in addition to the federal loans, the student will need to somehow come up with $80,000 to pay for this degree (IF the student manages to complete all degree requirements in 4 years). Financial gaps are a very serious problem, and they can easily cause students to borrow enormous amounts of money at unfavorable interest rates, ultimately leading to the current college graduate debt crisis.

So, what can students and their families do? The single most important thing family can do is discuss finances openly and honestly as soon as possible in the college admission application process. As much as parents might not want to talk about money with their kids, it's crucial for students to know what's reasonable and what's not when it comes to paying for college. Parents should never have to dip into their own retirement funds to pay for a child's college education, and students should aim to graduate without enormous amounts of debt.

To that end, if everyone in the family is on the same page regarding how much is too much to pay for college, then much heartache can be avoided by having everyone look at and apply to schools that are reasonably affordable to the family (in other words, don't look at a school that is most definitely out of reach financially to avoid the student falling in love with a school that is out of their reach). This becomes especially significant when considering applying Early Decision to a school. Since ED is legally binding, this commitment means that a student agrees to attend this college *regardless* of the financial aid package awarded. This is the reason why I highly discourage families from considering ED as a viable application decision, unless the family is very fortunate and money is not an issue (in other words, the student can be considered "full pay"). Most people aren't in this situation, so applying EA or Regular Decision allows families to receive ALL offers of admission and aid before making a decision. To that end, use the worksheet found here to help compare the different costs and aid packages of each school that has admitted the student. Seeing costs laid out clearly side-by-side may help make the best decision possible (in other words, that dream school might not look so appealing when you see that your second choice college is giving significantly more scholarship money). 

Next, if a family feels that the aid package is too little, parents can write an appeal letter to the financial aid office. When writing that appeal letter, be sure to be polite, grateful for the aid already awarded, and very clear about what family circumstances would merit a reconsideration of aid. To see a sample appeal letter, look here. Be sure to include documentation with your letter that supports your situation, as well as any award letters from comparable institutions (in other words, don't ask Dartmouth to reconsider its aid package because you received more scholarship money from Franklin Pierce University - those two schools are not compatible at all!). If this is your child's dream school, then definitely mention this! Be sure to make it clear to the financial aid officer that your student will definitely enroll in this school IF the school may find any additional aid for the child. 

Lastly, students should ALWAYS be on the lookout for external scholarships and grants. I always tell students to apply to many scholarships and to apply often! Free money is free money, no matter if it's $100 to help pay for books or $10,000 that can go towards filling that "gap." Two good places to start looking for scholarships are Fastweb and The College Board's Big Future website for scholarship and grant research. Both are free to use, which is important - students should NEVER have to pay to research scholarships and they should NEVER pay to apply for scholarships. Students can also check with their high school guidance offices to get a list of local scholarships - the more obscure the scholarship, the better chance the student has to win that scholarship (simply because there will be so few applicants). 

Gaps are an unfortunate reality in today's higher education landscape. That doesn't mean that it's impossible for students to make their college dreams come true! With research, persistence, resourcefulness, and advocacy, students and their families can make affording college a reality.  Just be sure to mind that "gap"!