Dividing Up the Pot
By Laura Pappano
There is a panic button. Well, not a button, exactly, but a code that the receptionist at Boston University’s Office of Financial Assistance can dial in an emergency from behind the counter.
“People get upset a lot, but it’s rare that we call the police,” says Christine W. McGuire, the aid office’s plain-talking executive director, who briefly considered a career as a minister. She remembers it happening only twice. In both cases, the agitated students left before the police arrived. More often — and quite often, she says — tempers flare and voices rise as students and their parents face numbers different from what they had expected. Or hoped for.
Then, says Ms. McGuire, striding across the waiting area and opening the door to a space labeled “conference room” that happens to be the size of a supply closet, “you pull them in here to calm them down, go over the facts.”
The job of the financial aid office certainly seems tedious, but as the uncorked emotions suggest, the decisions made here shape students’ futures.
Before plunking down their deposits by May 1, students must decide which college to sign on for or walk away from, or whether to try to bargain for a better package. This year is about picking not the college you want but the one you can afford. For those considering universities like Boston, at $53,110 next year, campus aid — the money that comes directly from the institution — may determine whether a college is manageable. Or not.
Making sense of aid awards is puzzling, to say the least. Awards may vary a lot, even though you have provided each campus the same financial information. Private colleges typically expect families to pay far more than the expected family contribution (E.F.C., in financial aid lingo) would suggest. It’s called gapping, because there is, literally, a gap between how much a college costs and how much aid is offered.
“Students get frustrated that their award letter doesn’t seem to have anything to do with their E.F.C.,” says Peter Shungu, who helps Boston students navigate the college aid process as an adviser with the nonprofit organization Access.
The reason is that every college has its own approach and goals in offering money from its coffers. Aside from a relative handful of elite colleges that admit students regardless of their financial need and then award enough aid to cover it, most colleges are like Boston University, using financial aid — both need- and merit-¬based scholarships — to lure the best students.
Ms. McGuire, whose office overlooks the Charles River and Harvard beyond (“It’s the only time I get to look down on Harvard,” she quips, on separate occasions), is blunt about the purpose of B.U. aid: “It’s meant to encourage some and do what we can for others. I don’t want to say ‘discourage’ because we want people to enroll. But we are more encouraging to some.”
Translation: The strongest students in a pool of applicants (maybe this is your safety school) will probably get more aid than the weakest applicants (maybe this is your reach school).
“We’re saying, ‘We love you,’ ” to those offered the best packages, says Laurie A. Pohl, vice president for enrollment and student affairs.
Boston University is a sprawling strip of a city campus befitting its breadth of academic offerings (100 majors) and eclectic range of alumni, from the Rev. Dr. Martin Luther King Jr. to Howard Stern. Most of its students come from out of state, and only 11 percent are poor enough to qualify for federal Pell grants. Still, nearly half are eligible for financial aid.
With its spectacular tuition and fees, B.U. is among the growing ranks of gappers: the university says that, for this year’s freshman class, 75 percent of students deemed to have financial need were offered enough to cover it. (The official statistic, 47 percent, is considerably lower because, the school says, not all families took it up on the federal loans or work-study that were part of their award packages.) Last year, B.U.’s average freshman award was $29,650, including loans.
Bottom line, Dr. Pohl says, is that “we’re going to meet full need out of the box for our best students who have financial need.” All told, about 200 students in each incoming class receive scholarships for half the tuition, and about 100 for full tuition, whether they need it or not.
Beyond the few getting these coveted scholarships, how does Boston University decide how much “love” to shower?
B.U. may be need-blind in admissions, but like many colleges, it is not talent-blind in financial aid. When the admissions office accepts a student, the file gets a rating before going to the financial aid office. That rating, Dr. Pohl says, is based on a holistic read of the application: factors like leadership, talent, motivation and personal character are weighed as well as grades and test scores.
“They get a number that is not a calculation,” she says. “It is not a tally. It is a label. It could just as easily be colors or letters. What it tells us internally is their relative strength, how competitive they are within our pool.” With that rating and the office’s calculation of “need” — indeed a relative term — a formula is applied to reflect, as Ms. McGuire puts it, how “encouraging” the school will be to an accepted student.
For a nearly paperless process (students file aid forms online) there is an awful lot of the stuff in Ms. McGuire’s office. Her broad wood desk is cluttered with reports, folders and printed projections to help decide how much money she must offer students that B.U. really wants, to get the right number to come.
