The Search Episode Nine Transcript

The Search

Episode Nine Transcript

 

Lee Coffin:
From Dartmouth College, I'm Lee Coffin, Vice Provost for Enrollment and Dean of Admissions and Financial Aid. Welcome to The Search. If there's been one recurring issue as we've wandered from episode to episode, it's affordability. Kids have mentioned it. Parents shared their concerns about it. Counselors noted its importance as a factor in a search. So, let's meet this one head-on and make some sense of it. I've heard it described as the most significant discretionary expense a family will make. Certainly, it was true for my family. Financial aid was my boarding pass for the adventure of a private liberal arts college, and I've already told you, it changed my life, my family's commitment to my education.

And that included my own contribution to it through student loans and summer jobs and my own savings. It was not insignificant, and it was not painless. I'm the oldest of five, and I watched as my dad traded down the family station wagon every year so he could use the equity in that car to pay his portion of the tuition bill that was coming due. I worked during the summers at McDonald's. I drove a parts truck. I had a campus job. On Sunday nights I served food in the dining hall. But my loans, my job, I thought of those as the mortgage I was taking on my future, and it was the best investment I've ever made in myself. And I really mean that.

I share this story with you to reassure you of a really important point. I get it. I'm a dean, but I was you. I was a middle-class first-gen kid from a blue-collar public high school, where going to college was not the predetermined path. Doing well in school was really important, but financial aid was a non-negotiable factor in my search. It was the decision point in where I ended up enrolling. And for many of you, that's true as well. Today we're going to look at affordability and try and make some sense about what it is and how it works. We promise to speak in plain English as we explore the ins and outs of what many people call the maze of financial aid and eligibility for it.

My guest today is Dino Koff, Dartmouth's Director of Financial Aid, and perhaps the most energetic and effervescent financial aid officer I've ever encountered in my career. He's the perfect guest for this important conversation about affordability, price, and negotiating your way through the ins and outs of financial aid. Dino, welcome to The Search.

Dino Koff:
Awesome. Thank you.

Lee:
Let's start this conversation about financial aid with some terms, because I think one of the parts of the work you do and that I do with you is we can speak in code sometimes, and families outside the process don't always follow along with what we're saying. So, let's put some proverbial flashcards up and say OK, here's the concept, here's what it means, so that our listeners can follow along. Let's start with the very essence of financial aid. What does "need-based" mean when we talk about need-based aid?

Dino:
I think this is great to be able to talk about affordability and laying out these terms. We have our own language. We have our own code in financial aid, and this will help demystify it for people listening, because they'll have their own flashcards, as you said. Need-based aid. When we look at many schools have financial aid that they give out, and when they give this money out, they're basing it on numbers. One way that colleges look at giving out aid is need-based, meaning they're looking at financial numbers. Not academic, not looking at GPA, not looking at SATs or standardized tests, not looking at leadership qualities. They're looking at financials. They're looking at how much did your family earn? They're looking at how many people are in college? What are the assets that your family has? And it's looking at family, it's looking at student, but the key part of need-based aid is financial numbers.

Lee:
Right, so the family's financial need, and the college offering aid to meet that need, versus merit aid.

Dino:
When you hear merit, it's what talent, whether it's academic talent. Some schools have athletic talent. Some have music. They're giving money out for music, theater, the arts.

Lee:
Athletics, maybe, if you're in a certain Division I context?

Dino:
Absolutely. All of these. That's why when we say merit, it's what talent are you bringing to the college, and what is the college willing to base their financial aid on? And it is a talent, so its merit-based.

Lee:
In this big scheme of financial aid, you've got need-based aid, which institutions offer as an assessment of a family's economic situation, and/or merit aid, which is a reflection of the college's interest in a particular talent you represent, and they would like to enroll more of that type of student.

Dino:
Absolutely.

Lee:
OK. When we hear colleges say they're meeting 100% of demonstrated need?

Dino:
This term, meeting 100% of demonstrated need, is definitely a term that is a Cadillac plan of financial aid. When you hear meeting 100% of demonstrated need, the colleges, you fill out forms, and I'm sure we're going to get to those questions on how do colleges get the numbers, but you're going to fill out forms, and the colleges are going to come up with essentially a family's ability to pay. After a college comes up with the family's ability to pay, whatever's left after you subtract that, that's met by financial aid. It's met by scholarships. It's met by work-study, maybe, possibly a loan. But colleges meet all of your demonstrated need, so that if you can come up with your family contribution, financial aid will take care of the rest.

