Why Are College Financial Aid Offers So Different?

Costs Can Vary Widely From One College to Another

Once all the applications have been submitted, and the online FAFSA or CSS/PROFILE has been filed, students and parents start receiving financial aid offers from the colleges on their list. Quite often they are surprised by the disparity, as they somehow thought or assumed that all offers would be in the same range. While some might be similar, others may be on opposite ends of the spectrum, with some much lower and others much higher.

Since families provide the same household size and family income information to potential colleges on the FAFSA, one might think that all of the financial aid offers would be in the same vicinity. It can be hard to understand that colleges have some leeway in their financial aid decision-making process. While they might use similar formulas to come up with a general idea of what they want to offer a particular student, they don’t necessarily use the same factors in making their award offers. That is why it is so important to wait until you receive all financial aid offers and compare them carefully before making a final decision.

What could happen that makes these offers so different? Here are a few factors most families aren't aware of.

Some Colleges Have More Money Available

Certain colleges may have very generous alumni who make significant contributions to their endowment and scholarship fund, or some states offer better support of their public schools. This allows the colleges more flexibility in offering aid to prospective students. It might be helpful to apply to different types of colleges — large and small, public and private, or in-state and out-of-state — to capitalize on the differences. An expensive college on paper might turn out to be the most affordable in reality.

The College Might Have Used Up Certain Funds

 There are certain forms of financial aid which are made available on a first-come, first-serve basis. If you file the FAFSA too late, your student might miss out on being eligible for these funds. That’s why it is so important to apply for financial aid as early as possible. If students who receive full offers including these funds decide not to attend the college, your child might be eligible to receive an additional amount, but you cannot count on that happening.

Your Student Has Something The College Wants

Try to find a college where your student has a quality that will make a really good fit with its student body, as the college may be willing to offer additional support as an enticement. Athletic or academic skills that might not necessarily stand out in a large student body might be just the tipping point a smaller college needs to make a better offer.

Some Colleges Look at a Wider Range of Income Possibilities

While most colleges do utilize the FAFSA as their foundation, some require the CSS/PROFILE, which asks for more in-depth financial information. This can sometimes affect the children of divorced parents, as the non-custodial parent’s income might also be considered. If the non-custodial parent has a significantly higher income, it could reduce the financial aid offer substantially. Colleges using the CSS/PROFILE might also look at additional income factors such as home equity, the value of a small business, investment value, and certain vehicle values.

If your desired college requires you to complete the CSS/PROFILE, be sure you also apply to one that only uses a FAFSA, to offset these possibilities.

When reviewing the offers, also keep in mind that the gap between grants/scholarships and the cost of the college are in addition to your Expected Family Contribution. You need to look at the total amount of out-of-pocket costs your family will take on so you can make more informed choices regarding which college to attend and how much student loan debt ​to acquire.

The goal for many families is that their student receives the best possible education at the lowest possible out-of-pocket costs. That is why it is important to look at more than just one college, so you will know for sure if you have received the best offer.