Money Matters: A Walkthrough of Financial Aid for College [Podcast]

This is a transcription of a recent podcast episode where Former Dean of Admission and Strategic Advisor to Scoir, Peter Van Buskirk, is joined by Lynell Engelmyer of the Hamilton Foundation (CBO) and Director of Financial Aid at Swarthmore College, Varo Duffins, to discuss all things related to the financial aid process.

Please Note: This podcast and transcript reference the old FAFSA. This blog post on the new FAFSA has the most up-to-date information you need to know about the FAFSA.

Listen to the podcast "Money Matters: A Walkthrough of Financial Aid for College" here

Introduction

Erin Barnes 0:07
Hi, I'm Erin Barnes and this is Inside College Admissions, a podcast presented by Scoir. On today's episode, Strategic Advisor to Scoir Peter Van Buskirk is joined by Lynell Engelmyer of the Alexander Hamilton Scholars, and Varo Duffins, the Director of Financial Aid at Swarthmore College; their conversation will touch on all things financial aid. Without further ado, I'll hand it over to Peter.

Peter Van Buskirk 0:35
Welcome to Inside College Admissions. My name is Peter Van Buskirk, and I'm joined today by good friends Varo Duffins and Lynell Engelmyer for a conversation about money and college, financing your education. Welcome Varo and Lynell.

Lynell Engelmyer 0:48
Thank you. Thank you, Peter.

Peter Van Buskirk 0:49
Good to have you with us today. As the school year gets started, for young people in high school, invariably, they're focused on trying to get the job done in the classroom in high school. But for many, especially high school seniors, the look is sort of over the horizon now to college and getting college applications out. Many are beginning to imagine where they'll be starting in college a year from now, many are also asking some pretty important questions about how I can afford this. And what we'd like to do today is provide some insight into the not just the college going process, but the college financing process. And I'm particularly interested in the perspective that you bring. I'd like for our listeners, if I could get just a little bit more of an introduction from each of you. Varo, you're the Director of Financial Aid at Swarthmore College. What's your Reader's Digest version of your pathway to the work that you're doing right now?

Varo Duffins 1:42
Well, Peter, as you know, I started in higher education in 1995. I was an admissions professional/admissions counselor at Elizabethtown College for a year, before the Dean of Admissions at Franklin and Marshall College; you hired me to F&M where I served in the admissions office there for the better part of a decade before I moved into financial aid in 2004. I was at F&M in financial aid and left there as a senior associate director. And then I became a director of financial aid here at Swarthmore College about six and a half years ago. So that's been my pathway in terms of, you know, so I have experience both from the admissions side of things and a private institution, as well as financial aid.

Peter Van Buskirk 2:29
Which is fairly unique these days. There are folks who are either admission officers or financial aid officers, but you bring two perspectives into one, which is great. And Lynell, I know that you had your start on the college side as well in financial aid, can you help us understand a little bit more about what you're doing? In particular, you're now a program advisor for the Alexander Hamilton Scholars Program, is that correct?

Lynell Engelmyer 2:50
That is correct. And like Varo, I have a little bit of experience on both sides of the desk. I worked as an admissions tour guide as an undergraduate. And the person that I worked for said to me, "there's a job in financial aid at a small liberal arts school Lebanon Valley College," and the sole requirement for their hiring net position was that I had to not make people cry. I took that job, I went on to become their Director of Financial Aid, life circumstances caused a move, and I started doing some work in admissions, where I also started volunteering using my financial aid background to help explain the process to kids from from low income backgrounds who were less likely to go to college. That volunteer work is eventually what brought me to Hamilton Scholars, which is a national nonprofit that serves mostly first-gen low income students, real civic changemakers. And so they are not only low income, but often with very complicated financial circumstances. And so I'm the person that will help them navigate that and explain it to financial aid officers so that they get to see the most accurate picture of that family.

Peter Van Buskirk 4:05
You pique my curiosity, though, don't make people cry. What's that all about?

