“Why did my financial aid award change?” is typically a question asked after the student has lost money compared to the previous year. Rarely does anyone ask this question if they received more money.
Here are 6 reasons why a student’s financial award offer will change from year to year…
1. The family’s income has changed. If income goes down, then the expected family contribution (EFC) will likely go down. This typically results in a better financial aid package. However, it is more likely that your income went up from the previous year. This means your EFC went up and your financial aid package will be lowered according to the established guidelines.
2. The family’s assets have changed. As with income; if the assets go up, EFC goes up. If the assets go down, EFC goes down. Since most families will spend assets while their students are in college, this will most often have a downward pressure on your EFC (good for you). But if you won the lottery or inherited money, those new assets are going to drive your EFC up (bad for you… sort of).
3. The number of students in college changed. The more students you have in college… the lower your EFC will be. If a student graduated last year and you only have one in college this year, then you will see a big spike in that student’s EFC. Consequently, they will get less financial help from the college.
4. Changes in the federal Stafford loans. Stafford loan amounts increase as a student progresses through college. Currently freshman students can borrow $5,500; sophomores – $6,500; juniors – $7,500; and seniors – $7,500. As students are able to borrow more under the Stafford program, colleges will typically lower the other sources of help in the financial award. For instance, the student get’s an addition $1,000 in a Stafford loan, but their college grant is lowered by $1,000.
5. Your college’s endowment has taken a hard hit in the market. One of the unfortunate results of the current recession is many colleges have seen their investments drop… big drops in some cases. This means the schools have less money they can give to their students. The recession is unfortunately limiting the amount of money many schools are able to give away compared to previous years.
6. Your college is a cheap-skate. It is rare, but some colleges will do a bait and switch to get freshmen students. They will give them very generous offers their first year, but then pull back the money in the subsequent years. This is not common, but there are unfortunately some institutions that will do this.