Lee:
Versus what's known as gapping.

Dino:
Gapping is happening more and more as costs continue to rise, as there's pressures on college budgets. That's why the meeting 100% of demonstrated financial need is the Cadillac plan, because more schools aren't able to afford that. You're seeing schools that may say, "Yes, we understand your family contribution was $10,000, but we don't have the financial aid to give you up to the cost of," let's just say it's a $60,000 school, "we don't have $50,000. But we're going to give you $25,000." As you mentioned the word "gap," that's the difference. There's the gap, and how can we come up with that? When you're looking on websites, meeting 100% of financial need, that's a great term to see on a school that you're really interested in.

Lee:
If that's the Cadillac, it suggests that more of the college options our listeners might explore are going to fall into the scenario where there may be a gap between cost and the financial aid. What advice would you give families about negotiating the gap? Are they taking out loans? What's the solution to a gap?

Dino:
That's really a great question, because the solution to gap actually could be different for everybody. As they look at this gap, it could be outside scholarships, whether they're community organizations giving money. We've heard of the big ones, the Gates or Jack Kent Cooke. Those are the big outside scholarships, and those are there to help to fill the gap. But realistically, it is looking at savings, it's looking at loans. Can students work more while in school? That's what's filling the gap.

Lee:
So, the gap requires more stretch for a student and a family.

Dino:
It does. It absolutely does, and that's sometimes difficult, because that gap sometimes can be very large.

Lee:
As we were answering this last question, we both mentioned cost of attendance, so let's pause and just explain cost of attendance.

Dino:
I think cost of attendance is a really good term to understand, and I say that because so many times we'll hear, "Well, a school has tuition. It's really expensive. It's $55,000 as a private school," or, "I'm looking at an in-state school and it's $16,000 in tuition." Well, that's one component of the cost of attendance. The cost of attendance, also called the cost of education, every school that receives federal funds has to come up with a cost of attendance.

Lee:
It's a federal requirement.

Dino:
Yes. What will it cost you as a student to attend a college? It's every educational expense. It's tuition, we just mentioned, and fees. It's room, it's food, it's books. We want students to buy deodorant. It's miscellaneous items. It's different personal items. There's a cost to that. It might be a computer. It could be health insurance. All of this can be put into the cost of attendance. When you hear tuition is $16,000, the cost of attendance after you add the other components of room, food, books... I should also mention transportation. It costs money to get to college. All of that, a $16,000 cost could right away go up to $30,000, and you could be like, "But I thought tuition was $16,000." That's why it's really important to look at the cost of attendance. You'll get a full picture.

And it's every educational expense. It's not spring break. "I want to go on spring break." Well, that's not an educational expense, so that wouldn't be in there. But when you're looking at schools, you don't want to just look at tuition. You want to look at the full cost of attendance to see how expensive is the total cost of my experience going to be?

Lee:
And the total cost for one academic year.

Dino:
Absolutely.

Lee:
Right. And just as I say that, one of the other points that people sometimes miss is financial aid is a renewable process. Students get an award for the first year. It then needs to be renewed for the second year and the third year and the fourth year. Another way of thinking about this is, does the college give you a four-year commitment to meet your 100% of demonstrated need, or it's a commitment for the first year and then all bets are off as you move forward? So, lots of different ways of thinking about what seem like fundamental questions of financial aid.

Dino:
That's a really both question and point that you just made. Again, every school is different, and there will be some schools that will say, "We are going to give you a $20,000 merit scholarship, and we're guaranteeing that for four years," so that you know going in that you have $80,000 to go to that school, college or university. That's one instance. The schools that meet 100% of demonstrated need, there's a commitment to meet 100% of demonstrated need for four years, but your need may change. If you win Powerball, your need has changed. If you win $4.2 billion in Powerball, great, but more importantly, know that your financial aid will change because your need has changed.

Lee:
Your eligibility for need-based aid shifted.

Dino:
Absolutely.

Lee:
Or maybe a parent lost a job.