Lynell Engelmyer 4:10
Well, so as you can imagine, financial aid is a really difficult, often painful subject for families: you're disclosing very private information to somebody you've never met before, which is a little unnerving. You can never give somebody enough money. So you kind of already start out at a deficit in that relationship. And how do you explain what is essentially a foreign language to somebody and make them feel good about what you can do for them as opposed to what you can't do for them. And so it really became about kind of making sure that you abide by federal legislation, but also building relationships with families and letting them know that you had their best interest at heart.

Peter Van Buskirk 4:56
Very good. And I know from your experience, and Varo from yours as well, you probably start fielding questions from families about financial aid well before they apply for admission; is that an open door that that you, Varo, that you extend to families? Or does the mystery continue right up until the point where they have to send in applications to do engage in any kind of pre application counseling with the families?

Getting Started on Financial Aid

Varo Duffins 5:16
We do. And, you know, not every college does that not every college is in a position to do it, I would say that colleges and universities may approach that differently. There are some tools online that help with that. And that have been around now by federal legislation for about 10 years, believe it or not, actually 10 years coming up this fall. So there are ways to approach that. But in terms of general inquiries that we received from families, that is something that we do the same way, as it works with admissions. And as I'm sure Lynell would agree that families are beginning that process early and earlier every year. So it's not unusual for us to obviously be talking to families who are juniors, certainly seniors in high school; we have had families that have contacted our office that have children even younger, and some very young just because they're just very curious as to how this process goes. And they hear a lot on the radio and television and read a lot on the web, and sometimes just follow in with very general inquiries. So that is obviously something that we do and encourage that families do prior to the point that they would apply and throughout and during that.

Peter Van Buskirk 6:27
So it's never too early to really get started in the thought process and educating yourself about financial aid. Now, a lot of times families look at colleges from a sort of social emotional point of view and get excited about dream schools. And the second look is the one that introduces them to the price tag. And folks are saying, well, we can't afford that. I mean, there are schools that are costing anywhere from $30,000 to $70,000. How can a family tell whether or not they're supposed to be able to pay all of the amount or whether there might be assistance available to them? And I'd like each of you to chime in on this very first?

Varo Duffins 7:05
Well, you know, as I said, there are some tools online that allow families to do that the net price calculator. Legislation put in the end of October 2011, you know, required institutions that are Title IV assistance, meaning that they receive some sort of federal assistance for the institution to have that available on their website. Families are supposed to be able to go to the main website, put in the words "net price calculator," and it should take them to place on the website to actually fill that out. Not all net price calculators are the same; they don't always use the same software, they don't always ask the same questions. They are designed and required to give families what their likely net price or net cost is going to be, which is the the annual total cost minus any aid that does not need to be repaid, essentially, is what that means. And they are garbage in, garbage out pieces of software. So they are as good as the information that's put into them. Most colleges and universities do not adhere to whatever decision they have on the net price calculator is actually going to be the decision. But to the point of your question, does it give families a better sense and at least put them in a ballpark? Or maybe even the right neighborhood? Yes, I would say so. And again, it also depends on the accuracy of the net price calculator to the actual need analysis that the Office of Financial Aid will actually come up with.

Peter Van Buskirk 8:38
Lynell, your thoughts.

Lynell Engelmyer 8:39
I would tell you the same thing that Varo just told you, to use the net price calculators. But I actually put a step before that when I'm talking to families; I suggest that they use what's called an Expected Family Contribution or EFC calculator. If you just Google EFC calculator or Expected Family Contribution calculator, you'll come up with it. And it is a mock up or a replica of the federal financial aid formula. And it tells you what the federal government will likely think your family can pay. And again, I use the same sort of little asterisk that Varo uses that the information that comes out is as good as the information that goes in. But the reason I like that is a precursor to the net price calculator is that the amount of aid or school gives you can vary literally from school to school. I think it's important to have as a barometer, what the government thinks your family can pay, and then look at what the net price calculator will give you and see how closely those two can match.

Peter Van Buskirk 9:49
Well this is really interesting, as much clarity as there's fog in the situation right now. And what I'm hearing is that there are opportunities for families to kind of get some preview of what their expected contribution will be. However, it's my understanding that there are two methodologies that come into play. One is the Free Application for Federal Student Aid (a federal document), and the other is the college scholarship service profile, which is used by many of the selected private colleges in the country. So now can you give us a sense of what those two animals are all about how, where they come into play for families looking at financial aid?