Ms. McGuire, who is one of the few who doesn’t think the Fafsa (Free Application for Federal Student Aid) is too complicated, says it is not her job to make B.U. affordable to everyone. “What we are doing is incredibly thoughtful and complex,” she says, tapping a tower of files on her desk, a financial analysis of what happened with last year’s class. “I don’t want families to walk away with the impression these decisions are random, which they sometimes do.”
For example, last year, Boston University gave $43 million in institutional aid to incoming freshmen. To end up at that figure, it offered $150 million to accepted students (27 percent took the offer). This year, despite a budget deficit for the university and freezes on hiring and new construction projects, the school is offering even more — $160 million — with hopes of spending $45 million. Ms. McGuire says the higher aid figure recognizes that more people need help, that B.U. raised tuition by $1,370 (almost 4 percent), and that it will very likely need to offer more aid to get enough students to attend. “We are assuming not as many people will take the offer in this economy,” she says. “We are building that in.”
Ms. McGuire leans on models and analyses, but clearly this year is different.
The financial aid process is tweaked annually, which is why even experienced aid officers attend multiple training sessions before award season. Training this season put new emphasis on family situations that aid officers might not have seen much of in recent years.
“We need to be really aware that we will see parents who have lost jobs. We will see parents who have had foreclosures. We will see parents in bankruptcy. We will see parents whose equity is a negative number and are struggling to meet their monthly obligations.” That’s what Jim Briggs, a professorial-looking C.P.A. with a sense of humor (his spiral handout is titled “Fun With Taxes”) told Boston University officers at his financial aid training workshops, which he holds for about 25 colleges and universities.
Mr. Briggs’s message to the officers: Think about the economy when facing confusing financial information. For example, what may look like extra income could be an emergency early withdrawal from an I.R.A. Or in a sample of financial aid humor: “There are two ways to resolve conflicting information, right? Contact the parents or shred the offending documents. Just kidding. We can’t shred.” At a session near Valentine’s Day, foil-covered Nestlé Crunch hearts were given as prizes for those who correctly identified codes that must be entered on computer screens when aid officers alter data (Congress grants them “professional judgment” to make such changes).
The effort at levity, however, can’t camouflage the size of the chore. Between mid-February and mid-March they would have to process 13,000 aid applications (15 computer screens’ worth of data per student), a reminder made at one session with a large “30” drawn in Magic Marker on a flip chart. That’s how many files each of the 24 aid officers present would have to review each day. And come May, they would do the same for returning students.
So what exactly do they do with the files?
In their warren of blue-walled cubicles, they are looking at families’ incomes, home values, investments, business earnings. Because B.U. gets financial data from two sources — Fafsa and the College Board’s CSS/Financial Aid Profile, a form used by about 300 private colleges and universities — aid officers must first make sure numbers match up. Often they don’t.
Because it is colleges’ job to administer federal aid, officers at B.U. apply two different analyses to the data, one that reflects eligibility for federal aid and one that reflects eligibility for B.U. aid (some colleges use only the federal formula for both jobs).
What’s key to know: the federal formula casts a family’s finances in the most favorable light to get the most aid, while the College Board’s methodology scrutinizes finances more critically. The federal approach, for example, does not consider the value of a family’s home or even a family-owned business with less than 100 employees. On the other hand, most private institutions consider home equity, business value and even sibling savings.
Meredith A. Barnhart, senior assistant in the B.U. financial aid office, working beside a whirring fan on a February afternoon to counteract the solar gain from a bank of windows, reviews the application of a student whose family has a $37,000 annual income and also receives $20,000 a year in Social Security benefits.
“I see right away the mother is a widow,” says Ms. Barnhart, who notes that the family has $100,000 in savings and a home worth $250,000. While the formula for federal aid considers only the $37,000 income that yields an E.F.C. of about $1,700, B.U. comes up with an institutional E.F.C. of $16,000. That is what the family can afford, according to B.U.
“We recognize that their income is very low, but we are really looking at their assets,” she says, noting that the student has two siblings but none in college. The E.F.C., however, is not the end of the line. After Ms. Barnhart reviews the file and hits the F11 key on her computer, the application is ready to be “packaged.”
The packaging — the specific combination of grants, loans and work-study a student is offered — is secret. “It’s proprietary how we are putting someone into a box,” Ms. McGuire says. She does say her office has 13 computer packaging models into which undergraduate aid files are entered. The model applied to a student’s application determines what kind and how much financial aid he or she gets.