Dino:
And it can shift in another direction, absolutely. Many of the need-based schools that meet 100% of demonstrated need will review every year. And when they review, we expect income to go up. That's the goal. But it doesn't always happen, and we do see sickness and we do see job loss, where income has changed. It definitely can move and give more aid. That's why meeting 100% of demonstrated need is so important to look at, if a school offers that. If something happens that is unexpected, these schools can help.

Lee:
Right. Before we move off of definitions, there's one that I should mention, which is you will hear colleges refer to their admission process as need-blind or need-sensitive, or its cousin, need-aware. Same idea. What the colleges are telling you in those policies is on the admission side, if a college says, "We are need-blind," your ability to pay is not a factor in your admission decision. If the college says, "We are need-sensitive or need-aware," the college is saying your ability to pay might be or will be, depending on the institution, a factor. That's also something as you're looking at a list and understanding financial aid and cost, there are some environments where that question is also an admissions factor.

Dino:
Lee, can I just say one thing on that? Something that's really important between need-blind versus need-aware. You defined it perfectly on our little index card definitions, but one thing I want to say is, it is very important that if you need financial aid to go to a school and it's a need-aware school and you decide not to apply for financial aid, it's heartbreaking when families realize their child got in, but now they're applying for aid, because you cannot apply most of the time. It's very clear on websites that financial aid applications have to be in at the time of admission. Really important, if you think you're going to need any help to pay the cost of attendance for the four years, apply for financial aid.

Lee:
That's a really important tip, Dino, because I've heard families say to me just in general that they're strategically withholding that financial aid, yes, because they don't want to jeopardize their chances of admission to go to particular colleges. And to your point, I say that's risky, because if your circumstances require it, then you need to tell the college. Don't go down that rabbit hole of let's give in and then try and negotiate, because what often happens is the door has closed because you weren't part of that original cohort.

As a financial aid officer, what's your advice to families about when to have a conversation with an applicant about price, affordability, and the family's willingness and ability to pay? Does that happen junior spring, during the summer? Do you wait until someone applies? Is it the concluding conversation? What's your best advice to families about when to have what is often an uncomfortable conversation?

Dino:
If you're looking at schools now and you're looking at their academics and you're looking at their fit and you're looking at their social settings, why not look at affordability up front?

Lee:
Affordability.

Dino:
Yeah, right. And I think it's time to do that, because you can fall in love with a school. And you're like, this is great, and you check off the academics and you check off the fit and the social setting, and you don't check off the affordability, and you keep going down the road, that can lead to frustration, because you're like, this is the most perfect school but they gap and they don't meet full need and we haven't been able to save as much as our income might say we should have. So, looking at the whole process when you're looking at a school, as colleges do holistic reviews, applicants and families or prospects need to do holistic reviews. And that's looking at not just is this the right college, but adding that affordability part in, because you can always adjust. You can have a reach school academically, you can have a reach school financially, but you also want to make sure that you have not just a safety school academically, but you want a safety school financially so that you know, I can afford this. No matter what, I have a place for myself.

Lee:
And we heard on our parent episode one of our guests talk about his advice to his daughters to keep an in-state public option on the list for exactly that reason, that if we need to go there at the end, you should be as excited about it as you are about these other options as we're moving through. I think it's really good advice. So, at the beginning of the search, affordability right up front. Some of the terms we just shared are important clues during the research phase. To parents, I would say this is a really good parent part of the search, to do this homework either with or on behalf of your kids, because they may not have the maturity yet to really understand these topics. But is it need-based or merit? Is it need-blind or need-aware? Do we meet 100% of demonstrated need or not?

But part of that is also giving some early sense of what this will cost. Dino, how does a family find a resource that can give them a real nuts and bolts perspective on what the projected costs might be?

Dino:
Every college has a net price calculator. Again, if they receive federal funds, it's a federal mandate that you have a net price calculator.

Lee:
On our website.

Dino:
On our website. Easy to find. Every school has them, and they're supposed to be an actual formula so that you can input your data, and the output is, here is the financial aid that you may qualify for. A, it has to be input correctly, and that's important. And B, some schools may have a sliding scale in terms of merit aid. You may not have your SATs. You may not have your GPA. Or things may change. You're putting in numbers at the time, and I always say go to the net price calculator, fill it out, and save it. Print it, save it on a hard drive, whatever, but keep that document and refer back to it. Call the school. Give it to a school and say, "Did I fill this out correctly?" More and more schools are having this net price calculator called MyinTuition, and I'm highlighting that, because there's six or seven questions. It takes you two minutes and 47 seconds to fill out, but it's an estimate.

