Families Often Underestimate Financial Aid Eligibility

WASHINGTON, June 28, 2016 /PRNewswire/ -- Just 24 percent of parents and 37 percent of students believe they will qualify for financial aid, according to a national survey of more than 5,000 high school students and parents released today by Royall & Company, a division of EAB.  That is significantly fewer families than the National Center for Education Statistics (NCES) says actually receive aid in the form of grants or low-interest loans from the federal government: 85 percent of all college-going students.

Even families most likely to receive need-based aid—those in the survey's lowest household income bracket—underestimate their chances of securing financial support.  In households with incomes of $60,000 or less, just 66 percent of parent respondents expect to qualify for need-based financial aid.  And just 73 percent of student respondents in this income bracket expect to qualify for need-based financial aid.  In contrast, according to an EAB analysis of NCES data, 84 percent of students with household incomes of less than $60,000 received Pell Grants—and many more students in this income bracket qualified for subsidized student loans.

Families in lower-income brackets also do not feel as comfortable completing the Free Application for Federal Student Aid (FAFSA), a prerequisite to receiving any form of need-based aid, as families in higher-income brackets.  Specifically, Royall & Company found that 43 percent of parents with household incomes of $60,000 or less expressed concern about completing financial aid applications—compared with 16 percent of parents with household incomes of $120,001 or more.

"There is no doubt that college is too expensive for too many families, but there are resources to make college more affordable," said Pam Kiecker Royall, Ph.D., Head of Research at Royall & Company.  "Low- and middle-income families especially have more funding options for higher education than they realize."

"Further, the survey results highlight an urgent need to educate parents and students about financial aid now, with the school year starting in just a couple of months," Kiecker Royall noted.  Processing the FAFSA can take several weeks.  And if students' financial aid is not ready, they may be required to pay for tuition, fees, and books out-of-pocket. 

Schools such as North Central College (NCC), a private college in Naperville, Illinois, are working with Royall & Company to make sure high schoolers are aware that a college education, and especially a private college education, could be an affordable option.  They are having significant success encouraging all students to fill out the forms that enable them to get the aid to which they are entitled: In just one year of targeted nudges to students with information about the FAFSA, financial aid form submissions to NCC increased by 22 percent.

"Making sure more students fill out the FAFSA ties together two of our key tenets—increasing access and opportunity for under-represented student groups, and creating a diverse NCC campus community to support learning and growth," said Martin Sauer, the college's Vice President for Enrollment.  "We are committed to educating all students that a high-quality college education is within their reach."

At all income levels, cost was families' primary concern about college, but concerns were magnified for families with lower incomes.  Sixty percent of parents and students in the survey's lowest income bracket ($60,000 or less) cited financial concerns as their top anxiety about college.  In comparison, 33 percent of students and 41 percent of parents in the survey's highest income bracket ($120,000 or more) named financial concerns as their number one worry.

"The Royall & Company survey suggests that families' concerns about college costs may be driven by their misperceptions about who is eligible for financial aid and how to apply for it.  And while this is troublesome for all families, it is especially so for families with lower household incomes," said Chris Marett, President at Royall & Company.

Royall & Company collected feedback between November 2015 and February 2016 from a total of 5,133 college-bound high school students and parents of college-bound students about affordability and financial aid.  For the full report, visit Royall & Company.

These findings are part of Royall & Company's ongoing program of surveys and analyses of student preferences and behaviors.  Since 2000, Royall & Company has surveyed more than 800,000 students and studied more than ten billion student interactions.

About Royall & CompanyRoyall & Company is a division of EAB focused on best practices for higher education enrollment management and alumni fundraising.  Royall & Company leverages proprietary data and insights to help schools optimize enrollment and annual giving revenue, so those schools can continue to meet their mission of supporting life-long student success.  In 2015, Royall & Company helped its member institutions admit more than 11,000 ACT-identified under-served students.  For more information, visit www.Royall.com.

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SOURCE Education Advisory Board