Negotiation and Professional Judgment
Negotiation refers to the idea that you can haggle with the financial aid office to get a better financial aid package. Very few schools do negotiation, and those that do, do so only according to set policies. Colleges are not car dealerships, where bluff and bluster will get you a better deal. You cannot play one school off another, to get them in a bidding war for a student. Students are effectively commodities, with very little bargaining power.
On the other hand, colleges do have the authority to make adjustments to a student's financial aid package in cases involving unusual circumstances through a process known as Professional Judgment.
Understanding the Process
Regardless of whether you call it negotiation or professional judgment, it is important to understand how the process works in order to maximize the amount of student aid. FinAid has an extensive section devoted to the topic of professional judgment from the perspective of the financial aid administrator. Although this section contains more than 100 pages of principles, philosophy and examples, it includes a lot of jargon and technical analyses. Rather than force you to read it, here are some of the key points:
The financial aid administrator is the final authority. If the circumstances merit, they can adjust the financial aid package to compensate, no matter how much the change. But the key is the financial aid administrator has to be able to document the circumstances and their financial impact on the family, and show how this affects ability to pay. Typically this is by adjusting the inputs to the financial aid formulas, and letting the formula compute the new aid package. A financial aid administrator cannot (and does not) give you more money simply because you ask for it, or because he/she sympathizes with you, or because his daughter is in love with your son. Everything has to be justified in an objective fashion. The US Department of Education audits the universities very frequently, and if a professional judgment case is not supported with documentation and clear reasoning about the relationship between the unusual circumstances and ability to pay, the school will have to repay the aid to the federal government. So aid administrators are always extremely careful to document their cases and to provide backup for their decisions.
Professional judgment is initiated by the family writing a letter to the financial aid administrator at the school asking for a "Professional Judgment Review". At some schools this is called a "Special Circumstances Review". The letter should summarize the unusual circumstances and include copies of the documentation. The letter should be short and stick to the facts, instead of burying them in a long-winded plea for help. The financial aid administrator may ask for additional information and additional documentation.
Do not include the letter with your original FAFSA application, as it will be discarded. The letter should be sent separately to the student's college.
Some people who promote the idea that you can negotiate with colleges recommend that the student and not the parents contact the school. The reasoning is that the student is the one seeking help, not the parents, and it is harder to say no to a student who desperately wants to be able to attend the college. After all, it is ultimately the student's decision of where to go, so pleas for help from the student are more heart-rending. Unfortunately, although this probably doesn't hurt, it doesn't help either. The negotiation process with colleges is driven by documentation of special circumstances, not emotional appeals. Personal requests for help may have more of an effect in getting a student admitted off of the waiting list than for improving a school's financial aid package.
Schools that Negotiate
An unpublished 1996 survey of 1,492 colleges conducted by the National Association of Student Financial Aid Administrators and the College Board found that only 1% of public colleges and 2% of private colleges frequently or always adjust financial aid packages to reflect other college's offers. The survey also found that 5% of public colleges and 10% of private colleges adjusted financial aid packages in response to the family's stated inability to pay (i.e., a professional judgment review). Nationwide, approximately 5% of Pell Grant recipients are the beneficiary of a professional judgment adjustment. (The SUFAPPP survey was repeated in 2001 with similar results. There's also a 2003 survey of graduate aid policies practices and procedures.)
This indicates that although very few schools "negotiate", there are nevertheless a handful that do. Most of those that do use a rigid policy to determine when they will match other school's financial aid offers. Usually the schools will only match offers from a limited number of schools that the college considers to be its peers (i.e., similar quality schools for which the college competes for students). Usually the peer schools are in the same geographic area and cost about the same. The schools never get into bidding wars for students.
Leveraging refers to the practice of offering slightly better financial aid packages (usually by only $500 or $1,000) to middle income students who are predicted to have a 3.75 or higher GPA at the college. Research has shown that "sweetening the pot" for middle income students is an effective inducement to enroll, but not for lower income and wealthy students.
Some colleges have switched from using their own need analysis methodology for the awarding of the college's own funds to using the Federal need analysis methodology. This usually gives a little more aid to a handful of students, since the institutional methodology considers some aspects of the family finances that are ignored by the Federal methodology. The administrative savings often balances out the slight increase in the financial aid budget.
Although most colleges practice need-blind admissions, where financial need is not considered when selecting which applicants will be admitted, this is not necessarily the case for students admitted off of the waiting list. If you are waitlisted, often the quality and frequency of your contacts with the admissions office will determine whether you are admitted off of the waiting list. But sometimes indicating a willingness to forgo financial aid will get you admitted. But you should never do this if you cannot afford to attend the school with no financial aid, as such students will not get any aid, not even in subsequent years.
One area where a few schools will sometimes negotiate is their outside scholarship policy. A school's outside scholarship policy dictates how the school reduces the financial aid package when the student wins a private scholarship. Federal overaward regulations require the school to reduce the financial aid package to compensate for outside scholarships when total aid exceeds demonstrated financial need. So the school cannot increase the amount of financial aid you receive. However, there is a little wiggle room in deciding how to reduce the aid package. For example, the school could reduce loans before reducing grants. Since grants are better than loans, replacing a loan with all or part of an outside scholarship will benefit the student. The schools that do this kind of preferential packaging will only do so for students who are bringing in a large amount of outside scholarships.
A growing trend among third tier institutions is to award academic (merit) scholarships, often called the "Presidential Scholarship" or "Trustee Scholarship". These scholarships are awarded by the admissions office or the office of the university president, not the financial aid office. There are a limited number of such awards, and they are highly competitive. The goal of these awards is to attract talented students to the school.
If you want to try negotiating with a school, present a better offer from a competing college and indicate that you will matriculate at the school if they will match the other school's offer. If the school is one of the few that matches other institution's offers, they will ask for a copy of the other school's award letter. They will compare it with their own financial aid package, and also the costs and student budget at each school. If there is a genuine difference in out-of-pocket costs, they might match it (or at least come a little closer) or they might not.
The schools that will match offers from competing schools are open about the practice and encourage the students to submit competing offers. For example, Carnegie Mellon University is famous for its willingness to reconsider its original offer. This doesn't mean you'll necessarily get a better offer after the second review, just that they are willing (some say eager) to take a second look in response to new information, including better offers from their competition.
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