How applying early for college affects financial aid
This article is from U.S. News and World Report
Early decision applicants may enjoy improved odds of being accepted at their dream school, but that could come at the price of receiving less in college aid, experts say.
According to a 2017 report by the National Association for College Admission Counseling, schools offering early decision accepted nearly 60 percent of early decision applicants in fall 2016. Among schools with early decision policies, the average overall admissions rate was almost 48 percent in fall 2016 – that's more than a 10 percentage point difference compared with early decision admissions.
The study also found that nearly half of selective schools – 49 percent – offered early decision; many of these institutions are private colleges.
Under early decision, students commit to a first-choice college and, if admitted, agree to enroll and withdraw their other college applications. That may mean the student accepts the school's financial aid award, even if a better offer might have materialized from another college or university.
"When you apply early decision, you agree to attend that college if accepted and to withdraw any applications you have submitted to other schools. If a college finds out you broke your early decision contract and did not withdraw applications to other schools, they can rescind your offer of admission," says Shannon Vasconcelos, director of college finance at Bright Horizons Education and College Advising, which offers college admissions consulting.
For students and parents who are considering an early decision application, here's what you need to know about how that decision affects college financial aid.
Students may opt out if they can't afford to attend. In general, early decision is binding and a student is required to accept the offer of admission. But there is one exception – if the aid award offered by a school isn't enough to make the cost affordable. This isn't common. Among admitted early decision students, nearly 87 percent accepted their early decision offer during the fall 2016 admissions cycle, according to the NACAC report.
Vasconcelos says less generous offers for early decision applicants is not a concern at the highly selective colleges that tend to offer no merit aid and guarantee that they will meet 100 percent of full financial need for the cost of attendance.
"If your financial aid package isn't enough, you can ask to be released from the agreement. But this is effectively turning down admission and any offer of financial aid that comes with it. If you choose not to enroll, you will most likely have missed the application deadlines at your remaining school choices," says Abril Hunt, an outreach manager at Educational Credit Management Corporation, a nonprofit focused on helping families pay for college. "As soon as you think you might need a backup plan, start applying to other schools."
Hunt says aid awards will typically only be adjusted if a special circumstance has occurred on a student's Free Application for Federal Student Aid, known as the FAFSA; the federal form is used to determine student aid eligibility for federal student loans and grants, but many colleges and universities as well as states use it to award students grant money.
It may limit the ability to negotiate financial aid awards. Students accepted under early decision lose the ability to compare aid packages across multiple schools.
"The primary financial drawback of applying early decision is that you give up the ability to compare offers from other schools and potentially negotiate awards to get those offers even higher," Vasconcelos says.
Experts say low-income students who can count on substantial need-based aid are also unable to see how the school compares in meeting demonstrated need.
"Students may be going in blind as to what their price is likely to be if they get in. That said, many colleges are not transparent about their need-based aid or merit scholarships – and so while the official FAFSA is helpful to have, it still leaves many questions open and could be risky for families if the offer comes back and is unaffordable," says Nick Ducoff, founder and CEO of Edmit, which helps students and parents navigate the college financial aid process.
Charlie Javice, founder an CEO of Frank, an online platform created to streamline the FAFSA process, says not having multiple financial aid offers also reduces a family's negotiation power.
"It makes it harder to say: 'I got into NYU and Columbia is giving me this award, and Columbia can you work with me because NYU is giving me that amount,'" Javice says. But, she says, if a student applies early, typically there's a larger pool of institutional money that hasn't been allocated yet.
Applying early may limit merit aid. College admissions experts say families banking on merit aid to float tuition should approach early decision gingerly. But, they say, it's not impossible to be awarded merit aid as an early decision applicant.
"Most schools use merit aid to attract their ideal students. If a school knows you will attend regardless, there is really no reason to offer you merit aid. Additionally, institutional and private scholarships aren't generally awarded until late spring or early summer. It's not impossible to get merit aid, but if you need to compare financial aid awards between schools, early decision is not the best option," Hunt says.