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Saturday, January 28, 2023

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Financial Aid Leveraging – The Big Business Darkside of College

Financial aid leverage is a completely foreign term for families preparing to send their children to college. However, this completely foreign term is having a huge impact on the amount of help students can get from college.

Make no mistake…Universities are big business and you are their customer. Like any business, colleges and universities strive to maximize revenue and minimize expenses.

If you look on the World Wide Web for the Financial Aid Leverage (FAL for short); you will come across many terms such as rate of return, target discount rate, Strategic Use of Financial Aidand net income model. Many consulting firms such as GDA Comprehensive Services and Noel Levitz The market covers all major universities across the country. These companies use their expertise to strengthen the university’s cash flow through FAL and similar strategies. These are the practices of big business, not altruistic institutions looking to give you more money.

Another respected college advisor, Kalman Chany, in his 2009 edition of Paying for College Without Bankruptcy Financial aid leverage is currently being used by 65% ​​of private universities and 27% of public universities. When I first read about this practice seven years ago, only 25% of private colleges and 12% of public colleges were using it. As a result, FAL is rapidly entering the field of higher education.

So what is the leverage of financial aid? Simply put, it’s a statistical process by which colleges try to determine how much money they need to give a student and still get that student into the school. They are effectively trying to figure out how much they can buy you. This process has little to do with the amount your student is entitled to.

“By developing a true financial aid leveraging strategy, every group [college department] See how the strategic use of financial aid can improve the institution’s academic and financial well-being. “ (“The Proper Mix,” Thomas Wilson Noel-Levitz Inc., p. 3). FAL is designed to serve the best interests of the college, not the best interests of the students!

Is taking financial aid now a bad thing? unnecessary. Is it bad that you go to court to face the opposing lawyer? No, but it can be very bad for you if you enter court with the expectation that the opposing party’s lawyer is looking for your best interests.

The bottom line is…colleges and universities are great institutions, but colleges and universities are not looking for your best interests.

Be prepared not to rely on people who do not have your best interests in mind.

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