The FAFSA and CSS Profile

Lynell Engelmyer 10:26
So every school in the country, every college or university in the country that offers any kind of federal aid uses the FAFSA, the Free Application for Federal Student Aid, to determine a family's expected family contribution, or what that family can pay. So basically, anybody going to college is filling out the FAFSA. Some colleges, particularly those schools that give out a very significant amount of their own institutional funding, largely private institutions, decided that that wasn't quite enough information from them, and they wanted a more robust picture of a family's financial health. And so they started using the CSS Profile, which is a deeper dive into a family's finances.

Peter Van Buskirk 11:14
So now we've got two methodologies kind of walk us through the FAFSA timeline here, families can complete the FAFSA very soon, if they're seniors in high school, and the families what kind of information to get back when they complete the FAFSA.

Lynell Engelmyer 11:29
So the results from completing the FAFSA are what's called an EFC expected family contribution. But actually, when you hit submit, when you file the FAFSA electronically, and you hit submit, there, it comes up on your screen a page that says print this document, and on that it will tell you right, exactly what your expected family contribution is. So you know, almost immediately once you hit send, what I'm very careful to tell families, this is what the government thinks you can pay. And the distinction I make is that that is not necessarily what the institution thinks that you can pay at schools that don't require the CSS Profile, it is sometimes what you'll pay, sometimes not. But for schools that require the CSS Profile, those two numbers, the expected family contribution from the FAFSA, versus the contribution that's determined from the CSS Profile often differ because different variables are used.

Peter Van Buskirk 12:30
If I could interrupt in, Varo, I kind of like to get a sense from you. Because as a representative of a private institution, the profile becomes important in your consideration. How and when should families be addressing the profile application?

Varo Duffins 12:45
Well, the profile application (as of a few years ago) actually became available the same time as the FAFSA, which is October 1 of every year. The profile is designed, you know, by the College Board, and it is a tool that private colleges and universities use so that we are in a better position to be able to offer more of our own institutional aid grant to families who would qualify for more need above what federal assistance would consist of. And so we do ask more questions than the FASFA in most cases. And we asked the questions, because the questions that we are asking are related to the utilization of our own funds, our own private institutional funds. And as I said, in most cases, in all cases that I know those funds are utilized for additional grant and or scholarship monies. So engaging in the profile and the FASFA, essentially, at the same time is probably a really good idea. It's also a good idea in terms of how the information is reported from the asset side with families report. So there are a lot of, you know, pieces to this that are probably down in the weeds, Peter, but I think it's important for families to know that in most cases, as students are working on the application process, parents are often working on the financial aid process. And in a lot of cases, parents and students are working together on both at certain points as well.

Peter Van Buskirk 14:19
I think that there's potential here for some confusion among families, because if they complete the FAFSA early in the fall, and as Lynell suggests they get an immediate response with the Student Aid Report, they see a number from the government. The government says we should be able to contribute this amount and whether they like it or not, they get used to it and they carry that number around in their head when they complete the profile. Do they get any indication of what that profile report suggests about their expected contribution?

Varo Duffins 14:54
Well, now there's a reason for that federal process in effect. What is actually going through the federal government, we as colleges and universities simply act as stewards to their funds. And so they are provided with what used to be called an EFC, that soon will become a student aid index, which is essentially what it is. And part of the reason that that change is being made is that it is not considered an actual expected family contribution and actually plays to that confusion that you're talking about. It is a guide, and in many ways, it's a guide in terms of the level of demonstrated need. But it is according to the federal methodology— the profile determines around an institutional methodology— which of course, varies from institution to institution. And I don't think that there's any more confusion to that than there is in the Merit Scholarship process that occurs in admissions offices, from one institution to another or certainly within athletics programs and things like that. It's just yet another institutional specific indicator throughout the process. So at the end of the day, the decision that families will receive in terms of the profile is actually going to be the financial aid decision presuming that the student has been admitted to the college or the university.

Peter Van Buskirk 16:13
But isn't it possible, if not the case, in many instances where an institution can choose between justifying financial aid for a student based on the profile or the FAFSA, depending on the circumstances that relate to that particular student? Or is it always going to be that the profile that rules the day?

