Massachusetts Financial Aid Officers Face Rising College Financial Aid Applications, Competition for Enrollment
More Guidance Needed to Help Families Plan Early, Navigate the Financial Aid Process
BOSTON – The Massachusetts Educational Financing Authority (MEFA) and Fidelity Investments® today published research that highlights an increase in demand for financial aid among students attending colleges in the Commonwealth. College financial aid officers throughout Massachusetts were surveyed to identify trends in college financing and what they find to be the gaps in information for students and their families.
The majority of respondents have seen a significant increase in financial aid applications over the past three years, by an average of 13 percent. On average, administrators report that 78 percent of their students now apply for some type of financial aid. Additionally, 75 percent of schools say that, over the last three years, they have seen a rise in the number of financial aid appeals after packages are offered. Aid officers cite a combination of challenging economic conditions and rising tuition costs as leading factors driving the rise in need.
“During these challenging economic times there has been an increase in requests for financial assistance at all colleges and universities, but what families need to know is that significant financial aid is available for students,” said Bernard Pekala, director of student financial strategies at Boston College.
“At Boston College, for example, we are need-blind in admissions and meet the full demonstrated need of all accepted undergraduate students, which includes over $90 million annually in need-based financial aid for our undergraduates. Over the past three years, our financial aid has increased cumulatively by over 20 percent, while tuition has increased by less than 10 percent. Families need to consider what is available to them before making the mistake of not applying to a private college or university based on the sticker price.”
To meet increases in family need, most aid officers report that their college has increased institutional funding for financial aid by an average of 27 percent. That boost in aid could be why despite rising tuition costs, 58 percent of aid officers report they have not seen the gap widen between the amount of financial aid awarded and the cost of college, although that gap does still exist. Families that have a savings plan in place are better equipped to meet the gap.
Administrators have also seen an increase in competition for students applying to college. Overall applications are up an average of 12 percent over the last three years. At the same time, some colleges report seeing fewer Early Decision applications, with more families taking the time to evaluate financial aid packages offered by individual institutions in terms of discounts, scholarships and grants.
“Because college costs and financial aid opportunities vary from school to school, families who research these elements ahead of time are in a better place to make a good decision about which college to choose,” explains Thomas Graf, executive director of MEFA. “There are a multitude of factors to evaluate when picking a school, and informed consumers recognize that the considerations of cost and net price can be just as important as academics and extra-curriculars. As the Commonwealth’s authority on planning, saving and paying for college, MEFA offers free guidance and support for families with children of all ages to help them understand the landscape of college affordability.”
Seventy percent of colleges surveyed report that issues like loan debt and unemployment have also had an impact on enrollment decisions, mirroring concerns reported by parents of college-bound students in the College Savings Indicator study released by Fidelity Investments® and MEFA in August.
Counsel from Financial Aid Officers
When asked what advice they would give to parents, financial aid officers almost universally recommend having some savings and not relying fully on financial aid.
“Too many families overestimate the availability of financial aid funds and underestimate the benefit of having college savings set aside. Preparing for college costs should be a part of every financial decision, at every fork in the road,” advises Lynne Myers, Director of Financial Aid at College of the Holy Cross in Worcester, Massachusetts. “When your child starts kindergarten and day-care costs drop, when you get a tax refund or a raise at work, when you’re thinking about upgrading an old car, these are all important times to make saving for college a top priority.”
Other advice includes:
• Understand the full cost of college. Aside from tuition, room and board, college costs include books, research supplies, transportation and other miscellaneous needs that should be considered. Use EFC (Expected Family Contribution) calculators and institutional Net Price Calculators to gain familiarity with potential college costs for your family.
• Educate yourself and tackle the financial aid process. Leverage online resources or talk to college planning experts about the aid process and how to find grants, scholarships and other funding sources. Websites recommended most often by financial aid officers: MEFA.org, FAFSA.gov and FastWeb.com. As well, organizations such as MEFA offer free seminars, e-books and email reminders to help parents get started.
• Keep an open dialogue between parents and student1. Aid officers acknowledge that paying for college is a family affair and many urge parents to talk with their children early about college. Conversations about the future can motivate your child to aspire and prepare. Be honest about the level of financial support you are planning to provide and encourage students to include affordable colleges when it’s time to apply.
MEFA and Fidelity offer complimentary college financing guidance provided by dedicated college planning representatives who are available to answer questions regarding college savings options, including how to open a U.Fund College Investing Plan. Parents can visit Fidelity.com/ufund to begin saving and mefa.org to access online planning tools and search for financial aid and scholarships. Also available on Fidelity.com are a series of Viewpoints articles focused on college savings strategies and decision making, including:
• Five steps to take five years before college, updated with insights on how to make the most of financial aid, grants, scholarships and loans.
• The ABC’s of 529 college savings plans, outlining the range of investment options and potential tax advantages of 529 College Savings Plans
About the Massachusetts Financial Aid Officers Study
The Massachusetts Financial Aid Officers Study was conducted to identify trends in financial aid among colleges in Massachusetts, how financial aid has changed over the past three years, and to gather advice from aid officers to share with families about funding college costs. The study included in-depth interviews by phone and online with 34 Financial Aid Officers, representing approximately 35% of higher education institutions in Massachusetts and was conducted by Bellomy Research, an independent research firm, during the first quarter of 2012.
MEFA is a not-for-profit self-financing state authority, not reliant on state or federal appropriation that has been working for 30 years to make higher education more accessible and affordable for students and families in Massachusetts. MEFA was created by the state legislature at the request of Massachusetts colleges and universities and provides community education programs, college savings plans, and low-cost financing options. In its 30 year history, MEFA has assisted hundreds of thousands of families in financing a college education. For more information, visit www.mefa.org to learn more or follow MEFA on Twitter @mefatweets and on Facebook at mefaMA.
About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.8 trillion, including managed assets of $1.7 trillion, as of September 30, 2012. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.
1) Advice related to keeping an open dialogue between parents and children was not part of study, but subsequent focus group conversations held with aid officers.
The U.Fund College Investing Plan is offered by MEFA and managed by Fidelity Investments. If you or the designated beneficiary is not a Massachusetts resident, you may want to consider, before investing, whether your state or the designated beneficiary’s home state offers its residents a plan with alternate state tax advantages or other benefits.
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