Dino:
Many schools that have this will also have a traditional net price calculator that's going to take, unfortunately, about 20 minutes to fill out. It's a little bit more complicated because it's more in-depth, but that's the actual formula. You're going to know, and I can tell you, we test the Dartmouth one all the time. We're putting in the inputs and we're seeing OK, this person's going to qualify for this much in scholarship. And I want to just highlight, we're using data for taxes that have hopefully already been completed, so you can go do this at any time.

And there are no surprises. When we get families, who call us and say, "Oh my gosh, you have Early Decision. That's a commitment. We can't get out of it, but we don't have our aid," it's wonderful to be able to point to this tool, say, "Fill it out, and if you have questions, of course we'll go over it with families," but it's right there for all families to do. So again, no surprises. You know, OK, we qualify for $45,000 scholarship. Wonderful. We can verify that you filled it out correctly, because there are some things that are tricky, when we talk about taxes, when we talk about inputting assets. And what's a retirement account versus a taxable account or an investment? It gets complicated, and that's what schools are there to help for, because we've set up these calculators

Lee:
The net price calculator is a reliable estimate, a ballpark estimate, or just a beginning guideline to say this college is broadly affordable or not? Because that may be the answer too, that you put in the inputs and you realize, wow, this is really outside of my ability to grab. I had a friend do the calculator last year. She called me up and she said, "I just need to ask you a professional question. I plugged in all my numbers, and it said some outrageous amount of money that we were expected to pay per year." And what was revealed was, they had saved a lot, and so the formula was pulling from their savings and giving what she saw as an unrealistic expectation of a family contributions. But that's good to know, because that's what the formulas are going to expect a few months from now.

Dino:
I think, Lee, the key words there, it's good to know. And when I say there are no surprises, this also really helps to demystify a very complex... I mean, we started this off by talking about our own language in financial aid and our own terms. The more transparency we can give, we can tell a family, your family ability to pay is coming from both income and $10,000 worth of your assets. That's what we're drawing from. The calculator helps, but then further discussion with financial aid, it's really good to do this early, so you have all this information in front of you.

And also, if you're a sophomore or junior listening to this, you have a year and a half or two years before the bill comes, so you know what can be coming, and you may say "Oh, we have to ramp this up a little," or, "Yeah, you know what? We're comfortable. We got to keep doing what we're doing to make sure we can afford this."

Lee:
So, the calculators are a helpful tool during the beginning part of the search. Once we get to the application deadline, so it's time to apply for admission, and you then also apply for financial aid, Dino, what's the deadline for financial aid at most places?

Dino:
Believe it or not, every school is going to have their own deadline, but what I can tell you is, October 1, essentially the databases open up. As people are applying for admissions, if your taxes are done, which for most families they are, you can go and start in the fall, filling out, even for regular decision. Some schools, you might say, "I'm applying for an early decision or an early action." OK, October 1, everything opens up. But don't wait till March 15. Start in October. Be de-stressed. If you have questions, you ask us. Millions of people are applying for aid in March. It can only add to stress by waiting, so the earlier the better.

Lee:
And the application is called the Free Application for Federal Student Aid. To those of us in the biz, it's known as FAFSA. Sounds like a swear word, but it's actually a good thing. So, what is FAFSA?

Dino:
The FAFSA, essentially, it's a federal form that families are filling out, and it's sent electronically to the government. You submit it online, and you list the schools that you're interested in. You can have up to 10 schools, and if you're applying to more... I listened to the first podcast. You're not supposed to apply to too many more. But if you're applying to more, you can just submit it, and then after it's processed you add other schools and take others off and submit again.

After you press Submit, it goes to the federal government. The government then distributes it to the schools that you've listed that you want to send the information to. We download it, and we have access to the Free Application for Federal Student Aid. Important to note, that we talked about earlier, this is one form that you will definitely need to do each year that you're applying, if you're interested in federal aid. When we say federal aid, that can be grants from the government, a Pell Grant. It can also be loans, federal loans that you might be interested in. This is the form that starts the process off for federal aid.

Lee:
And then the College Board also has a financial aid form called Profile.