Varo Duffins 16:36
In most cases, institutions that require both the FAFSA and the profile are working with information from both so that they can put together the optimal package for a student. The FAFSA, and the federal methodology will determine how much of federal assistance will go into that package; the profile is determining how much of institutional grant aid usually will go into that package as well. And so the combination of both is really designed to give the most accurate, full picture for a family is looking at, in this case, a private institution (institutions that don't require the profile require only the FAFSA or making different kinds of decisions). And the aid that they're offering in many cases, is federal and state aid. They may offer non-need based additional institutional grant that's through talent or athletics or some other form of merit. But that is not usually a need based determination.

Peter Van Buskirk 17:36
Is it safe to say then, in the discussion about the FAFSA and the profile— and we'll move on from this in just a moment— Is it safe to say that when an institution has information from both at its disposal, that the ultimate decision about how to assist a student is a reflection of the institution's values and the extent to which the institution values that particular student?

Varo Duffins 18:01
Yes, I guess you could say that. And some of that value begins in the admissions office and whether or not the student is going to be admitted to begin with the other side of the value pieces. I don't know if it's a value judgment placed on each student individually, but it's really geared around the affordability of the institution, and the need analysis in the aggregate is really set up to address that. That is the reason that the profile exists in the way that it does, because it allows, again, private colleges and universities to utilize their own endowed resources very generously, to whatever extent they can be generous, given the population of students that they have on campus.

Peter Van Buskirk 18:45
Lynell, I'd love to know your thoughts.

Lynell Engelmyer 18:48
The only thing I really wanted to add to that is that, I had said earlier that everybody applying for financial aid fills out the FAFSA, while not everybody needs to fill out the CSS Profile, or they don't need to fill it out for every school that they're applying to. And since the family or the student does pay for every school, they release CSS Profile data, too. I think it's really important for families to check on each individual schools' websites to see if the school requires the CSS Profile, and only list those schools.

Peter Van Buskirk 19:23
And whatever is required, it's best not to wait, in terms of completing the form? I'm wondering if you could help us understand a bit of the FAFSA application scenario. A few years ago, the federal government changed the fiscal year of information used in its analysis. And there's something now that people in the business called a prior-prior year. What's that all about?

The Prior-Prior Year

Lynell Engelmyer 19:49
That is my favorite federal government-ism: the prior-prior year. One of the criticisms of the financial aid application process is that it occurred very late. And it was giving families very little time to make a well-informed choice about a college, especially incorporating a financial aid package. And so it became really important to back that process up a little bit. The problem is that if you were using the tax return, prior to the year your student starts college, you can only back it up so much, because you don't have your tax return done yet. And so the government made the decision to use the tax return from two years ago or the prior-prior year. So that the FAFSA application could open October 1, and you would, in almost all cases have your tax return completed from two years prior to allow you to apply for financial aid. There's one small issue with that, that I think particularly COVID has bought up a light to and that is your tax return from two years ago may not be an accurate indicator of what you're earning to debt. And what happens if you were laid off or a parent was laid off? What happens if there was significant loss of overtime, or any other circumstance that makes your tax return from two years ago no longer particularly indicative of your family's financial circumstances? And in that case, I always encourage students to write a detailed letter (brief but detailed letter) to the financial aid offices in question and explain using dates, dollar amounts and a short narrative to explain the difference between your financial situation today and your financial situation as reflected on that tax return from two years ago.

And that's great. And I think that when we talk about prior-prior, there's always a concern that family's financial circumstances can change fairly dramatically, but never more so than in the last couple years. Or when those letters, those conversations come to your attention, what happens next? I mean, is it the case that in every situation, you're able to automatically change the data in terms of your need analysis?

Filing an Appeal

Varo Duffins 22:15
I think one of the key pieces to filing an appeal, which is what some families call it, and some institutions call it a request for reconsideration, which we call it my office—

Peter Van Buskirk 22:27
We don't call it negotiation, though, do we know?

