Need for College Education vs. Need of Financial Aid
Many colleges are claiming that they are handing out financial aid faster than tuition dollars are rolling in. While I would be dubious about such a claim being made by public colleges and universities with their multiple revenue sources, which include taxpayer dollars, it does appear to be a genuine issue for some of the more generous private colleges. Heavily endowed (thanks largely to board member Warren Buffett) and academically reputable Grinnell College, for example, has admitted students without regard to financial need. And if they needed financial aid, the students received as much as they required. According to a National Public Radio report, only Harvard writes off more tuition dollars than Grinnell.
The problem this is creating for the colleges is that they are running out of money to hand out in the for of aid before they enroll all of their students. This means that some students who were accepted on a “need blind” basis may be left hanging out to dry if they actually end up needing financial aid. This is causing some colleges like Grinnell to rethink their need blind admission policies and lean more toward accepting students with need until the money runs out, and then only accepting those who can cover their tuition on their own.
School officials say that a failure to do something about this fiscal problem could lead to a reduction in academic quality, as they won’t be able to afford more talented faculty (and/or more expensive) faculty members. Cornell University in New York is another institution facing a similar problem. It’s committed to helping the school’s neediest students earn and pay for their degrees but it simply doesn’t have the funding to help all who need it. In light of its shortfall, Cornell is converting some of its grant programs into low (or in some cases, no-) interest loans. Massachusetts Institute of Technology (MIT) has also converted some of its grants into loans. As a Grinnell official pointed out to an NPR reporter, “The average new car loan is $28,000 a year. You may not want to get that high, but it’s not unreasonable to expect students to carry a slightly higher higher amount of their aid in form of a loan.” While I doubt that the average new care loan is actually $28,000 per year (!), I do suppose it’s fair to expect some form of borrowing to fund something with proven future value like a college education. On the other hand, if schools simply lowered their tuition — or stopped increasing them at the rates they are — tuition may not outpace their ability to fund it. Or ours.
Don’t Lie About Your Income to Get Financial Aid — Especially if You’re a Lawyer!
A Chicago attorney and Harvard Law School graduate (class of 1969) was disbarred by the Supreme Court of Illinois for falsifying income statements in order to qualify for financial aid to pay for his child’s private school tuition. I’m not going to name names (it’s pretty Google-able, if you really care or must know); the point here is that the outcome for this particular parent was not good. And he merely lied in order to qualify for financial aid for a K-12 private school.
According to reports, the former attorney submitted altered copies of his tax returns to the school’s financial aid officer, claiming his income was only around ten percent of what it really was. The amount of aid he stood to qualify for was between $6,000 and $8,000 per year over a period of four years. For that he lost his livelihood (estimated to have been worth more than a million dollars a year given the reported partner payouts at the large law firm at which he was a partner). He dodged a criminal charge because he didn’t falsify his actual tax returns, but merely doctored up copies of his real returns and sent them in to the school with his aid application.
When you apply for financial aid at the college level, lying about your income or anything else in order to qualify for financial aid is a federal crime. You could (and people have) go to prison for doing so. The story of the bone-headed Chicago lawyer should serve as a cautionary tale to all students and parents. When you are filling out the Free Application for Federal Student Aid (FAFSA), don’t fudge the numbers. The potential consequences for doing so far outweigh any near term benefits you’d receive in the way of additional financial aid. Think how much that Harvard Law degree would be worth in today’s dollars. In the case of one Chicago lawyer, it is certainly worth far less now than it was a year ago.