Dino:
They do. Some schools, many selective schools with need-based aid, are asking for the Profile. The Profile goes just a little bit more in-depth compared to the FAFSA. Again, this database opens up October 1. You're filling out the form, and it's asking more questions, because it is going more in-depth, and so it's going to take you a little bit longer than the FAFSA. You submit this form, again electronically. It goes to the schools that you're sending it to. We download it, and many institutions are using this for their scholarship and grant distribution for need-based aid.

One differentiation of this form, Lee, is where the FAFSA is looking just at the custodial parent, if we have families that are divorced or separated, and they're filing the Profile, there are two forms to fill out many times. Most of these schools who are giving out need-based aid are looking at both parents, where the federal government form is just looking at the parent that is giving essentially the most help to the student. But the Profile will have a form for household A, which is the parent that the student is living with, and household B is the parent that is not living at home. So, it's looking at both sets of parents.

Lee:
Another point of discovery for a parent on this question is, does the college use just FAFSA or some combination, FAFSA-Profile?

Dino:
That's a really, really good question. Not all schools are going to use the Profile. I want to highlight that really it is mostly the more selective admission schools that are giving out need-based aid. If schools are 100% merit, they're probably not asking for this form.

Lee:
What's interesting as you say that, Dino, is most of the schools using Profile are often the places guaranteeing 100% of demonstrated need, so you see in the Venn diagram this intersection of Profile, meeting full need, and in many cases, being need-blind. There's this space in college admissions where if you're in it, and Dartmouth is in this space, if you're in it, there's more requirements, but there are more benefits down the road, if that's a fair way of saying it.

Dino:
I think it is. The FAFSA, it doesn't ask a lot of questions, and that's where I keep saying the Profile is going to go a little bit more in-depth, so colleges can figure out true need of families by using this form.

Lee:
Dino, let's talk just quickly about what are the elements of eligibility? Income, obviously. Assets are things like savings and retirement accounts. But what other factors go into a family's ability to pay? Because ultimately, these formulas, FAFSA, Profile, give us an equation that says this family can afford X dollars a year.

Dino:
Yes. Lee, I just want to highlight one thing for you, that you just said. I just want to make sure everybody understands that retirement assets are not included in the formulas. When you talked about savings, the FAFSA is very clear that it is looking at savings accounts, it's looking at investments, but separate from retirement. And people get confused, and they're filling things out and sometimes will include retirement savings. That can definitely be excluded. Same is the Profile. Many times, people ask, "Well, why are they asking for this?" Part of the reason why it's being asked for on the Profile is just to make sure that you separate your savings out, because you don't want to commingle that, because the retirement assets are not included in your assets for the formula.

When we look at coming up with the parent contribution, coming up with the student contribution, we're looking at savings accounts. We're looking at investments accounts. We're looking at family income, student income, parent income. But we're also looking, and every school can be different, some schools are looking at real estate. Specifically, they're looking at primary homes. Other schools are not looking at that, and they exclude primary home value.

Lee:
Are you talking about home equity?

Dino:
That's where I'm going, absolutely. If you have a home that is worth $300,000 and you have a mortgage of $100,000, you have $200,000 in home equity in this example. Every school can be different.

Lee:
Sorry, does that mean you have $200,000 in equity and at some schools, the financial aid formula will expect you to dip into the equity to pay the cost?

Dino:
Some schools will. You may not literally dip into that home, but it's part of the formula that will say your assets are $200,000. From your assets we're expecting $10,000. And you may not fund it through your home, because you're probably not going to sell your home, but you may pull that from a savings account or your current income to cover that portion. That is not used in the federal formula, but it is used in institutional formulas.

Lee:
In the Profile.

Dino:
At many, many schools in the Profile.

Lee:
Are there other factors around the family situation that might count?

Dino:
It's also looking at how many people are in the family, because the formulas give allowances. We know that if you have a family of five and one is in college, there are four people that need to be fed. There are four people that need to live still, separate from the one that's at college, and so the formula takes in how many people are in the family. How many people are in college? You may have two people in college, which at many schools, that's good news for financial aid, because your financial aid increases. I need to tell you, it's not good news, though, because you get two bills. It depends which way you look at it, but that can help get more financial aid.

