Applying to College without Going Broke with Jeff Levy – College Bound Mentor Podcast #35

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This is Episode #35 and you’ll hear us talk applying to college without going broke with Jeff Levy. Listen to the episode on Apple Podcasts, Spotify, YouTube, and your other favorite podcast spots – follow and leave a 5-star review if you’re enjoying the show!

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College Bound Mentor Podcast Episode #35: Applying to College without Going Broke with Jeff Levy

What’s new with financial aid? A lot. In this episode, we welcome back returning guest Jeff Levy, Co-Founder of Big J Educational Consulting, who’s been an educational consultant since 2007. Hear the latest changes impacting financial aid, the key deadlines for the FAFSA application and CSS Profile, how common full ride scholarships actually are, things to keep in mind when saving for college as it relates to financial aid, and how to maximize your potential for merit aid. This episode covers everything from FAFSA to full rides. Here’s a small sample of what you will hear in this episode:

  • Who should fill out the FAFSA and CSS Profile?
  • What are Jeff’s famous charts?
  • How is financial aid calculated?
  • What are some Myths & Truths when it comes to financial aid?
  • How will the budget cuts impact financial aid & international students?

Check out Jeff’s resources at BigJEducationalConsulting.com and connect with him on LinkedIn, and Subscribe to College Bound Mentor on your favorite podcast platform and learn more at CollegeBoundMentor.com

Check out the episode and show notes below for much more detail.

Show Notes

  • Applying to College without Going Broke with Jeff Levy
    • [0:19] Welcome to College Bound Mentor
    • [0:26] Lisa Bleich, Abby Power, Stefanie Forman
    • [0:32] Check out Jeff’s resources at BigJEducationalConsulting.com and connect with him on LinkedIn, and Subscribe to College Bound Mentor on your favorite podcast platform and learn more at CollegeBoundMentor.com
    • [0:48] The Truth about Financial Aid with Jeff Levy – College Bound Mentor podcast #15
    • [2:22] Who should fill out the FAFSA (Free Application for Federal Student Aid) and CSS Profile?
    • [7:52] Do colleges have huge endowments they reserve for financial aid?
    • [8:54] What are Jeff’s famous charts?
    • [12:48] What expectations should families have about financial aid?
    • [17:54] How is financial aid calculated?
    • [19:32] How common are full ride scholarships?
    • [24:42] How should you save for college?
    • [30:45] How do you maximize your potential for merit aid?
    • [36:12] How will the budget cuts impact financial aid & international students?
    • [38:41] How much do data analytics come into play when it comes to college admissions?
    • [45:10] How is the rising popularity of public universities impacting financial aid?
    • [49:47] What are some Myths & Truths when it comes to financial aid?
    • [52:11] Check out Jeff’s resources at BigJEducationalConsulting.com and connect with him on LinkedIn, and Subscribe to College Bound Mentor on your favorite podcast platform and learn more at CollegeBoundMentor.com
    • Theme Song: “Happy Optimistic Americana” by BDKSonic

What is the College Bound Mentor podcast?

Lisa, Abby, and Stefanie know college. They also know students. With over 30 years combined experience mentoring young people, they’ll show you why understanding yourself is the key to finding the right college. Each episode, hear trends, case studies, and interviews with students who have gone through it all – giving you valuable insight to survive the college application process and beyond. Hosted by Lisa Bleich, Abby Power, and Stefanie Forman, Partners of College Bound Mentor.

Transcript

Please note: this transcript is not 100% accurate.

Jeff Levy 0:01
The best single thing you can do as a parent to prepare for this high cost of college is to save

Lisa Bleich 0:08
Hey, CBMers, welcome back to College Bound Mentor, where we help you survive the college application process and beyond. We’re your co-hosts, Lisa, Abby, and Stefanie, and on today’s episode, we are so delighted to have our rock star, celebrity guest from the independent educational consultant Jeff levy back on our podcast to discuss financial aid and how to go to college without going broke. This is definitely an episode you don’t want to miss. We did a similar episode, Episode 15, which was a year ago, which Abby was very surprised to think that it was so long ago, because it seemed like we just spoke with you yesterday. So welcome back. Jeff is the co owner of Big J consulting, and has been an educational consultant since 2007 based in Los Angeles and now, I guess, Connecticut, his students live in Southern California and throughout the United States, Europe, Asia and Australia. In his prior profession, he spent over 20 years in the film and television industry, where he worked on set with many of the industry’s most accomplished writers, directors, producers and actors, and was able to observe many paths to creative and professional success. He is also a financial aid expert, and speaks and writes widely on the topic. You just published your very brief guide to financial aid, which is so helpful. And we also had a great episode, great conversation on episode 15, so you could go back and listen to that. So we decided to have you back on to talk about updates and financial aid. And so welcome.

