Does Applying for Financial Aid Affect Your Chances of Admission?
January 31, 2011
This combination of admissions and financial aid policies drives low-income students away from the more selective colleges and the more advanced degree programs. As a result, wealthier students are overrepresented at these colleges. According to data from the National Postsecondary Student Aid Study (NPSAS), 34.9% of the students at very selective 4-year colleges have family adjusted gross income (AGI) under $50,000, compared with 45.8% of students at moderately selective 4-year colleges, 54.1% of students at minimally selective 4-year colleges and 63.8% of students at open admission 4-year colleges. In contrast, 34.5% of students at very selective 4-year colleges have family AGI of $100,000 or more, compared with 22.6% of students at moderately selective colleges, 16.0% of students at minimally selective colleges and 10.5% of students at open admission colleges. In effect greater selectivity is manifested as a preference for wealthier students.
Similarly, data from the 2007-08 NPSAS demonstrates that 27.2% of students pursuing Bachelor’s degrees had family adjusted gross income under $25,000 in 2007-08, compared with 40.6% of students pursuing Associate’s degrees and 51.5% of students pursuing Certificates. A quarter (24.9%) of students at non-profit colleges had a family AGI under $25,000, compared with a third (33.4%) of students at public colleges and three-fifths (58.0%) of students at for-profit colleges. For-profit colleges tend to have open admissions policies. A fifth (19.7%) of students at very selective 4-year colleges received the Pell Grant in 2007-08, compared with 25.2% of students at moderately selective 4-year colleges, 30.2% of students at minimally selective 4-year colleges and 34.2% of students at open admission 4-year colleges.
Some need-blind colleges use financial aid and other discounts to attract wealthier students. The 2008 NACAC study reported that 63% of private colleges and 15% of public colleges use preferential packaging, where more desirable applicants will get a more attractive mix of grants, work-study and loans. Preferential packaging is mostly based on academic merit or a particular talent or skill of interest to the college, but about two-fifths of it is based on income. This leveraging of the financial aid package helps the colleges financially because they get more net tuition revenue from a wealthier family than a low-income family even after accounting for the extra grant aid to the wealthier student.
Institutional aid — money from the colleges own funds — has increasingly been shifting away from need-based aid because of preferential packaging. For example, data from the National Postsecondary Student Aid Study (NPSAS) demonstrates that 45% of institutional aid dollars were need-based and 55% were non-need or merit-based in 2007-08, compared with 65% need-based and 35% non-need or merit-based in 1993-94. Moreover, while 85% of non-need or merit-based aid was awarded to low-income families earning less than $50,000 in 1993-94, this dropped to 32% in 2007-08. In 2007-08, need-based aid represents 55% of financial aid to low-income families, 44% of financial aid to middle-income families and 30% of financial aid to high-income families. Wealthy families still get some financial aid, but most of it is not based on financial need.
The most selective colleges appear to be the only colleges opposing this shift away from need-based aid. According to data from the NPSAS, 56% of institutional financial aid dollars were need-based at very selective 4-year colleges in 2007-08, compared with 37% of institutional financial aid dollars at less-selective 4-year colleges. Even so, 44% of institutional financial aid dollars at very selective 4-year colleges were non-need or merit-based, and enrollment at these colleges is still tilted in favor of wealthier students.
Colleges are increasingly under financial pressure, so need-blind admissions policies may change. For example, Tufts University suspended its need-blind admissions policy recently, and Williams College ended need-blind admissions for international students. On the other hand, Hamilton College just switched from need-sensitive to need-blind admissions.
While some colleges have admissions preferences for wealthier students, few if any public and non-profit colleges have admissions preferences for low-income students. The selectivity of the more elite colleges puts talented but poor students at a disadvantage in the admissions process. Low-income students do not have the luxury of participating in extracurricular activities or athletics, nor can they afford SAT-prep classes, because they have to work at one or more part-time jobs to help their parents put food on the table. Frankly, a low-income student who succeeds academically despite adversity is much more impressive than a wealthier student who had every opportunity handed to him or her. It’s a mystery why the most selective colleges don’t do more to admit and enroll talented low-income students.
The bottom line is that there might be a slight admissions advantage for wealthier students who do not have financial need, especially for wait-listed students. Ask the colleges you are considering whether they practice need-blind admissions, and whether that need-blind admissions policy or practice includes students who are wait-listed.
Nevertheless, you should still apply for financial aid if you need it. It does a student no good to be admitted if he or she can’t afford to enroll. Some families figure they’ll dig deep to cover the costs the first year, hoping that the college will pick up the tab after that, but this may not be realistic. Some colleges front-load the grants, meaning that they award more grants during the first year and less grants in subsequent years. Other colleges restrict institutional grants to just students who applied for aid the first year, leaving you with mostly loans to cover your costs.
Even if you don’t apply for financial aid, the colleges can infer something about your family’s finances by looking at your zip code or the parent’s occupation.