As the semester begins, many students are thinking of how to pay for their education. Especially this academic year, as tuition for Fall 2015 at UMBC has been increased by 7 percent. 5 percent of the increase was approved by the University of Maryland Board of Regents, and the remaining was voted in by UMBC.
And somehow, counterintuitively, with this rising college tuition comes decreased financial aid.
For the typical college student, a student who is still claimed as a dependent on their parents’ taxes, the Free Application for Federal Student Aid form, which universities use to facilitate their distribution of need-based aid, becomes a pitfall for the unwary.
The FAFSA utilizes the expected family contribution, also referred to as the EFC, to calculate the amount of aid given.
The EFC is the amount of money that the parents are expected to contribute towards their child’s tuition. This number is based on numerous factors, including age of parents, real estate, investments, savings accounts etc.
There is a certain amount of money that the parents can “shield,” and not have that count towards their EFC. The asset protection allowance is the amount of money and savings that does not count towards the EFC. This number, and the amount that parents can shield, is based again on their age.
In the past several years, the asset protection allowance provided by the EFC has dropped dramatically, lowering the amount of aid that students, especially those of middle class backgrounds, can receive. If a middle class family were to have a large sum of money in their savings account, for example, this could lower the amount of aid the college student would be offered.
Back in the 2012-2013 academic year, a student entering college could have an asset protection allowance of up to $41,300, meaning families could have assets of up to that cost saved up without impacting the aid offered. For the 2016-2017 academic year, the APA has been reduced by more than half.
The aid formula counts savings and assets at 5.64 percent of the actual value of the savings. Therefore, this drop in the APA represents a decrease in aid eligibility of this student by more than $5,000 over an average college career.
For many students, this hike in tuition and decrease in aid just doesn’t work with their budget, forcing them to take out student loans to cover the difference.
The change in the EFC and APA formulas will hit the middle class the hardest, and those who encourage and assist their children in going to college will now have to save more, thereby decreasing their aid chances even more. Assets of those in the lower class, those with a gross family income of less than $50,000, are not counted in the EFC, and the upper class generally do not qualify for financial aid.
Universities and policymakers are placing enormous strains on college students, not only with the increase in tuition, but also with the change in how aid is calculated.
President Obama outlined a plan that would make college more accessible. At the same time, other changes to financial aid packets decrease the viability and availability of college. Although it’s certainly not easy, perhaps more effort needs to be put into limiting budgets so as to not increase tuition any further. In addition, the APA needs to be rethought by those responsible for making education more accessible to everyone.