Jeff Levy 1:44
Well, thank you for having me. What episode is this? If that, if that last one was 1535,

Lisa Bleich 1:52
yeah, 35 so we’ve been busy. We’ve had some really amazing guests, and so we’re just thrilled that people are willing to talk to us about such interesting topics. So So last time we covered like, the two types of financial aid, the FAFSA and the CSS Profile, and I think it just as a starting point, could just kind of walk us through some of the changes this year. Um, there’s been a lot of changes externally in financial aid. And so, you know, why would a family or student would fill out one versus the other, like, who should be filling these out and what are some changes they might expect as they go through the process.

Jeff Levy 2:27
If you’re If a family is applying for financial aid, and actually, technically, it’s not the family, it’s the student who’s applying for financial aid, these forms belong to the student. The questions are addressed to the student. If this, if the student is applying for financial aid, they will have to submit the FAFSA, the Free Application for Federal Student Aid. Every college requires it for financial aid, but about 160 170 colleges require a second form, and that’s the CSS Profile. Those schools tend to be the most selective, although there are exceptions, and they tend to be private rather than public, although there are exceptions that second form is very invasive, more complicated, not really designed for the student to complete it, even though it’s the student’s form. In my experience, it’s usually the parent or the parents that fill that one out. But so it’s not really up to the family which forms to complete. It’s really about which forums the colleges they’re applying to require

Lisa Bleich 3:46
forms open October 1. So we should just say that, yeah, thank

Jeff Levy 3:50
you. Forms opened officially on October 1. And unlike past years, they will open, uh, FAFSA will open on October 1. It’s even open already in a beta situation. I don’t recommend you do it, but October 1 they open. And if you’re applying in the early round, early decision or early action, those forms may have a November 1 deadline. So really, really important, know every college your child is applying to, know which forms they require and what the deadline for those forms are given the round that your child is applying in. Really important. Most of the big changes happened a couple of years ago, but let me explain this about the FAFSA the best way it is your it is the students FAFSA. The best way to start the FAFSA is not for the parent to do it. The student has to get and it takes no time at all. They just log into Google Federal Student Aid ID. 80 and they’ll create their FSA account. They’ll have an ID number they need that the student does to begin their FAFSA. The student should begin the FAFSA, not the parent. There will be early on in the student section. There’ll be some questions about the parents, and they’re just identifying the parents by their first name in that section. If the parents are separated or divorced, only one of the parents will will have to will be listed in the FAFSA and will fill out the parent section. So just based on how the student answers some questions, and it’s going to be the parent who has given more financial support in the year to date to the student. So that’s the parent. Doesn’t matter who the student lived with more that used to be the what mattered, not anymore. It’s the parent who has given more financial support to the student. That’s the one parent who fills it out in the case of separation or divorce, the other parent is totally ignored. Not true with the CSS Profile that form is asking everything about every parent and step parent, so but the FAFSA, the other parent is ignored. So if both parents are roughly giving the same amount. I mean, no one’s going to if there are red flags, then yes, you will be asked to prove it. But if the parent, if there are no red flags, and the parents, and this happens, a lot, are giving roughly the same amount to the kid, make sure the parent, who the student indicates on the FAFSA is giving more. Is the one with lower income and lower assets, you’ll get more in financial aid, right?

Lisa Bleich 6:48
And that’s another thing. It used to be the non custodial parent, but as you said, that’s no longer the case. But for schools that only look at the FAFSA when a parent, when a family is divorced or separated, that can actually help quite a bit with financial aid, and that’s why you’ll see a difference between schools with the CSS Profile versus schools with FAFSA only. So that’s another way that we’ve seen a big difference in financial aid awards. So Right? Good to know

Jeff Levy 7:12
another difference between the two forms. The FAFSA doesn’t look at home equity as an asset. The CSS Profile for most of the schools, not all of them, Harvard and Princeton, don’t look at home equity either. But that can be a real advantage in FAFSA only schools, because home equity is ignored by the year.

Lisa Bleich 7:35
Yeah, it’s so interesting how, like all of the different formulas make a very different expectation of what a student aid index can be. So I’ve heard some talk or some chatter around a lot of people say, Oh, well, colleges have these huge endowments that they’re just waiting to give to the right student. What would you say? Or how would you respond when somebody says something like that?

