Updated: May 30, 2023

A Flawed Student Aid System Will Leave You Behind If You're Middle Class

As a result of the flawed student aid formula, middle-class college students seen as too rich to qualify for aid are forced to take out loans.
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The student aid formula used to determine each individual's financial need is based on a variety of factors, but leaves out crucial information that more accurately depicts how much each student can really cover on their own.

flawed student aid formula image
Flickr | https://www.flickr.com/photos/tulanesally/3218131407

The federal financial aid formula used in assessing a student's financial need is simple enough -- financial aid staff first calculates the cost of attendance for their school, which covers tuition, room and boarding, and more. They then calculate how much the student's family has saved for tuition. After subtracting the Expected Family Contribution, or EFC from the cost of attendance at each school, the remaining sum is the amount a student needs.

However, the formula used to calculate the amount of aid a student receives doesn’t take into consideration a variety of other factors, such as a family’s daily, monthly, annual, and unforeseen expenses as well as their saving needs, such as for retirement.

MyBankTracker's social media coordinator and recent college grad, Maria, told us that her family made too much money for her to qualify for free money, but overall, it was a struggle to pay for school.

- Where did you go to school?

St. John’s University.

- How much aid did you receive?

With a mixture of loans, grants and scholarships -- I received totaled over $100,000.

- Wow. How much was your family expected to pay?

At least half of the total aid I received.

- Did you feel it was justified?

I did not. My dad’s annual salary was high, but financial aid did not take into account his yearly expenses (mortgage, car payments, bills, groceries for a family of four, etc). They saw one number and judged our ability to pay tuition off that. I don’t think that’s fair.

- Were you a commuter or did you live in a dorm?

My first couple years I stayed on campus in the dorms. After calculating the cost of housing, I realized that renting an apartment would be cheaper so I got a roommate and we rented out an apartment for my last two years.

- What were your lodging expenses like?

As mentioned above, the price comparison can be broken down to this: on-campus housing per semester (4 months) was $3,500, divide that by four months and it equaled $875 each month. With a roommate, I found a two-bedroom apartment at $700 per month, each. That saved me $175 per month.

- How long did it take you to graduate?

Considering I took my first semester of college off due to health reasons, and then changing my major three times, it took me five years to graduate.

- How much was your tuition per year, as well as other costs like books, food, etc.?

When I first attended, tuition was about $12,000 per semester. The price increased while I was at the end of my second year to $13,500 per semester. When I was living on campus, it was another $3,500 per semester (which include a meal plan) and roughly $500 for books. When I was living off campus, cost of living was less.

- Were you working while going to school?

For my last two years, yes.

- Did you feel the aid was sufficient in paying for the majority of your schooling? Was it a practical number?

The grants and scholarships could have been more. The loans, less. But considering St. John’s is a private institution, it was sort of a practical number. We knew it wasn’t going to be cheap, but not that expensive.

- Did you have any experiences that hindered your ability to graduate (like when the dean gave you a scholarship)?

Yes. The tuition increase surpassed the total amount of loans I was allowed to take out. I had one more semester left when I found out my financial aid wasn’t going to be sufficient enough for me to make it to graduation. After talking with my advisor and college dean, they were able to award me a scholarship to finish my last semester of college and graduate with the rest of my class, due to my good grades.

Maria's story is not uncommon. Many college grads are finding the cost of college to be way more than they ever imagined, and are graduating with a huge amount of debt that they weren't prepared for.

So why didn't Maria receive more free money?

The way an individual's EFC is calculated includes a variety of factors, such as a family's taxed and untaxed income, assets, benefits (such as unemployment or Social Security), family size, and number of family members attending college at the same time.

However, as Maria pointed out, the formula doesn't take into account your family's expenses or needs such as for retirement, healthcare, and college education for other members of the family. The flawed student aid formula leaves many individuals without feasible payment options, leading them to take out student loans.

What can students do to increase their financial aid?

Students who aren't given the necessary financial aid help they need to reasonably assist in paying for their higher education expenses should focus on non-need based financial aid, like grants and scholarships. The earlier, the better -- even freshmen in high school can begin acquiring this money. The key to building a significant amount of savings is to be dedicated.