This aspect of the process is confusing to families who see two colleges offering vastly different amounts of aid — and coming up with significantly different family contributions. To see how this disparity happens, look over the shoulder of Julie Wickstrom, associate director of financial aid, sitting at her desk on a March afternoon just days before financial aid awards and acceptances are to be slipped into scarlet B.U. folders — the “fat envelopes” — and mailed out. The offers were printed this year partly on the old stationery with the B.U. “meatball” seal and partly on new stationery with a sleeker rectangular “brick” logo (students shouldn’t read into this; it’s a paper supply matter).
Ms. Wickstrom reviews the award packaged for a student with 2020 SAT scores, a family income of $22,000, $10,200 in savings and a home the family owns outright worth $225,000. “I noticed the house was bought in 1991 and I thought, ‘Wow, they were able to pay off their home with that income,’ ” she says.
B.U. is deciding not to consider home value in calculating this family’s need, because the income is so low they may not be able to get a home equity loan, especially this year. A policy in place for the past several years limits the amount of home equity counted to twice a family’s income.
B.U. calculates this student’s need at $50,800 (the federal formula puts it at $53,110 — the full cost of attendance). But this determination doesn’t mean the university will come even close to making it affordable. The award: a $17,500 institutional grant, a $5,350 Pell grant (the maximum for the 2009-10 academic year) and $3,250 in other federal grants for needy students for a total of $26,100 in grant money. The university offers the student another $11,000 in work-study and federal loans, but this leaves the family short $16,110, or 73 percent of its annual income.
“This student has a lot of financial aid — $37,000 — but they still have a big gap,” says Ms. Wickstrom, who concedes that based on what she knows, the student will probably not enroll.
B.U. seems to be making a stronger pitch to get a student with 2350 SATs whose parents are divorced. Ms. Wickstrom says the mother has income of $112,000 and reports $11,000 a year in child support. She has $63,000 of home equity and $18,400 in savings. Typically, B.U. needs detailed information about both parents’ finances to consider the aid request, but Ms. Wickstrom says B.U. received a letter “indicating that there had been some kind of abuse” and waived the requirement for the father’s financial data.
The university calculated the family’s need at $25,500 and awarded $17,000 in campus grants (family income was too high for federal grants), plus $10,500 in loans and work-study, for an award of $27,500. “We think it’s fabulous because we met their need,” she says. The numbers mean the family must pay $25,610. Whether the student accepts depends on other offers and how much the student wants to attend.
This year, more than in the past, colleges are uncertain how their financial aid models will hold up, and families are scrutinizing offers more carefully. Aid awards are not finalized until families have submitted their 2008 federal tax returns. But these days even those figures may not reflect a fair financial state.
As Ms. Wickstrom reviewed aid awards last month, she was bracing for a deluge of phone calls and visits, given that people have lost jobs and that assets have lost value (one dad simply noted on his electronic submission “bad timing on real estate investment,” by way of explaining why the home he owned had a value of $0).
Last year, Ms. Wickstrom says, 600 families appealed their aid awards. “We changed awards on at least half,” she adds, noting increases ranged from $500 to $2,000. At some colleges, of course — and particularly this year when more are worried about getting enough students to enroll — haggling over the financial aid award is practically part of the process.
Here, such an approach (even if you keep your temper in check) might be greeted with polite dismissal. “We don’t bargain at all if they say, ‘I got $20,000 from N.Y.U., can you match this?’ ” Ms. Wickstrom says. “Our answer is, ‘Have you had changes in your circumstances that we didn’t know about when you applied?’ ”
That B.U. costs a lot to attend is a fact it doesn’t hide. Ms. Wickstrom says some families express frustration that government loans don’t cover costs. “One of the questions we get a lot is, ‘Do you expect me to pay out of my pocket?’ ” The answer is yes.
That’s why Dr. Pohl, whose very job overseeing both admissions and financial aid is to get people excited about attending, wants families to reflect before they commit. She reaches for a hot half-caff coffee (in a rinsed-out plastic Pepsi bottle, a green effort, she says, and yep, she had the same bottle at a meeting weeks earlier) and says: “I am a big B.U. fan, and I think there is a lot B.U. offers. But it is not for everybody in terms of academics and being in a big city. And it’s not for everybody in terms of cost if it means your family will be destitute if you go here.”
Laura Pappano’s book “Playing With the Boys: Why Separate Is Not Equal in Sports,” written with Eileen McDonagh, will be published in paperback in June.
The original article can be found at: www.nytimes.com