Jeff Levy 7:58
I wouldn’t complicate your search for affordable colleges by looking into the endowment is just it’s just not. It’s not the place to do your investigation. There are colleges are all over the place in terms of their financial aid generosity. Some are very generous with need based aid and give nothing in merit aid. Some are very stingy with need based aid, but give a lot in merit aid. A few are generous with both, and some are generous with neither. So this is the challenge that faces families, is, how do we find the set of schools that are going to be most generous for us? And you know, I assume we’ll spend some time today talking about

Lisa Bleich 8:50
that, right? And you, and you have that amazing chart that you so generously provide for colleagues and also for families. Can you just talk a little bit about that and how someone could find that? We’ll have a link. That? We’ll have a link also on our website for that. But can you talk about

Jeff Levy 9:05
that? Yeah, my partner Jenny and I began publishing these charts about nine years ago, mostly because we don’t know how to do our work properly as Educational Consultants without that aggregated data in front of us. So if we’re working with a family, for example, who has learned that they have no demonstrated financial need, their income may be a little too high, their assets are substantial, but the price tag of college is, let’s say, 8590 95,000 per year per child is a significant burden for them, then that family should be looking for schools that are generous with merit aid, non need based aid. Conversely, a family might learn that because of their income and. We’re not talking about low income families. I mean, a family who that earns well above the national median can still be eligible for a significant amount of need based aid. That family should be looking for schools that are generous with need based aid, because merit aid is something that, for the most part, is reserved for full pay families. We develop these charts in order, and we’ve got like, 480 different universities and colleges in this chart, and we’ve got seven different charts, but the one we’re talking about is financial aid for domestic applicants. You can easily sort for the schools that are meeting 100% of need, 95% of need, 90% of need, if you’re a family with demonstrated need, and, on the other hand, if you’re a family that’s higher income that won’t qualify for need based aid, you can use this chart to find the schools that are generous with merit aid, meaning the average award is significant, 1520, 25,000, a year, and merit Aid Awards are are renewable four year award. So that’s a lot of money. And the chart also has a column, and this is just as important as average size of the merit Aid Award, the percentage of undergraduates receiving merit at that school. So Duke has an average merit aid award of like 60,000 per year, but you know, 10 undergraduates get it, so

Lisa Bleich 11:41
it’s Robertson fellow, and that’s about it, right? Yeah,

Jeff Levy 11:44
exactly. So we just don’t know how to put the right set of schools on our students list without having this data to refer

Abby Power 11:55
to. That makes a lot of sense. So one thing that along these lines, one thing that happens to us a lot. I’d be interested to hear, if you hear this from families, is families come to us and go, Oh, my friend’s son got a full ride to Harvard. We know Harvard doesn’t give merit aid. The IVs don’t give merit aid. Or Syracuse is giving such a big discount, it’s almost free. And I think part of the misconception out there is what, exactly what you said, that you really need to understand how many kids? Well, I think some of it’s just people say things like, you know, then it goes viral, or what have you, you know, the kid who got a free ride to Harvard. But a lot of it is not understanding how many kids are getting these, some of these special scholarships that you have to apply to, or that are, you know, granted by the by the most selective universities. So how do you kind of, when you meet new families, or families that are totally clueless about the process, how do you ground them in the idea of how they should approach looking for financial aid? You know, what’s the first step for them, and how do you set their expectations?

Jeff Levy 13:04
A great question. Abby, thank you for asking it. When I first, when I get the phone call from a from or an email from a family inquiring about our services, I before we even meet with them for an initial consultation, we send out some links to family parent surveys, and in one of our surveys, is a very simple question, is the cost of college a factor in where your child will enroll? And if they say it, well, I’m not asking them for their tax returns, I’m just asking them simple question, and if their answer is yes, it’s a factor in that survey, multiple choice answers open up. Is it one of many factors? Is it a significant factor? Is it an overriding factor? And I think families feel comfortable answering that question, if it’s a significant or overriding factor, I let them know at the initial consultation that we have to talk without the student. I’m going to need some information from them. And now it may turn out that and they’re never opposed to learning which colleges they will get the most money from. I mean, I haven’t ever had a family that didn’t want that information, and it’s not that difficult. And I again, I’m not asking for their tax returns. It’s not that difficult to find out where you are on that need spectrum. Are we a family that has moderate to substantial financial need, demonstrated need, or are we a family that has no financial need, but we’re going to need that non need aid, the merit aid to make college affordable, and that that’s what informs me about the set of. Colleges to put on their list, and my instructions to them to how to find that out. It’s not that complicated, like I can go into that. If you do go

Lisa Bleich 15:09
into that, I think people always want to know. Well, how do I know if I would qualify?

Jeff Levy 15:15
First rule, do it early in the process. Don’t wait until after the college list is all finalized and you’re beginning to submit the FAFSA and CSS profile. That’s too late. We need to know before the college list is put together. What are the colleges that are going to be most generous for you? Are you a family with need, or are you a family with no need? The easiest way, I think, to figure that out is running a bunch of net price calculators. So by law, at least right now, it’s still law may change. Every college must have a net price calculator on its website. Some are more accurate than others. Actually, the net price calculator that the College Board has, that I think over 200 colleges, different institutions use, is fairly accurate, so it’s not going to predict to the dollar how much financial aid you’re going to get, but if you run five or six or seven of these, it’s a little bit of work. But you know, for one of the most expensive purchases you’re ever going to make in your lifetime, a few hours is probably worth it. If you run five or six or seven of these. Save the results page, because it may come in handy in an appeal. Later on, you will begin to see, are we a family that’s expected to pay 25,000 a year toward our child’s college education, or are we a family that’s expected to pay 125,000 a year toward our child’s college education. There will be some outliers that don’t make sense. The more of these you run using the same numbers for each the more you’ll begin to understand exactly where you are on that needs spectrum.