Varo Duffins 22:29
No, not necessarily. But I think the key piece to that is, is that there has been a change that is beyond the family's control that has impacted the family financially. And one thing, with the prior-prior year, when that came into effect, that is one of the things that of course allowed the FAFSA process to be released and to allow families to apply to earlier. Because, you know, having a tax year that was actually already complete, and in this case should have been completed by several months, allows the family to actually complete the FAFSA with information that is already settled.

In a lot of cases, there are changes, you know, in family's income from one year to the next, I've found that the most dramatic changes usually result from something that has impacted the family and it could be a job loss or you know, something else that's pretty traumatic to the family and a request for reconsideration makes sense. I think, in general, normal changes and certainly increases or decreases in more recent income, I'm not sure that that's actually going to result in significant changes to a financial aid decision. So it may or may not behoove the family to appeal on that basis. In fact, in some cases, it may just behoove the family to know that in the following year when their son or daughter applies, that that new income will actually be accounted for at that point in time. So it is a judgment call. It's also one of those things that I think is important for your families to understand that increases and decreases in income and assets are not dollar for dollar. So it's not as if somebody, you know, loses $10,000 of income or makes an additional $10,000 of income, that that's going to change the aid decision by $10,000: it just simply doesn't work that way.

So it's more complex, and it's more layered than that, but to the benefit for the family. So filing an appeal or request for reconsideration is really a choice the family can make and then it's the choice of the institution as to how they want to address it. Another key takeaway since I've known you, Peter, for the better part of 30 years, I know you'll probably go with the next question, how do institutions actually allow families to do this? And that varies as well. Lynell is correct. I mean the advice she's giving to families to put together a really brief, detailed narrative that has a good timeline and good data and accurate figures in it is important. And institutions will receive that in different ways. We have on our website, in my office at Swarthmore, an actual web page and a link that families can request a reconsideration. They don't need a special access code to do that, if they just fill out a form and that form is then sent to my office, and then we actually walk them through the next stages of the process. It's actually, we've made it pretty easy for families to do that.

Peter Van Buskirk 25:34
So what we're establishing now is that there are a number of different processes that families need to pass through in order to determine whether they might receive any kind of assistance from an institution. And that if the information that they get back from the institution doesn't quite square with their own reality, or their own expectations, that there are opportunities for the families to reach back out to the institutions and have conversations. So correct me if I'm wrong, it's important for families to understand that if they have concerns that they articulate them in the present, rather than waiting, and I think a lot of times families get frustrated by this process, and they feel a little intimidated by it, that they'll they'll put off and put off. And then finally, what happens when you get the concern from the family about the financial aid award after the student's been admitted and now it's the middle of May, and you get that phone call, does that make it a little complicated?

Varo Duffins 26:26
Well, in most cases, if it's the middle of May, they probably already committed— they've either committed to our institution or they're committed to another institution— so they could be students that are, you know, on the waitlist at other institutions. So there are some complexities there sort of beyond the scope of our control. But again, I think the easiest thing to keep in mind for families is that should something happen to your family that is beyond your control, that impacts particularly your parents' access to resources, their income, their assets, and you have proper documentation for that, that is the time to reach out to the financial aid office. Colleges and universities will handle that each in different ways. And I think that that is probably the best advice to pass on that there is no standardization to this process, no more than there is no standardization to the admissions process and the admissions application process. So we vary in that piece, as well as any other institution.

Peter Van Buskirk 27:28
And that probably then is good explanation for why, if a student applies to six schools, and applies for financial aid to six schools, that there might be six different solutions from each school with regard to what financial aid might look like. Now, I'd like to kind of reframe the question a little bit here. I hear frequently from families that they want to know, is there an income threshold for eligibility for financial aid? In other words, if you earn beyond so much, does that mean that you can't get it? Or how far low does our income have to be? Lynell, I'm going to give you the first shot at this. I think I understand where we'll go with it, because there's a lot of variability here. But still, how do we address the question? What is the income threshold?

Eligibility for Financial Aid

Lynell Engelmyer 28:12
I always address that question by not answering that question with a number. Which is to say that there isn't necessarily one because the federal formula is so incredibly complicated. I actually did a hand calculation of it in my 25 year career one time, and that was when I was brand new. I went to a financial aid educational workshop for beginners and they made us do a hand calculation so that we understood it. And it was the last time I ever did it, because it's computerized, and it's complicated. There are variables included in the calculation that are things like family size, age of the older parent, and things that really can affect the contribution outside of a family's income. The formula is income heavy. But there are clearly other other variables.

