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  • Jason Flurry, CFP

When filing for financial aid can actually hurt your chances to get the best awards from colleges

The little known way to maximize your scholarships without sharing your personal, private financial information with the college.

Everybody want the most free money possible for college, right? Of course you do. And the advice everyone receives from counselors, colleges, and even some of the college planners who host college planning workshops at your local high school is always the same. They say the key to accessing this big pile of free money is found in filing for financial aid. While sometimes that can be helpful, there are actually times when filing for financial aid can hurt your chances for bigger awards at the colleges of your dreams. And in those cases, you will not want to file anything with the colleges other than whatever is needed for Admissions and scholarship consideration. Leave Financial Aid out of it altogether and maximize your results with a little known strategy we’ve used successfully for years at some of the best colleges in the country. I’ll get to what it is in just a minute, but first let me lay some important groundwork to help provide some perspective on why this strategy works.


Colleges are businesses

If you’ve never thought about it before, now is a good time to recognize that colleges are businesses. They sell two very expensive high ticket items called class credits and room and board. And since their marketing department has positioned them as a necessary step to our kids living a successful, happy life, the demand far exceeds the supply for most colleges each year. That drives the price up and places added pressure on students to “get accepted” into this elite club called college. It also burdens their families because who doesn’t want their kids to have the best chance possible for success?


If going to a good college is the best way to help jump start a rewarding future for their precious children, how can anyone say no? Very few do. So even though they can’t afford it, each year millions of families take on unbelievable financial challenges in the name of benefiting their children – and the colleges are all too happy to fuel the fires that support their lucrative business model without regard for the damage it does to those unsuspectingly caught up in it.


Sounds pretty bleak right? It is. And looking at the country’s $1.5 Trillion in student debt will scare you to death (and it should!).


So now that you realize that colleges are businesses and that you’re their customer, you owe it to yourself to become a more educated consumer. With any other high ticket item you purchase, you do some research to determine a fair price for what you’re getting.


Fortunately, you can do this with college too.


Very few people realize that each college regularly reports their financial aid and scholarship history in a report called the Common Data Set. It is written for the Department of Education, so most normal people like us have a hard time reading some of the legalese they use there. But, no matter what your level of sophistication, you can still usually find tables that show how much money each college awarded in a given year in the form of grants, scholarships, and in other categories, like loans, work study positions, etc. You can often find what percentage of students received merit scholarships and determine the average award each student got. You can also see what the overall average award was for students who filed for financial aid and what percentage of each family’s need they met on average too.


Why is this helpful? Well, by understanding how generous each college is and how they award and recruit students, you can better position yourself for success with those schools. You can also see where the tipping point is for many colleges in their pricing model, and that gives you a huge advantage when researching what college will likely cost for your family.


Making smart business decisions

Colleges, like other businesses, know the price point at which most people will still say yes and they are smart to realize that they don’t have to discount their price below that level very often. They figure why give away money for free when people will still come and pay more? That’s totally understandable. After all, if you were the college, wouldn’t you do the same thing to make as much money as possible?


What we’re talking about here though is what you bring to them that is valuable. Colleges have proven over and over again that if you have something they want, they will gladly pay for it. And if you know the tendencies of the schools in the context of what an average award is for someone in your shoes, you can better negotiate with them to get the maximum amount possible.


Positioning yourself for success

So you may be asking, “What does all of this have to do with getting more money by NOT filing financial aid?” I’m glad you asked.


Because colleges are businesses and because they know what people are willing to pay, they have a good number in mind as to what they expect you to cover regardless of your financial situation. If you share the details of your financial situation with them by filling out financial aid forms, especially if it your financial situation is good, you give them the discretion to determine if you can “afford” to pay what they want vs. what you actually want to pay. That’s leverage you simply don’t want them to have if you are trying to negotiate your final price.


The best leverage you can have is a strong student who meets the criteria they are looking for as a valuable member of their community. This usually involves having very high academics, but it can also include things like, leadership experience, a history of community service, or relationships with alumnus. Some colleges have a hard time attracting enough guys, so they have more flexibility to offer more money if they find someone they have interesting in pursuing. The same goes for schools who are predominately male. They need more women in their programs and they work hard to recruit candidates that would be good fits for their majors too.


Other things can be important too. For instance, where you live can have an influence in how much money you get if you’re willing to travel farther away from home to attend college. And of course, there are other factors colleges want and need to create a balanced, diverse community that complements their academic offerings. Get to know what they are and reverse engineer your student to be the perfect prospect at several of the highest quality colleges on your list.


Then with the right amount of attractive leverage in place and several other merit scholarships on the table, you can approach the colleges to ask for more money knowing you have something they want and have a hard time getting. Their pockets are deeper than yours, so ask them for more with confidence, while also keeping in mind what their average awards are for people in similar situations to yours.


If you haven’t filed for financial aid at that point, they will almost always ask you to file their forms before discussing things with you further. That’s when you interrupt their flow by politely refusing their instructions. By then you should have determined that you’ll only qualify for loans by filing financial aid forms. You will have also positioned your student well at other colleges so you have competing offers on the table that beat their offer, which gives you an advantage others don’t have when asking the college for more. With these pieces in place you can then let the college know that you are only looking for additional merit scholarships instead of need-based grants and loans.


Some colleges will tell you there is nothing they can do without financial aid forms on file, but most will distinguish a request for additional scholarship consideration, which is a function of Admissions, from an appeal for the other awards handled by their Financial Aid department. Those are the situations where you stand to gain the most by keeping your financial cards face down and negotiating based solely on merit.


Be Courageous

The colleges already like your student at this point, so you don’t have anything to lose by asking for more. Just be prepared to wait things out and let them know that if they are able to find anything else that will help make them more affordable for your family, you are excited and ready to move forward with them. In other words, you want them to feel like they can collect some of your money and get the benefit of having your student as a part of their family, or get neither because you have other more attractive options you are considering.


If you have already shared your financial information with them and they feel you have plenty of money to pay what they typically get, which could be a very different feeling than what you have about your ability to pay for college, your chances of getting more money from them is almost zero. However, if you keep the focus on merit, desire, and competition, you approach the conversation more like your student’s agent and conduct yourself more like a business making a mutually beneficial decision whether or not to work with another business.


Can this work for me?

While this approach doesn’t work at every college in the country, you’d be surprised at how many successful appeals we’ve had by taking this exact approach, especially at private universities where their prices and policies are usually more flexible than public state universities. We just got an $8,000 increase for one of our clients at a private college using this approach and the best part about it is the student’s award is renewable for all four years of college. So that $8,000 increase quickly became a $32,000 increase simply because we asked for it. How would having an extra $32,000 in college savings feel to you right about now? I can tell you that When it is added to an award that was already pretty good, it feels very good to get an increase like this.


Remember that regardless of which approach you use to qualify for college aid you want to get things down to a point where you feel comfortable that you are only paying your fair share of the college bill. This little known strategy could just be the thing you need to gain that extra advantage that saves you thousands of dollars each year.


Your counselor, the colleges, and most ordinary college planners will tell you that filing financial aid forms are mandatory, but now you know better. Take charge of your college plan and learn how to make your moves like a true College Planning Specialist. That’s the best way to beat the colleges at their own game and get the kind of results you can be proud of for your family.

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