Lisa Bleich 17:20
So this was a long time ago, but when my oldest was applying to college, I spoke with the financial aid person at her school, and she said that the net price well, at the time, there wasn’t a net price calculator, but the financial aid offices look at your ability as a family to absorb debt. So even though you may not have all of the money saved, but the ability to be able to repay it is there, is there any truth

Jeff Levy 17:48
to that? Well, I don’t know if I can answer that question directly there. There the financial aid formulas. What’s baked into them is your ability to pay from current earnings. So that’s income, your ability to pay from past income, that’s savings, and your ability to pay from future income, and that’s debt. So that’s all sort of included in the calculation of what you’re expected to pay families are like, blown away by how high that number is, the number that is what they’re kind of expected to pay each year. How can we afford that from our income annually? Well, you can’t, you know, that’s not what that number represents. It represents past, current and future earnings. So I’m not sure if that answers your question, but a similar question that I get asked a lot is, will my credit card debt be credit us in how much financial aid we get? And the answer, of course, is absolutely not. They don’t care how much credit card debt you have. You know? I mean, that would be unfair to those

Lisa Bleich 19:11
who just rack up a big bill, and then I won’t have to pay more for college,

Jeff Levy 19:14
exactly, so that that does not factor in,

Abby Power 19:18
yeah, so kind of backing up to the where we just started that question, do you get families coming to you with that? Oh, my friend’s friend’s sister’s brother’s daughter got a full ride to Harvard and and all everyone. I literally had someone say this to me the other day. Everyone I know is going to USC for free, which I can tell you, not everyone’s going to USC for free, but, but do you, do you hear that? Or is it a

Jeff Levy 19:47
regional thing? No, all the time. And and it’s, it’s what you said earlier, Abby, it’s either the person who thinks their child got a full ride. Doesn’t really know what they’re talking about were it’s the terminology. When you say someone got a full ride that’s usually a very big merit scholarship or a big athletic scholarship. They’re very rare. What’s not rare is that at the wealthiest schools, Harvard, Princeton, for example, they are incredibly generous with need based aid for not just low income applicants, but, you know, middle income applicants. So at Harvard, for example, I mean, no one gets in. So maybe it’s a terrible example. No, no,

Abby Power 20:41
it’s fine, because that’s those are the stories. Those are the myths, right about Harvard and

Jeff Levy 20:45
well, there is some truth to it if, if your adjusted gross income is 100,000 or lower, you will pay nothing at Harvard, as it should be. And I think if it’s 200,000 or less tuition is fully paid for, and some portion of additional expenses depending upon what your income is at. So, you know these schools that are needing full need, and you know there’s full need and there’s full need, and the financial aid award may be very different between two schools that meet full need, but they can be very generous for low and middle income families. What they don’t do is give any merit aid for higher income families. But you know, just from my own family’s experience, my daughters are now grown, and their debt is paid off, but as California residents in my income bracket at the time, which was, you know, I call it middle income, not wealthy, not poor, it cost me less to send them to a very expensive Ivy League college. It wasn’t Harvard. Then it would have cost me to send them to an in State University of California institution. This was before I was this was when I was in the film business and working erratically, you know, year to year. That was one of the first keys that kind of opened my mind to how this all works. It’s not the sticker price. You know, the sticker price has almost no bearing on what you’re going to pay unless you’re you’re high income afford it. Yeah, and the school doesn’t give merit aid, but like, 85% of all undergraduates are paying less than the sticker price. They’re either getting need based aid, Merit aid, federal, you know, federal loans, which anybody can take out, do not make your decisions based on the sticker price. It’s really has to be made on the projected net price, the price you’re going to pay after grants and scholarships.

Lisa Bleich 23:04
So Jeff, I have a new job for you. It’s something that I’d like to do, but I think you’re better suited. I think you need to consult to Hollywood about how college financial aid works, because whenever you see a show, it’s all it’s so much misconception the way that they portray it, you know? And I’m like, oh, there’s no such thing as that. And I’m so I feel like you should go in with your with your ties, and become a consultant on how college actually works, right?

Jeff Levy 23:34
I did a little bit of presenting in front of some of the Hollywood unions, the grips and the gaffers I did early on, have an, you know, I just

Lisa Bleich 23:48
made the writers so that on the what they portray on TV. Yeah, exactly

Abby Power 23:53
like the guy who rides around in the cop car, the the former cop who rides around the cop car and gives the consulting advice about what’s real. You need to do that. Yeah, you need to do that for college.

Jeff Levy 24:06
Funny story, my daughter is a television writer. You texted me last night saying, Dad, I’m writing a scene, and I need some financial aid advice for this.