Peter Van Buskirk 29:10
"How many homes do you own? What cars?" There's a look at lifestyle, also, I would imagine, particularly through the profile.

Lynell Engelmyer 29:19
Particularly through the CSS Profile— lifestyle, I think doesn't rear its head as much on the FAFSA, but certainly on the CSS Profile. The CSS Profile is actually not one form. It is a repository of questions, some of which are standardized across all schools. But then schools actually have the ability to differentiate questions that they themselves want. So for example, Swathmore might choose not to ask you what kind of car you're driving, what kind of make and model and how many you have. But another institution that is maybe peer institution of Swathmore might ask that question. So, you know, Varo spoke about kind of this is not a completely standardized process. And it is because institutions can define some of their questions based on their own institutional values, based on their own institutional availability of funds and things like that. So it's a pretty complicated question.

Peter Van Buskirk 30:19
So Varo, it's possible then that a family with $100,000 of income could show quote, unquote, no need, while a family with $250,000 of income (I'm being intentional here) could show that they have some need, depending on other factors involved. Is that correct?

Varo Duffins 30:39
Yeah, I mean, I would say that one of the fundamental driving factors of any analysis is family size and the number of children. One of the questions that I ask at financial aid nights, one of the sort of program exercises that I've done with colleagues of mine in the profession and on campus, is really rooted in sort of natural calculus that we all do, particularly if you're a parent. So if you imagine two families of a similar income: one family is family of three (presumably two parents and an only child going to college), and another family down the street, who has the exact same income as that family, but they're a family of six (two parents, four kids, and let's say two of the kids are twins). And there's another [family] and three of their four kids are in college at the same time. Are those families making the same financial decisions day to day? Will those families face the same financial decisions in the upcoming academic year in terms of college?

And if you run through that exercise on your own, while you're sitting at home, literally just watching TV or, you know, outside mowing the lawn, you will come to that calculus pretty quickly. And what the need analysis essentially does is it literally breaks that calculus into finer parts. But this is an exercise that I think literally every person can do, whether you are a parent or a student going through the process. So what Lynell said is exactly correct. No, we don't say that there is an absolute threshold where you do or do not qualify for aid; there are incomes that might leave some people surprised that they will qualify for aid, and the other way around, but we see some very large families in this process with the number of kids in college. And we see families that are considered very small, with only one child in college. And so how those resources are utilized against that family size and against the children in college is really what the point of the need analysis does, among other things,

Peter Van Buskirk 32:52
At the end of the day, then, there will be different perceptions with regard to what need is: there's the institution's perception, or government's perception, the family's perception. I suspect that you will encounter (in many conversations with families) about not need based aid, rather, what do we deserve, not because we need it, but what can we get? [What kind of aid can we get] because we want it? We won't go down that road today about what want-based aid would be, but that's a different kind of conversation, I would imagine.

We have just a little bit of time left and I'd like to address the issue of debt now. Because there's an awful lot of talk in our country and in political circles about the debt that is collectively attributed to students in our country right now. What is the role of debt here? I mean, I know that both of us talked earlier about how the federal government contributes funding to college for students in the form of grants and loans, and then of course, their private loans, etc. But just off the top, and I'd like each of you to comment on this, what do you think is a reasonable amount of debt that a family might expect to look at over the course of four years— not just one year, but four years for an undergraduate education? Lynell, do you want to give that a shot first?

