Scholarships: Not Just For The Needy
The sticker price of some colleges and universities now rivals the $210,600 cost of the median American home, and even wealthy families feel the pain when they start writing those large checks. But affluent parents shouldn't assume they will have to pick up the whole tab by themselves. Far from it.
A growing number of top-notch schools have begun handing out thick wads of cash to households that may not appear to need it. Why? "Wealthier families, who have students who excel, are desirable because they prop up the school's profile in the college rankings, and they can also pay a significant portion of their education," says Deborah Fox, president of Fox College Funding in San Diego, a firm that advises higher-income families on strategies to apply for college funding.
CARVING UP THE PIE
This rush to offer financial carrots to kids from places such as Greenwich, Conn., Lake Forest, Ill., and Newport Beach, Calif., is a dramatic departure from the 1990s when a handful of brainiacs might capture a college's meager lineup of academic scholarships while everybody else either paid the full freight or queued up for financial aid. Today, colleges that routinely awarded promising but financially needy students full rides of $30,000 or $40,000 a year might carve up some of those packages among three or four well-off academic achievers. They figure that tossing $10,000 a year to an affluent kid from the big city or suburbs might be enough to elicit an acceptance.
Colleges bearing scholarships aren't interested in academic slouches. The student must be an above-average applicant among those vying for admission to a particular school. At some institutions, that will require an "A" average, but at others "B" students with an SAT score barely above 1000 could walk away happy. Teenagers who are determined to get into a "reach" school, where they barely qualify for admission, are likely to get nothing in their stockings.
Statistics show just how deeply schools are discounting tuitions. Private schools currently offer average tuition breaks of 33.5%, according to the College Board. In states such as Virginia and Ohio, discounts are hovering around 48%, says Paul Hamborg, vice-president at Human Capital Research in Evanston, Ill., which advises colleges on enrollment strategies. The practice also extends to state universities, which give average tuition breaks of 14.7%.
Another recent study by the nonprofit Education Trust found that at 50 state flagship institutions, the amount of grant aid pocketed by families making at least $100,000 jumped 406% from 1995 to 2003, while money earmarked for those with household incomes of less than $20,000 dropped 13%. "Many of these flagship institutions have become more and more enclaves for the most privileged of their state's young people," the study noted.
The sons of Robert Band, a CPA from Natick, Mass., are both beneficiaries of college largesse. When finalizing his lineup of schools, Band's oldest son, Eric, who wants to be a physician, narrowed his choices to Muhlenberg College in Allentown, Pa., and Union College in Schenectady, N.Y. Each offered $12,000 a year to the "A" student who scored 1300 on his SAT test. Now 22, Eric is a senior at Muhlenberg, where regular tuition is $30,715 a year. When his brother, Matthew, now 20, whose test scores and grades were a tad lower, started his search, he also targeted schools that were known to offer free cash. He ultimately pocketed a total package of $50,000 from Quinnipiac University in Hamden, Conn., after Hofstra University in Hempstead, N.Y., made a last-minute bid to sweeten its offer. He's now a sophomore at Quinnipiac, where annual tuition runs $28,720.
To find out about a school's generosity quotient, check its Web site or contact the admissions office for scholarship requirements. Popular college resource guides often include information on merit money--also called non-need-based aid--and the College Board's site, collegeboard.com, features student profiles of thousands of institutions to help you determine where you have the best chance of getting help. You'll find a list of roughly 100,000 scholarships in a slim book entitled The A's and B's of Academic Scholarships by Anna Leider.
If you're looking to pay wholesale prices for your child's college education, consider the following strategies:
IGNORE THE IVIES. Schools with rarefied pedigrees, such as Harvard, Yale, Princeton, and Massachusetts Institute of Technology, enjoy the luxury of reserving their financial aid for truly needy kids. If your child wants some cash, he or she may have to leave a little prestige on the table.
That in no way means settling for second-rate choices. Oberlin College in Oberlin, Ohio, and Washington University in St. Louis are active scholarship dispensers. So is Tulane University, which was slashing tuition by nearly 50% for sought after students even before Hurricane Katrina smashed into New Orleans, says Hamborg of Human Capital Research. "If you're a wealthy family," he adds, "you could be looking at a 50% discount at middle-market private colleges like Providence College in Rhode Island, Fairfield University in Connecticut, and St. Michael's College in Vermont."
DON'T FORGET THE FLAGSHIPS. Using taxpayer dollars, public universities are just as eager to attract smart, affluent kids. Hilary Carroll, 19, a National Merit Scholarship finalist from North Hampton, N.H., discovered this when she received full-scholarship offers from the University of Florida and the University of Oklahoma. Carroll entertained plenty of private school suitors, including Cleveland's Case Western Reserve University, which offered nearly $21,000 a year. Carroll, who is now a freshman, ultimately decided to attend Lafayette College in Easton, Pa., where she received a scholarship of $8,000 a year. To compete with the private colleges on the academic as well as the financial front, public institutions such as Colorado State University, Texas A&M University, Indiana University, the University of Arizona, and the University of Washington are offering strong honors programs.
EXPLORE OUTSIDE YOUR REGION. Many schools are delighted to see students who hail from two or three time zones away. "If you live in California, schools in the South, East, and Midwest are looking for students from the West," says Eric Goodhart, director of Programs for Education in Lunenburg, Mass., who advised the Band family. Colleges are less likely to shower an applicant with money if they suspect they aren't being taken seriously. That means you or your child should visit a campus before sending in an application. If that's not possible, the student--not the parents--should connect to a school through e-mails and telephone conversations.
APPLY FOR FINANCIAL AID. "Always, always, always apply, even if you make $250,000 a year," advises Frederick Rugg, author of Rugg's Recommendations on the Colleges. Some schools won't award your talented kid any merit money unless you've filled out the federal aid form, Free Application for Federal Student Aid (FAFSA), as well as the CSS/Financial Aid PROFILE, which is used by hundreds of private schools and which asks a lot more prying questions.
Parents may be reluctant to divulge their net worth. Even if your child doesn't qualify for aid, however, it still couldn't hurt to let a cash-hungry college know about the retirement accounts, the family trust, and the summer home in Telluride.
By Lynn O'Shaughnessy