Stefanie Forman 24:21
That’s unbelievable. Oh, my God,

Abby Power 24:24
very funny. Okay, so do you talk to your families about how to save for college? Is that something they come to you and ask about? And if so, do you have any nuggets of advice that could be helpful for everyone?

Jeff Levy 24:39
Yeah, I mean, the sit one of the myths out there is, don’t save for college, because you’ll get penalized in the financial aid formula. There is nothing further from the truth than that, the best single thing you can do as a parent to prepare for this high cost of college. Is to save, and here’s why the penalty the way savings is assessed, in the financial aid calculations, the penalty is five cents on the dollar. If you have saved $100,000 it’s going to increase your family’s expected contribution by 5000 so would you rather have 95,000 left in the bank to pay? What are going to be, you know, high college costs or nothing? If the penalty of the assessment were 25 cents on the dollar, which it is for students, not for parents, but then that’s a disincentive to save. But at five cents on the dollar, the best thing you can do is say how to save. Now, I’m not a I always make the distinction. I’m a financial aid advisor. I’m not a Certified Financial Planner. I’m not going to tell my families how to move assets around, or, you know where to park their assets, but I think from my own experience and the experience of my families, saving over time, is the best way to do better, to save a little bit over a longer period of time than to all of a sudden, think of it in, you know, when your kids in 10th grade, which was my experience, stupidly and oh, my god, I gotta start putting this away. And the reason for that is because of compounded interest, that a little bit over a long period of time is really going to grow,

Lisa Bleich 26:37
and then you don’t even feel it. I mean, we started saving when the kids were born, and we just saw it as an automatic withdrawal, so we didn’t even really think about it, and then the money was there when we needed it.

Jeff Levy 26:47
Well, Lisa, you’re much smarter than I am. I didn’t know that at the time, but wasn’t thinking about it, but you’re absolutely right the automatic withdrawal that comes directly out of your paycheck, or however you’re getting paid, and goes into that account, whether it’s we, we can talk about 529, accounts, maybe. But whatever the account, the important thing is that you have a savings account devoted to saving for your children’s college education, and that automatic weekly or monthly withdrawal is the best thing you can do.

Lisa Bleich 27:25
And I think I want to underscore a point that you made, because I think sometimes people don’t realize it’s like when, when my kids were born, my my parents thought the right thing to do was set up one of those ugmas, you know, those trusts for the kids. And of course, it didn’t do well, and it was in their names, and so that was a big mistake. They didn’t know it at the time, and it was fine. But so what you said is that if it’s in the student’s name, then it’s going to be assessed at 20% is that correct? 25% 25% so setting up a trust in your student’s name is not going to be helpful. So it’s really important that it’s in the parent’s name to get a reduction, and maybe this make the student the beneficiary.

Jeff Levy 28:04
With respect to financial aid, you’re 100% correct. We can’t give generalized advice, yes,

Lisa Bleich 28:10
but for financial aid, if you want to maximize financial aid, which is what we’re talking

Jeff Levy 28:14
about, yes, when a parent tells me that there’s a large trust in for which the student is the beneficiary. I cringe, because that is a student asset, and that’s even if they don’t have access to it until they’re 21 or 25 that’s still a student asset, and it’s penalized at typically 25 cents on the dollar, a 529, savings plan, which is set up specifically to help parents save for college, not necessarily the place where you’re going to get the best return on the dollar. But there are some, you know, there are some advantages to it, as opposed to a, some other kind of investment. Even though the student is the beneficiary of that account, it is a parent asset, if the if the parent is the owner and the custodian of the of the account. So it’s set up that way to incentivize parents to open these 529, accounts. If it were a student asset, nobody would open them.

Stefanie Forman 29:27
This is very helpful for me, as my daughter turned seven, and I won’t share too much, but we have one of those things. And yeah, it’s, it’s giving me food for thought here. So yeah, I’m going to actually text my husband, right? When this,

Jeff Levy 29:44
especially if it’s an irrevocable trust for which the student is the beneficiary, that’s that’s not good for financial

Lisa Bleich 29:56
financial aid, right? Not for savings, which is for financial aid. Unreal, right?

Stefanie Forman 30:02
I would love if you could dig deeper into something that you’ve mentioned before. You were talking about, you know, students, well, we were talking about your charts, which is, by the way, they are the most You’re so generous with them. And so everyone on here, besides the amazing advice that Jeff is giving, please like Google his charts they are, I mean, incredible, so I digress. But anyway, just talking about merit aid, we have so many families who don’t qualify for financial aid, and the cost of college continues to rise, and they really want to maximize merit aid for their for their children. So what advice can you give to these specific families on how they can be really smart? You know, moving forward with merit aid.

