Even though the May 1 enrollment deadline for most colleges has passed, the goal of paying for college may remain a quest for some families. With the good news of college acceptances, come the financial aid packages. First-year aid packages are almost always the most satisfying, since their heft is designed to encourage enrollment, as colleges woo their accepted applicants among heavy competition from other schools.
This first-year flush of aid is known as “front loading." That means that colleges put their best financial aid foot forward that first year. The consequence of front loading is that some (many?) times, the aid packages of following years decline and package components shift from grants and scholarships to loans of various types. This is the old football running-back move of “give 'em a leg and then take it away," a kind of financial aid head fake.
This can cause significant anguish for students and families who may have already gone out on a financial limb to enable their child to enroll at a college that first year. As aid packages diminish post-front loading, it becomes a matter of, “Should I borrow more to stay where I am or initiate transfer proceedings?"
Complicating the transfer decision is the fact that there is no guarantee that the school(s) into which you're targeting to transfer will be able to offer you any more financial aid. In other words, paying for college can quickly become a logistical swamp.
I've written before about negotiating financial aid packages. You should be aware that you don't have to accept at face value the aid package that comes with your acceptance, or even those that come in the following years after enrollment. For example, some months ago, I discussed this:
… I know that to be true because I have negotiated successfully for an increased aid package for my daughter. I recall the situation quite clearly, even though it happened decades ago.
My daughter applied Early Decision to a small liberal arts college and was accepted in December. As with many colleges, the financial aid package arrived along with the good news. However, after analyzing the aid offer, my wife and I determined that our Expected Family Contribution plus the amount of our daughter's student loans were more than we could handle, as a family.
So, we sat down and did some calculations and came up with a figure that we thought we could manage. This figure included a hopeful increase in the school's grant/scholarship aid and a reduction in the amount of student loans our daughter would have to bear.
Next, after carefully organizing these numbers and assuming as much of an objective, non-emotional manner as possible, I called the school's director of financial aid. He turned out to be not only quite cordial but also quite understanding. Our conversation lasted all of ten minutes, if that. I explained some deeper levels of our family's financial needs, details that did not appear on any of the three financial aid forms I filled out to accompany my daughter's application.
The director asked me to document and send to him the additional information I had mentioned. I did that.
About 10 days after I sent this additional information, my daughter received a revised financial aid package that had both an increase in the school grant and a reduction in her loans. The total of these two actions did not cover 100% of what we felt was our need, but it was in the 80% ballpark, enough for us to manage our daughter's college years. A happy ending. …
Well, maybe you're not up to a one-on-one aid negotiation. Perhaps you either don't have the organizational skills to present a strong argument or you just don't have the time. There may be other reasons, too. If so, what can you do?
The answer appeared in a recent and surprising article: Some Students Are Hiring Hagglers to Negotiate Financial Aid Packages.
That's a rather shocking headline. The first image that came to my mind when I saw it was that of a professional athlete who is represented by a sports agent. The team for which the athlete plays makes a contract offer, just like a college offers a financial aid package. Then, the athlete and his or her agent discuss the offer. Usually, the agent deems the offer to be woefully inadequate, so the agent goes back to team officials (or, in this case, the financial aid director or staff) and attempts to negotiate a better deal for his client.
This back and forth can continue for extended periods of time. In some cases, which those of us sports fans have noted, the athlete will hold out, not joining the team while contract negotiations continue to drag on. This can cause ill will and an aura of greed to descend on the hold out. In the world of college financial aid, attempting to hold out pending a better aid offer will most likely result in a withdrawal of acceptance. Other than sports examples, though, let's see what this article has to say about these so-called college aid hagglers.
… Most families sending a child off to college for the first time don't realize that paying the sticker price for college isn't a foregone conclusion. With that in mind, there is room to get some discounts and more financial aid which has prompted some to turn to help. After all, filling out the Free Application for Federal Student Aid, or FAFSA, is complicated enough, but appealing for an aid package from a school can be downright impossible. Despite the difficulty, pulling it off can save big bucks.
Take a professional college tuition haggler, Joel Peck. The certified public accountant who advises on college admissions told the New York Times that haggling could lower the cost of tuition by anywhere from $5,000 to $10,000. With the prospect for some serious discounts, some families are paying for professional hagglers—Peck charges as much as $1,300—which is well worth it if families can save several thousands of dollars in tuition each year.
Peck isn't alone in offering professional haggling services to families with college bound children. According to the New York Times, which cited data from the Independent Educational Consultants Associations, the number of full time education advisers has skyrocketed during the last decade. Interestingly enough, the cost of a college education rose right along with it.
In 2005, there were 1,500 independent education advisers; in 2015, that figure stood at 8,000. Twice as many people do it on a part time basis or as a side gig, noted Mark Sklarow, the chief executive of the trade group. While Peck is charging as much as $1,300 for his services, the association says the median fee for college advising services is $4,600 with many charging on a per hour basis. The professional hagglers clearly aren't for everyone. Sklarow told the New York Times that the main people using this service are families with a child in a big public high school in an affluent neighborhood who is gearing up to attend a private college or university.
These professional hagglers may see increased business this year as the number of appeals is expected to increase thanks to changes in the FAFSA application. Families can now file paperwork earlier than in the past and base it on the tax returns from two years ago. By using older information, families can appeal on the basis that the college financial aid award wasn't based on the most up to date financial situation for a college bound student. …
Getting back to the sports agent example, we can see that aid “agents" may come cheaper. Sports agents generally receive between four and 10% of the athlete's playing contract, and 10 to 20% of the athlete's endorsement contract(s), although these figures vary. Of course, the example above is very general. Peck can receive “as much as $1,300 for his services." He may have a sliding scale or a straight percentage, although my guess would be that he has a minimum fee to retain him. Obviously, there are no guarantees when it comes to negotiating aid packages, so a haggler would have to get at least a minimum amount of money for his or her time in trying to get the student more aid.
In my case, many years ago, when I was able to get an additional $5,000 in non-loan aid for my daughter, if a haggler had been working for me to get that increase, a 10% fee would have amounted to $500. A 20% fee would have been $1,000. A 4% fee would have been a mere $200. A haggler's minimum fee must cover the eventuality that no additional aid can be achieved. Also, if I were hiring a haggler today, I would specify that the increased aid would have to be in the form of non-loan money. It would have to be of the type that did not require repayment by my child, or me, as co-signer.
Thus, the world of aid hagglers can be complex. My purpose in mentioning hagglers is to bring the topic to light in these days of rocketing college costs and exploding student loan debt. In thinking about the terms for hiring one of these agents, one might want to start a cottage industry: a search service to locate the best haggler for your needs. That, in turn, might lead to a new reality TV series: Haggling for Hagglers.
It's easy to see that the trail to finding ways to pay for college can quickly lead down the rabbit hole of frustration. The good news: the art of the deal is still possible.
Be sure to check out all my admissions-related articles at College Confidential.