Personal Business: College Planning
College Aid: Intro to Haggling
You can negotiate for more aid, even at top--flight schools
Jonathan Piper, 18, applied to nine top-notch colleges and got into them all. Small wonder. The Cleveland native scored in the 95th percentile on his SATs and managed a 3.9 average at prep school while playing baseball, singing leads in musicals, and participating in an engineering society. He's also an African American. But getting accepted was just the first step. Next came the money.
Last spring, Piper made call after call to college financial-aid officers. His soft-spoken pitch: "I have no idea what I want to do, and I want to see the best that each of you can offer me." University of Pennsylvania and Princeton University didn't move much, but Wake Forest University in Winston-Salem, N.C., raised its annual aid offer from $8,000 to $26,000. A freshman there now, Piper is studying poetry with Maya Angelou and has no regrets. "It would have cost me $15,000 a year to go to Princeton, vs. nothing for Wake Forest," he says.
Colleges call it "dialing for dollars"--the time in March and April when parents and students phone them with better offers from other schools in hopes of coaxing more aid out of them. Rare a decade ago, negotiating is now so much a part of the picture that some colleges openly encourage it, while others are quietly putting away aid dollars for maneuvering at season's end.
The result is that a classroom now resembles an airplane. Three people sitting side-by-side could be paying different prices, and economic need has less to do with it than savvy. Nationally, about half of all students now receive assistance. "With financial aid, it may not cost more to go to an expensive school than a lower-cost institution," says Kalman A. Chany, president of New York-based Campus Consultants and author of Paying for College Without Going Broke (Princeton Review, $18).BRAWLING. Why are colleges willing to bargain? The sellers' market of the 1960s and '70s that saw baby boomers cramming classrooms has turned into a buyer's market. Top-tier schools are fighting over stellar applicants, and lesser rivals are scrambling to fill seats. Meanwhile, parents and students have become more adept at using hard-headed strategies to get more bang for their buck.
Some students, for example, start their university path at low-cost junior colleges, then transfer to more expensive and prestigious schools to finish their degrees. Others are loading up on advanced placement credits in high school to cut a semester or two from college.
It pays to be astute. Tuition and fees have risen 94% since 1989, nearly triple the 32.5% increase in inflation, according to the Bureau of Labor Statistics. The sticker price--tuition, fees, and room and board--for a year of undergraduate education ranges from $33,000 at Ivy League schools down to $10,500 at state universities.
The good news is that rising financial aid, now at $60 billion nationally, is softening the blow. In 1975, aid offered by higher-education institutions averaged 18% of their tuition revenues. By 1995, that rose to 34%, according to the Institute for Research on Higher Education at the University of Pennsylvania. The largesse results partly from outsize stock market gains that last year sent college endowment funds rising 18%.
The first thing to do when investigating aid packages is to head for the Internet. A few days of pointing and clicking can have a lifelong payoff. You'll learn such tips as:
-- Don't go the early-admission route if you want aid. Your commitment means they know they've got you.
-- If you have stock set aside for college, sell it before Jan. 1 of your child's junior year in high school. After that date, any capital gains will reduce aid eligibility.
-- Apply to at least six colleges, from dreams to sure bets. Then, with offers in hand, negotiate.
Because public institutions rarely haggle, your best chances for a deal will be at the 1,608 private U.S. colleges. Carnegie Mellon University, which kicked off the bidding process a decade ago, today promises a 24-hour turnaround by fax on requests for more aid based on other college offers.
Even Ivy League schools might dicker if your child is a star. Last year, they upped their aid formulas, especially those based on merit rather than need. That has opened the aid taps to more kids from upper- and middle-income families. The Ivies made the move after they started losing top students to public schools. Applications to Harvard and Yale fell 8% in 1997, and a 1994 study found that 38% of college students from families with incomes over $200,000 were in public institutions, up from 31% in 1980. Bargaining tends to work best in the college-heavy East and Midwest rather than the student-heavy South and West. If your child is set on a specific college, it helps to have strong offers from direct competitors. Negotiations can be done face-to-face, by phone, or by faxing other offers with a polite cover letter. "Don't come in with guns blazing," advises Bruce Hammond, author of the forthcoming Discounts and Deals at the Nation's 360 Best Colleges (Golden Books, $20). A well-spoken student may get better results than a pushy parent.
Cash-strapped students are also saving thousands by enrolling at a public college and later transferring to a private school or starting at a junior college (average tuition of $1,500 a year) and moving on to a state university. "A baccalaureate degree doesn't say you took your first two years at a community college and saved $20,000," says Arthur Cohen, director of the ERIC Clearinghouse for Community Colleges at the University of California at Los Angeles. But make sure your credits are transferable.
Students are finding other creative ways to save. High school pupils who take advanced-placement courses can knock off several semesters of college. Some private colleges offer three-year bachelor's programs or five-year bachelor's-master's degrees.
Families after deals might think of Canada. New York University ($32,500 a year) and Boston University ($31,000) wooed Peter Dietz of Hastings-on-Hudson, N.Y., but he chose McGill in Montreal for $10,000 a year. "I liked that I was lifting some burden off my parents," he says.
Another way to cut costs is to enroll at one of the 900 colleges with cooperative work programs that alternate study with paying jobs in a student's field (www.co-op.edu). At Kettering University (formerly General Motors Institute) in Flint, Mich., Michael Pulhuj alternated 12 weeks of mechanical engineering studies with 12 weeks at Glasstech, a glass technology company. His co-op work paid half his $65,000 college tab and landed him a job with Glasstech on graduation.
If your child is younger than 14, be aware that the buyer's market is ebbing fast as Generation Y comes of age. By 2008, when high school graduates reach a record of 3.2 million, you'd better have cash on hand. For now, however, you still have the luxury of dialing for dollars at campuses across the country.EDITED BY AMY DUNKINReturn to top