Jeff Levy 30:55
So first of all, use our chart to find the set of 20 or 30 or 40 schools that a are generous with merit aid and B might be a good academic and social and cultural fit for your child. So if I learn that a family is going to require merit aid, or probably require merit aid to make college affordable. I start with our chart to see what are the schools that are in play. Now that same family may say, but if they get into Stanford, we’ll make it work. You know, I respect that I get it and they may be able to make it work. So really, it’s, you know, what I’ll say to that family is, but if they don’t get into Stanford, those target schools with a medium probability of admission, or those likely schools with a high probability of admission, should I make sure that many of those are generous with merit aid, and they always say, Yes, please do so that’s the first place to go. The hard part, need based aid is pretty cut and dry. You can figure out based on what your expected family contribution is that you’ve learned from the net price calculator, or it’s also, it’s called the Student Aid index for the FAFSA. You can learn what that is, and if you know a college meets 95% of need, you can kind of predict what you’re going to get in need based aid. Merit aid. There’s more under the hood that we can’t see. Merit aid is really a tool that institutions use to meet their institutional goals and priorities. That could be the bassoon section is all graduating, you know, and they need a they need to bassoon players, those two bassoon players, if they’re decent students, may get merit aid. It could be that we have students from 49 states, but not a 50th state. We need some Wyoming kids, those Wyoming kids you know, may get merit aid coming from California. We are targeted by a lot of institutions, our our students, because A, they know that they can’t get into the University of California campuses. And B, even if they got in, they’re not that inexpensive. They’re now in state over 40 grand. So we are ripe for to be plucked by instant institutions who, through merit aid, can make their college almost as inexpensive as an in State University of California campus. So there are all kinds of reasons that a student may be eligible for merit aid. They’re hard for us to know, but experienced independent Educational Consultants and school counselors have a pretty good sense of who may be eligible for a decent amount of merit aid.

Stefanie Forman 34:13
Yeah, that’s so helpful. Thank you, because, yeah, I think the need and the ask and the want to understand merit aid just continues to to rise for families

Jeff Levy 34:23
who is also helping colleges meet their institutional goals. Full pay families, that’s our next question. They colleges need full pay families to help underwrite the costs of families who are getting financial aid so very desirable if you are a full pay family, and that puts you kind of in the in the front runner position to get marinade. And a lot of families think, well, that doesn’t make any sense. How are we full pay? If we’re if they’re giving us merit aid. Well, the National discount rate, meaning nationally, across all institutions after financial aid is given by the institution, the discount rate is now over 50% so what colleges are pulling in on average, is half of what their their tuition cost is. So if they give, if they’re a $90,000 school, and they give $30,000 in marinade, they’re coming out ahead. So they’re happy to do that, because it it increases their net tuition revenue, it doesn’t lower it.

Lisa Bleich 35:43
Know that the full pay students are going to be able to come back and be able to afford it, because in the the middle income, even if they got $30,000 they still not may not be able to pay the $60,000 difference, but a full pay student can. So there’s a higher likelihood that they’re going to get that money and they’re going to retain that student over the four years.

Stefanie Forman 36:03
Yeah, that lens is so helpful. So, yeah, speaking of that and the current world that we live in, how do you think the budget cuts will impact financial aid, or maybe the drop in full pay international students?

Jeff Levy 36:20
I’m worried we’re all experienced enough not to be predictors of what’s going you know, you’re definitely getting into that school year, but I’m very worried, I think that the changes that I think will happen is that the amount of financial aid given is going to tick down. The percentage of full pay families will tick up. I think college, you know, colleges have a balance of families who are full pay and families who are not, and I think that balance is going to change a little bit, just out of necessity, so that this could be an advantage for full pay families over the next few years. But I think that there’s no question that colleges are very concerned now about about their bottom line, because of, you know, all of these denied funds, and as you say, international students just you know that that’s dropping substantially, and they were a that they were a revenue stream, not a dream. So I think that’s it’s going to make admissibility a little bit easier, I think. And I saw that, actually, I saw that last year. I saw more waitlist movement at the most selective schools last year than I ever saw before. You guys the same you you saw the same thing. So admissibility, a little easier, financial aid probably a little tighter.

Abby Power 37:55
Yeah, and do you think you’re gonna we’re gonna see again this year? I would kind of expect it, admissibility easier for full pay families, domestic families.

Jeff Levy 38:05
I do, I think so.

Lisa Bleich 38:08
Yeah, they’re going to reduce the discount, though. Do you think that that will happen?

Jeff Levy 38:12
It’s that, how far do we reduce the discount before we lose

Lisa Bleich 38:19
right? So I’m sure they’ll run, they’ll run some algorithm to figure out how much if they if they raise it, you know, if they reduce it by $5,000 will that yield as many students and

Jeff Levy 38:29
yeah, this is why enrollment managers and consultants in enrollment managing make a lot of money to figuring this stuff out.