Lee:
And Dino, on that point, that could often be the reason someone's financial aid eligibility goes up or down, right? I was the oldest child, so my year, one in college was part of the recipe. Two years later, my brother applied, and so now we had two in college. There were five of us. At one point, when child number five finally wiggled through, there was nobody else in the pipeline, and my dad I remember grumbling about how much more expensive it was for my youngest brother, because the number in college had finally finished for us.

Dino:
And that's something that definitely, we talk to families about, just so that they know. OK, you have two in college for the first two years. Again, it's all about transparency. We do put on our award letter, "This is your family contribution with one student in college," just so everybody knows. But when you look at the four years, that's something to map out, that OK, this is a big stretch in year one, but year two we have two in college and year four we'll have three in college and mapping it out. And schools can help and say, "This is what a snapshot would look like if your financials stay the same after year one. This is what year two could look like with two in college."

Lee:
So, it's wise for a family to look at this as a four-year window, not just first-year fall.

Dino:
Absolutely. It's a four-year relationship too. I mean, we're all in this together. It's the colleges, it's the families, it's the support network. It's a dialog that doesn't just end after you select the college you're going to. This is a four-year or more relationship as you become an alum.

Lee:
And you just went to what was my last question for you, which is, the admission process has a finale. You get accepted, you enroll, and sadly, unless you're a tour guide, you don't visit the admission office again. But for financial aid, you continue to be a presence in every student's life for the four years they're enrolled.

Dino:
Yeah. Lee, yes, and that's really important to highlight that even though we love meeting with students and families, we would love for it to be as easy fill out your FAFSA, submit your paperwork, and here's you award for four years. But unfortunately, life happens. And as I said earlier, we do have people who get sick and it impacts their income. We have people who have job loss. And so, it is a four-year relationship. We're always saying, what has changed? What new documents can we get? It's not as easy as here's everything, because we'll say, whoa, your income dropped big. And we look at the situation, and hopefully we're giving out more aid in that situation. It's a four-year-plus relationship.

Lee:
You're counselors.

Dino:
It's what makes it so much fun.

Lee:
Yeah. So, Dino, before we wrap up this really important episode, lay out the elements of a financial aid award. You've done the calculator, you've been accepted, you have a financial aid award. What are the pieces of that award that a student and a parent need to be looking at?

Dino:
When looking at the award letter, we talked about the cost of attendance. You know what the full cost is. But the components of it, they may have scholarship and hopefully a lot of scholarship or grants. But it may have work-study. It may be a job. And remember, that job, that's not a grant. You actually work for that money, and it's a biweekly paycheck.

Lee:
On campus.

Dino:
On campus. And it also may have loans in it. That's something that has gotten a lot of attention. Let me say on the counseling point what I always talk about with loans, is there are calculators out there now, so you can log on to see, OK, the federal government has offered me a $5,500 loan in year one, a direct loan. And you can just Google "educational loan calculator" or the federal student aid website has it. You can type it in, and you can see, all right, here's the payment after year one. And you want to estimate, what does four years look like? We hear stories about people taking $30,000, $40,000 in student loan debt for one year. It's really important to know, OK, here's my payment for just one year. Let's look at what it is for four years. Are you comfortable with that?

Lee:
Yeah, terrific advice. Dino, this topic is so important and foundational to anyone's search. I would close just with a comment to our friends who might be listening from more low-income backgrounds, where the idea of cost seems preposterous, or even the middle-income families where the cost feels like a real stretch. I speak from experience when I say, the investment in yourself is really worth it, and the colleges are doing what we can to help you make this dream possible. But more than any other part of the search in college admission, this financial aid piece and the deadlines associated with it is much more precise. Following along with a calendar, making sure you hit the deadlines, filling out the forms correctly so that the college can give you an award on time with as much generosity as the college can afford, really important. Dino, thank you so much for coming on The Search.

Dino:
Awesome. Thank you. This was great.

Lee:
You're welcome. As I said at the top of the episode, we've covered a lot of ground as we've moved through these episodes, and we're going to wrap up the how to apply section of the series with an episode we're calling Practical Matters. We're going to come back to a few big topics that we haven't touched on in previous episodes and give you some insights around interviewing and athletics and the calendar that you'll follow and a couple of other topics. That's next week. Until then, this is Lee Coffin from Dartmouth College. Thanks for joining us.