The Topic of Debt

Lynell Engelmyer 34:11
I think that debt is not unreasonable, in many situations. I don't subscribe to the theory that all debt is bad debt. But I think that there is a limit to it. I think a college education is an investment with an ROI, with a return. And, you know, lots of studies show that you will earn a multiple of what you might earn with only a high school diploma. As you go up in educational attainment, and if you require some debt to make that investment, I think the payoff could be great. I think that the Federal Direct student loan, formerly the Stafford Loan, has loan limits to it for undergraduates. And I think that if an undergraduate took the maximum loan limit each year for four years, I would tell you that I don't think that that is unreasonable debt. For me, it's where students and families talk about a certain school and attending a certain school at any cost and borrowing at any level, that really, really scares me and where the numbers start to accrue into pretty staggering figures. And so I've sometimes told families when they say to me, "Well, where can I borrow more money?" You know, I tell them, we can look outside of the Federal Direct student loan program. But I actually tell them that there are calculators for loan repayment, so that they can then look at what a monthly payment might look like. And when you break it down into that level, I think it makes it much more real. And when you start talking about a six or $800 loan payment right out of college, my hope is that it gives a family pause. I think if you look at the loan limits for the undergraduate Federal Direct student loan, those are not unreasonable and maybe a good investment in the student.

Peter Van Buskirk 36:07
And again, as a parent, and then you've been a parent in this process as well, you don't want your child to come out of college saddled by a lot of loans. But to your point, there may be a reasonable amount. You talked about the Federal Direct and a maximum amount; is that a total over four years in the neighborhood of about $25,000 to 30,000?

Lynell Engelmyer 36:26
So there's actually a yearly maximum based on class year, the thought being that the longer you've persisted through college, the more likely you are to graduate and the more likely you are to be able to repay the loan. It's $3,500 freshman year, $4,500 sophomore year, $5,500 junior year and again, $5,500 senior year. So you're somewhere between $20 and $25,000 for that. There are ways to borrow a little bit more under that, but that's the basic answer.

Peter Van Buskirk 36:56
Very good. And Varo. I know at Swarthmore, the institution makes it a practice— correct me if I'm wrong— to provide financial aid that does not include loans to the students. A) Am I correct in that? And B) That doesn't preclude a student from still choosing to take out a loan in median costs.

Varo Duffins 37:14
And I love the way you frame the second part of that question, Peter, because that's very important. We are known as a loan-free institution, which means that as we determine a student's need with the aid decision that we provide, it consists of need-based grant and a work expectation, a campus job expectation; we do not meet that need, or fulfill that need with the expectation of loan. And that, of course, is to the benefit the student. To say it more candidly, whatever loan expectation they would have normally had, that would have been filled in with federal loan, we actually replaced with our own institutional aid grant. But to the second point of what you said, yes, it does not preclude students from borrowing loan and our students who do borrow loans, and we do have some that, do it in terms of adding additional flexibility to their educational experience, because now they're borrowing alone. That's not necessarily expected to go toward paying the actual student account balance, but it could actually go toward helping the family and maybe even lessening the burden on the parent contribution as well. So in terms of reasonable debt load, you know, I can't really say it any better than Lynell just put it.

I think it varies from student to student; it really is a cost value judgment for the student and for the family. And whatever it is that they feel comfortable doing, what one student and or family will feel comfortable borrowing may not be the same that another family would do. You know, as Lynell said, it's the subsidized amounts over four years; the standard amounts that a student would receive a federal loan into an aid decision would be about $19,000, and they'd have the option to borrow or to be given an additional $2,000 each year, you know, which takes it to just under $30,000. And according to the Project on Student Debt, which is another website that your families may want to look at ([in addition to] the Institute for College Access and Success and TKA). They actually give some really good data and some longitudinal data on student debt institution by institution type, and also by state, but the average that they say on their website is that more than six in 10 college seniors who graduated from public and private nonprofit colleges in 2019 had student loan debt, and they owed an average of $28,950. So, you know, those are good figures for families if they just want to get a sense of the averages.

But as one of my colleagues here at the college says, nobody is average. And so you know, you have to think about the context of where you fall within that, and at the end of the day, like everything else, even with admissions, it really is a very personal choice and what fits and works for one student and family may not work with another. It really depends on what your goals and objectives are. And you know, the other thing with that is, for many students, this will be the first debt that they may incur. And as all of us in the room who are over the age of 25 know, it probably won't be the last amount of debt and wise investment that they make. So I definitely champion everything that Linell said in terms of the investment piece, I think that's really smart advice.