Lisa Bleich 38:36
I think we should talk about that a little bit, because I think that’s something that people don’t really understand about how much data analytics comes into play when they’re making these decisions about what percentage, How much discount they should give to what students. I remember at one conference we were talking, I believe it was to it was, I think it was Connecticut College. We keep coming back to Connecticut, and they were saying that when they were running the numbers on they had like these, like a chart, and they had these different, like deciles, of students. And so they were able to determine that a student who was, say, top 5% of their class with the highest test scores, no matter how much discount they gave them, they were not going to be able to yield that student. So Did it make sense for them to give them a lot of merit money, whereas other students in the different little cells, they knew that they would be able to yield those students. So can you just talk a little bit about how that comes into play when they’re making these decisions about discounts?

Jeff Levy 39:35
Yeah, and just just to explain to your audience, when you say, yield that student, but yield is the admitted students who actually follow through and enroll. And that is the our students care about acceptance rates. You know, colleges care care about yield they want to be. You know, Harvard’s. Out a yield of what, like 80 something percent. Yeah. I mean, we we want our I’m not even sure that this is so much of a financial aid question as a broader question, but we want to position our applicants to look good in front of those algorithms. And there are a lot of ways to do that, and one way is to demonstrate interest over time, not just during application season, but in 11th grade. Start going onto the website, visit the college if you can interact a little bit, not too much, with your admission rep. Those kinds of students who are engaged with the college are more likely the algorithms say are more likely to yield. And I think your point, Lisa is excellent, that if you’re in a set of high achieving kids who are not likely to enroll at Connecticut College, then they may not be wasting money on you with a lot of merit aid, but if you’re, if you’re someone who, with a little more money, will enroll there, maybe you’re not, you know, a 4.0 student, maybe you’re a 3.85 student, then that’s who might be getting more merit aid than The higher achiever? Yeah. And I

Lisa Bleich 41:22
think that’s why there’s so much uncertainty, because a lot of times families are unable to understand, like, Oh, I’m a strong my son’s a stronger student, and he got waitlisted, or he didn’t get in. And all of that is all around enrollment management. And there’s a lot of things that are outside of our control, you know, in the process, and then there are. And so that’s, I think, something that’s hard for a lot of families to just wrap their hands around.

Jeff Levy 41:44
You know what? What you’re saying reminds me of a point that maybe should be mentioned, that applying binding early decision is if you want merit aid is not necessarily a smart round to apply in. It’s fine if you want need based aid, colleges are not going to cheat Ed applicants out of the need based aid that they typically give. But merit aid, I’m not so sure about I think early action, non binding, early action may be a better round to apply in if you’re looking for merit aid, because you’re not bound to go to that school, so the only way they can really increase your chance of yielding is to throw a little more money your way. And I’ve actually seen some institutions in the month of April without even being asked, up their offer of marinade to some of their admitted students, because now they’re getting worried. You know, we haven’t gotten enough. It’s, it’s, we have two weeks left before May 1. You know, the the national deposit day, and we haven’t filled all of the seats we thought we would, we would fill here’s a little more money to some of those students we think will yield if we give them a little more money. So I was

Lisa Bleich 43:08
just gonna say, I just want to make it clear, because I think that there are in your chart, it’s so clearly shows who provides merit money, but the the top say, you know, 50 schools with high, high, high, highly selective schools that don’t offer merit money. That’s not going to happen. So I just want our listeners to be clear, there are the schools that give merit money and that or discounts, and then there are the schools that don’t. So don’t I just want people to understand that there’s a difference.

Jeff Levy 43:39
I guess. The only other point I would make in what I was just saying is, don’t rush to deposit before May 1. Let you know time will work in your favor. Play a little hard to get and use that month, possibly to talk with the in the case of need based aid, to talk with the admit with the financial aid office. And in the case of merit aid, you can open a discussion with the admission office on the grounds of we’re waiting to see. You know what? You know what will be the smartest option for our family, and cost is a significant factor, and no one is going to, you know, disrespect you for saying we have to make smart financial decisions for our family. So April is a good month to have those discussions with the college and to wait a little bit and see maybe some more money will trickle in.

Stefanie Forman 44:40
So I’m curious if you see this in California, we’ve been seeing it in New Jersey, respectively, and Abby, in the Midwest, our families, there’s a huge want for or it’s coming from both the parents and the students. This desire to attend public. Universities for many reasons, cost being one of them, and just overall, that there’s just such a huge increase in applications in public universities. So how does that impact financial aid? Because most of these public institutions, they don’t meet full need for out of state students, and nor do they meet it loan free.

Jeff Levy 45:19
There’s so much that I can say to your question, Stephanie, I see a lot of the families I work with putting out of state publics on their list because the kid loves the idea of a rah rah school with a great football team and lots of school spirit, and the parents want to give the kid everything that they want, but generally speaking, there are a few exceptions. But generally speaking, like you say, an out of state public is going to be not going to be a source of much, if any financial aid, there are some exceptions. UVA, University of Virginia meets full need for every one of their applicants in state or out of state. On my coast, Oregon is pretty generous with merit aid for out of state, Merit aid for out of state kids they

Abby Power 46:18
love, the Midwesterners

Lisa Bleich 46:19
they do. And UNC also beats full need, which is a great option on the east coast.

