Academic/Financial Aid Advising

With today's rising cost of education, it is vital that students and their parents learn how to effectively finance higher education. Since the 1980s, tuition has increased annually at two to three times the rate of inflation. Between 1981 and 1995, tuition at four-year public colleges has increased 234 percent (Gordon, Habley, & associates, 2000), forcing many families to start learning more about how to strategically finance their children's expenses. But this can be a confusing and daunting challenge and, although the financial aid office can help students develop creative ways to finance these costs, sometimes situations may arise when a financial aid counselor is not available. Often, students begin their search for help with their academic advisers. The purpose of this article is to give academic advisers a basic understanding of how financial aid works and some pointers about working with students who use financial aid.

Who Can Afford College?

Many families are at least partially dependent on financial aid to cover college expenses. In order to be considered for any type of financial aid, students must fill out the government form called the Free Application for Federal Student Aid (FAFSA). Once this application is complete, the government calculates the amount of money that the family is expected to contribute to college expenses: this amount is called the Estimated Family Contribution (EFC). The EFC is calculated based on a family's total income, savings, stocks, and investments. For students who are needy and have a low EFC number, financial aid offices will put together a package that will typically include federal, state, institutional, and other need-based grants. Any remaining need that is not met through the EFC or grants will then be filled through a loan to the student. More and more, middle-class families do not qualify for need-based aid and thus are only eligible for loans. However, this ineligibility does not necessarily mean that a family has enough cash on hand to cover the EFC the family is expected to contribute. The EFC seems like a fictional number to many families. However, if a family does have income sources, the government feels that it is only fair that the family should contribute to their child's education. If the FAFSA did not take into account a parental contribution, then every student would receive the same financial aid package. This approach would not likely be the fairest method of distributing limited government resources.

Financial aid offices differ from school to school, but most of the rules cited above generally apply to all of them. As tuition soars these days, the level of federal government financial support is not keeping pace; thus, the total amount of available need-based aid has been reduced (Wang, 2001). Some schools (private institutions, in particular) may have more money set aside to give in the form of scholarships or grants. If not, there are a myriad of loan options, including federal loans, private loans, and other types of loans offered by some schools. Many students have to take out substantial federal loans, which sometimes do not even begin to make a dent in the tuition, fees, and room and board expenses, due to federal government limits on the amount of loan eligibility.

Other loan options are private loans and federal parent loans. The federal parent loan is usually a better loan because the parents can take a loan out up to the amount of the EFC. The private loan is a loan to the student from a lending institution and usually has features such as a moderate interest rate and deferred payment until graduation. Many students and families are not happy about having to take out loans, but, in order to earn a college degree, students must find a way to pay for it. The obvious problem with loans is that students will eventually have to pay back these loans, causing them to start their careers already steeped in debt.

How Do These College Expenses Affect Student Development?

Going to college is supposed be an experience in which young people gain knowledge and learn how to become educated members of society. However, if there are issues that distract students from their studies, their academic experience could be affected, and their development could be delayed. For example, Michael, a first-year student, started college with the best of intentions. He went to class, got involved with campus activities, and became a well-respected student. However, at the end of his first semester of college, his father lost his job and was no longer sure that the family would be able to afford for Michael to go to school during the following semester. Michael was nervous, worried, and confused. He had no idea about what to do or where he could get help. He went to the financial aid office, and the counselor asked him if he had filled out a FAFSA form. Michael had no idea what a FAFSA was and wondered why no one told him about this form before he came to college. Embarrassed and confused, Michael seriously considered dropping out to avoid dealing with the hassle of financial aid.

Michael's situation is unfortunately a common one. Some students and families may plan for school but still do not save enough money. Financial aid is a good service, but students must know how it works before expecting to receive money. In Michael's situation, he needed someone to be empathetic, walking him through both the steps for obtaining financial aid and his other financial options. For example, some schools can set up a payment plan. If students are not aware of all of their options, they may decide to drop out or take a leave of absence in order to earn enough money to return.

What Could an Academic Adviser Do to Help?

Interestingly enough, an academic adviser can be very helpful if the adviser knows something about financial aid. The advising unit may want to establish a relationship with one or more financial aid counselors so that advisers can effectively refer students for help or ask simple questions themselves over the phone. It would be ideal to have a financial aid expert physically located in the advising department to ensure that students receive timely and convenient financial aid information. Advisers should at least be knowledgeable about how to start the financial aid process and know enough to educate students about questions they might want to ask of the financial aid counselor.

If financial concerns are affecting a student's performance in the classroom, the adviser may want to try to ascertain whether it is a money management issue or if there are extenuating circumstances, as in Michael's case. There is more to the cost of college than tuition, fees, room, and board. Many students do not realize how much extras such as clothing, school supplies, food, and a social life can cost. Some students who do receive a lot of financial aid may be managing their money poorly and finding themselves out of cash before the end of semester. An academic adviser with knowledge of financial aid can encourage the student to work out a plan with the financial aid office to get through the rest of the semester.

An additional stressor for some students is that they have to work long hours and may fall behind in their studies. It is important for advisers to discuss with students not only their class schedule but also the other obligations they have outside the classroom. A primer on time management skills or a referral to the counseling center might be appropriate for a student who is over-committed.

Some Financial Aid Basics for Academic Advisers

  1. Visit your financial aid office. Know how to refer your students for the most common financial aid issues.
  2. If students have financial problems and they feel comfortable discussing their situation, discuss some of their options: financial aid, outside scholarships, etc. Always refer students to the financial aid office for in-depth discussions of student-specific situations.
  3. Tell students to do some financial aid research on their own to look for available scholarships. Guide students to financial aid Web sources such as FastWeb, FinAid, or collegeboard.com.
  4. Advisers should try to keep up-to-date on national and local financial aid issues.

Summary

As a recipient of financial aid, I understand the problems that can arise for students. Although money is an important part of a college education, a lack of financial resources should not prohibit students from attending and graduating from college. As an undergraduate, I did not know much about financial aid because scholarships, grants, loans, and my parents paid most of my education. However, the first time I had a problem with my financial aid I felt completely lost.

I would like to remind financial aid counselors to be patient with students, since many students do not understand the financial aid process. I would urge academic advisers to at least be aware of the basics of financial aid so that when a student brings up the topic, advisers are at least able to make a proper referral. And, there are three things that parents and students can do when shopping for colleges: (1) scope out the best financial aid opportunities, (2) figure out what your financial aid package is at each school, and (3) bargain for the best deal at each institution (Wang, 2001).