Many families worry that their student won’t be accepted if they check the box on the college application indicating that they will be applying for financial aid. So, this is the question I hear over and over: “Does applying for financial aid hurt my college admissions chances?” Generally speaking, we tell all our students, regardless of their family financial position, to apply for financial aid as there is very little downside and considerable upside potential.
But if you want to get into the nitty gritty to understand more about risks and rewards of applying to college and asking for financial aid, read on!
Does applying for financial aid hurt my admissions chances?
This is a bit of a complicated question. The actual act of applying for financial aid should have absolutely no bearing on whether a student gains admission to just about any college. Admissions officers don’t simply look at the fact that you are applying for financial aid, assume that you will need lots of it, and then deny you admission.
Rather admissions officers review your application based on your merits. If you’re a good candidate, they put you in the “accept” pile. So, you should feel free to check that box and send in your forms! Just applying for aid will not hurt you. If the college professes to be “need blind,” then you’re likely to sail through the rest of the process at this point and be awarded the financial aid you deserve.
The situation is slightly different if you are applying to colleges that are not “need blind” (i.e. schools that consider your ability to pay in the admissions decision). At these “need aware” schools, your financial need could impact your ability to gain admission, especially if your grades and other credentials do not stand out. Think about it: if a school has only so much aid to hand out, to whom would they be most likely to give it? Students with the best grades, test scores, and extracurricular achievements are likely to get the most money.
Still, the prospect of not getting into a school should not stop you from applying for financial aid. If a certain college is not going to accept you because you need financial assistance, then you don’t want to attend that college anyway. You want to go to a school that you can get in and that your family can afford.
If my family makes too much money, will applying for financial aid hurt my college admissions chances?
What if your family makes a high level of income and therefore is unlikely to qualify for financial aid? Would your admission odds decline by applying for financial aid?
No. If the student is a compelling candidate, it is actually more likely that he or she will be accepted. The evidence provided in the financial aid forms will demonstrate your ability to pay, and a well-qualified applicant who can pay full price is a highly desirable one for most colleges.
There are two more reasons why a high net-worth family might complete the financial aid forms:
- First, completing the financial aid forms could be a requirement for a student to receive merit-based scholarships. Without the forms, you might leave money on the table and not receive a scholarship that you might otherwise deserve.
- Second, completing the financial aid forms might make your family eligible for the Federal student loan program, thereby enabling you to borrow some money (albeit a relatively small amount). Some families like their kids to take out such loans as a way to ensure that the student has “skin in the game” and appreciates the value of a college education.
The bottom line: colleges are expensive to run, and they need students who can pay in full. If you can fund your education and you can show this, this ability to pay could tip the admissions scales in your favor. If you are in this favorable position, it won’t matter whether you fill out the financial aid forms.
Mind the funding gap: A potential pitfall in the financial aid process
One of the most misunderstood aspects of financial aid is that just because you qualify for need-based financial aid doesn’t mean you will receive everything you deserve from the colleges. Without getting into the details of where financial aid comes from, just remember that colleges’ financial aid budgets are not infinite. As businesses, they must protect the bottom line. They cannot give away more aid than what is available. While some schools have enough money to meet the full financial need of all accepted students, other schools do not have this luxury. These colleges try to stretch their budgets by spreading the aid around more thinly. The trouble with this is that the college’s budget limitations can have a very negative impact on your own family budget. What does this mean?
An example can clarify:
Let’s say that according to the FAFSA, you have a Student Aid Index (SAI) of $20,000–meaning that your family should pay no more than $20,000 for college. Let’s also say that the cost of attendance is $60,000, including tuition, fees, room, board, insurance, travel, books, and a bit of spending money.
So you would expect, since you have demonstrated financial need, that you would be given enough financial aid from a college to reduce your bill to no more than $20,000. This is the expectation. But the college is not obligated to meet that SAI. The college can give you a different offer. For example, it might say, “you’re accepted, but you will need to pay $40,000 to attend.” They are giving you $20,000 dollars in aid, and you should be able to pay (according to the FAFSA formula) $20,000. But the total cost, remember, is $60,000.
This leaves you with a “gap” of $20,000. How will you fill this gap? Most likely it will come from taking out loans. But loans are just your money, with the difference being that you will pay it back at a later date (and more of it, with the interest payments).
But be careful! Too many loans can be a bad thing. Owing a ton of money upon college graduation can actually reduce or restrict your future opportunities, because paying off those loans must come before you do anything else, such as rent an apartment, buy a car, or take your significant other out for a nice dinner for your anniversary.
So, really, will applying for financial aid hurt my college admissions chances?
Our answer: if you qualify for aid, apply. You need money to pay for college, so apply. If you are denied admission, then that means they didn’t find you a strong enough candidate for that school. But if you are accepted and are offered an aid package with a significant “gap” that will need to be filled through loans, turn your attention to more generous offers from other colleges.
And if you’re not sure whether you qualify, apply anyway. At the very least, you’ll make yourself eligible for federal student loans, which (in small amounts) could help ease the financial burden.
And if you’re a high-income family, apply anyway. You might make yourself eligible for merit-based scholarships, and you may also get access to those federal loans should you want to avail yourself of those.
The bottom line is that no matter who you are, there are compelling reasons to check “YES” for financial aid and apply. Colleges won’t hold the fact that you applied for aid against you in the admissions process.
And in the long run, the outcome of this process–when based on an honest assessment of your ability to pay for college–could help you much more than it could harm you.
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