Jeff Levy 46:24
But if you’re out of state, you have to get in, right? This is true. This is true.

Lisa Bleich 46:28
You do have to get in. But same for UVA, so I guess it’s the same,

Jeff Levy 46:31
but, but I think it varies state system by if you’re if you’re a resident of the state, some of these schools are terrific values. There’s no question about it, the combination of the already discounted tuition for an in state resident and in some cases, pretty good financial aid policies for and scholarships for in state residents, they can be a really smart option, and that’s why in California, you know, it’s impossible to get into a UC. Now, what? Why wouldn’t you consider for an in state price tag of $40,000 at a Berkeley or a UCLA or a UC Sandy? I mean, how is that not a pretty good value compared to 90, $95,000 a year. So I think that’s driven, you know, the the selectivity of these schools is that more and more families are just staying saying, you know, it’s a lot less expensive. This is where we’re going to apply. So does that answer the question you were asking?

Stefanie Forman 47:39
Stephanie, yeah, I think everyone wants to understand. I think everyone’s like minded in that way that everyone wants to understand why the increase in, you know, public universities, and I, I think we’re all like minded in that way. And I think people are going to start to think really differently about their financials when it comes to college, as this price tag just continues to shoot up.

Jeff Levy 48:04
But depending upon the state you live in, there may be neighboring states, like in the West Coast. There’s the Western Undergraduate Exchange, where many schools, public and private, are participating in various ways of getting students from to apply. I remember quite a few years ago visiting University of Utah, and they had like an amazing, amazingly relaxed standards for becoming a resident of the state and therefore qualifying for in state tuition. So we can generalize, and I think there’s value in generalizing. But do your homework, you may find out of state publics that are not much more than the in state public and you may find that after one year, you can be if you stay that summer after freshman year and work that sophomore year, you’re now considered a resident. It’s not the rule, but there are schools that.

Lisa Bleich 49:13
But on the flip side of that, there are some out of state schools, like Michigan, if you’re going out of state, it’s pretty much as much as it going to a private school. So there’s, you know that back and forth, but absolutely there there’s definitely a rise in interest in the big publics and a lot of the Southern publics as well. At least from this area, there’s a big interest in that. So we always like to end with Myths and Truths. I know we covered a lot of them, but are there any other myths or truths that you want to share with our listeners about financial aid and applying to college without going broke.

Jeff Levy 49:45
One myth that I don’t think we’ve talked about today is that you have to submit the FAFSA to be eligible for merit aid. I can’t tell you how often I hear that now. So I haven’t looked up every one of the 2000 you know, four year institutions in this country, but I have tried real hard to find them. Which schools require the FAFSA for merit aid consideration, and I have found two. Okay, which one? Please write to me and let me know.

Lisa Bleich 50:22
I want to know what I haven’t found. Any other which two Have you found?

Jeff Levy 50:25
Virginia Tech, okay, and for

Lisa Bleich 50:29
them, has a very important That’s right. Fordham, that’s right,

Jeff Levy 50:32
yeah, well, they have a very interesting policy. You will be awarded merit aid without submitting the FAFSA, it won’t be dispersed into your account until so you have to submit the FAFSA before you pay in August

Lisa Bleich 50:50
for the first semester, so you’ll at least know if it’s worth doing or not if you’ve

Jeff Levy 50:53
got so you don’t have to do it until you know that you’ve received. Oh, that’s good to know. I think it’s kind of crazy, but there are specific scholarships that you will find on the college’s websites that may have a need based component. Those specific scholarships may require the FAFSA, but frankly, with the amount of pressure coming down from from the current administration around dei I think those scholarships are going to go away also, even if they’re only looking at family income, I think that colleges are just going to be really scared about singling out those families as compared to full pay families. So I think those scholarships are going away.

Lisa Bleich 51:40
Interesting, yeah, yeah. Well, lots, lots of changes.

Jeff Levy 51:44
And one other thing I want to say about it, the reason why more colleges don’t require the FAFSA to give out merit aid is because they’re using merit aid to attract more families to supply and enroll if you erect barriers to get right, the family won’t do it. It just it’s kind of counterintuitive. So that’s a myth,

Lisa Bleich 52:10
right? Well, as always, this was incredibly insightful. So thank you so much, Jeff for being on again. You are our first repeat guest. So thank you for that, and thank you, CBMers, for tuning in. We will have your resources available on our website, so you’ll be able to access that to catch more episodes of College Bound Mentor, make sure to Follow or Subscribe on your favorite podcast platform and tell a fellow parent or student about the podcast. And if you like what you heard, please rate our podcast to boost our rankings so more people can find out about it. To learn more about us go to CollegeBoundMentor.com Until next time, you got this!

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