Closing Advice

Peter Van Buskirk 40:40
Excellent. As we get to the end of our segment here, I want to give each of you an opportunity to offer some parting thoughts, advice to families as they begin to engage in the financial aid process associated with college admission. So, Lynell, do you want to go first?

Lynell Engelmyer 40:55
Sure, I think my advice would be that staying organized is paramount. I tell all my students: use your calendar, use the reminders on your phone calendar, so that you don't miss dates and deadlines. Because you know, in financial aid, money is finite. And being late can be a real problem. Make sure you know what each school requires, which is a little bit of a treasure hunt to figure out, so keep it organized. And really make sure you check off each box. And finally, just remember that you're a consumer in this process, not a victim of it. And so it means that you're allowed to call a financial aid office and ask questions. If you don't understand something, if you don't understand how to answer a question, you're allowed to call and ask.

Peter Van Buskirk 41:45
Very good. Varo?

Varo Duffins 41:46
I think it's all great advice. And I would overlap on some of those pieces. I guess in terms of framing the beginning of the approach to the process of financial aid is to begin with yourself and your family, and to understand from the beginning, sort of where you feel like your points of affordability, or lack of affordability may be. That's the long way of saying, if you feel like there is a price, an out of pocket price point that is really beyond your reach, that may be something to talk about. It doesn't necessarily mean that it should dissuade you from pursuing an institution in terms of your interest. But it may be something to talk about in terms of students who have very special unique circumstances. And they may have some concerns about how to navigate the process. Because you know, there could be aspects of their situation that they feel are unique, or personal, or don't fit neatly into all the boxes.

I would say as Lynell said, to really get organized around your information. One of the things that a very wise Dean of Admission taught me years ago, he might even be the one asking me this question, is that you really have to know your story. And I think a brief detailed one page narrative, particularly if you have special circumstances, to actually write that down and flush that out in terms of dates, and figures and things that are accurate— it's a really good way just to do sort of a self introspection, so that you understand your situation and your family situation. The other side of this that I think is very key, and Lynell touched on this earlier which I think was really smart, you, as a student, as a family, are providing very personal, confidential information to complete strangers. And unfortunately, there really isn't another way to do that process. And I think having some sense of trust in the institution and knowing that financial aid offices at colleges and universities have been doing this for quite a long time. We are very adept at keeping information confidential, private, secure. But there's also the other side of trust, which is in that narrative and things that you're talking to and about yourself to know that the professionals in that office are handling that information with great care. And I can assure you that they are and that in almost all cases, I would imagine that you should really not feel too overly concerned with sharing that information. The degree to which you share the information, of course is up to you.

Which leads me to my last point, which is to be responsive to the financial aid office, if they make requests for additional information. It is not to throw you off. It's not because they believe that you are not telling the truth. Oftentimes, it's just for a simple clarification. The more responsive you are to those requests, the easier the process goes for you and the faster it will go for you because— and I will end here— the most important thing is that when you get that wonderful letter that you've been admitted to the college/university if you've applied to, one thing you definitely want to have that comes along with that letter or soon after is some semblance of a financial aid decision, so that you can at least make sound and wise decision when it comes to whether or not you wish to enroll at that institution.

Peter Van Buskirk 45:16
Great advice. Thank you both Lynell and Varo. I think that if folks have been able to follow this conversation all the way through, you should be coming away with a sense of confidence that the road to college can be facilitated with financial aid. The cost and financial aid doesn't have to be a barrier, but it can be a pathway. And we've just heard from two superb financial aid professionals about how this process can work for you. Again, a great session. Thank you, Lynell. Thank you, Varo. And I hope everyone who's listened is coming away with this now with a good sense of how to be organized and how to carry forward in the application process. That's it for today. I want to thank you for joining us; be safe until the next time, take care.

Erin Barnes 45:56
A special thanks to Peter Van Buskirk for joining us in this conversation today. If you want to hear more from Peter, you can find his content in the blog section of our website and on YouTube where his webinars and presentations are hosted. If you want to learn more about Scoir, go to scoir.com. That's scoir.com. We'll link to that in the show notes, and be sure to follow us on Instagram at Scoir. That concludes our conversation today. If you like what you heard, please subscribe, rate, and review this episode. Thanks so much for listening!