Before College: Beware of Unmet Need

Michelle plans to begin college this fall. She’ll need help paying for it, so she’s now analyzing the financial aid offers that have arrived from the colleges and universities to which she’s been admitted. In doing so, there are three questions to answer about each school — what’s my net price, will I have unmet need, and how much will my unmet need be?

Unmet need has two components:

  • Costs — tuition, fees, books, supplies, room, board, travel between campus and home, and a reasonable personal expenses; and
  • Non-repayable financial resources available to the student — grants, scholarships, and Expected Family Contribution.

So at each school, Michelle’s unmet need is the gap between her costs and her non-repayable financial resources.

Unfortunately, for all but the wealthiest students, unmet need must play a significant role in college selection. The Center for Law and Social Policy recently found that among students at:

  • Public 2-year colleges, 71% had unmet need averaging $4,920;
  • Public 4-year colleges, 75% had unmet need averaging $9,134;
  • Private nonprofit colleges, 78% had unmet need averaging $13,844;
  • Private for-profit colleges, 93% had unmet need averaging $14,815.

Unfortunately, financial aid offers may arrive on “award letters” that don’t explicitly list unmet need. So Michelle needs to do some math to determine her unmet need at each college she’s considering.

If she’s facing significant unmet need at an institution she’d like to attend, Michelle has two options — increase her non-repayable financial resources and reduce her college-related expenses.

But these probably won’t not be enough, so hopefully the student loans and work-study opportunities Michelle’s been offered will fully substitute for her unmet need. If so, she should remember to borrow only what’s absolutely necessary to cover that need.

If loans and work-study won’t cover Michelle’s unmet need, or if Michelle doesn’t want to take on debt, she faces a potentially difficult decision — to attend another college where her unmet need is lower.

Michelle’s parents may also borrow a Federal Direct Parent PLUS Loan to eliminate what remains of her unmet need after her loans and work-study awards are factored in. Institutions seldom include PLUS Loans in their initial financial aid offers, so Michelle will likely need to contact the financial aid office to request such a loan.

The the top two reasons for undergraduates dropping out — having to work to earn money and the inability to pay tuition and fees — are proxies for unmet need. And students trying to stay in school despite large unmet needs are generating many of today’s largest college debts. So beware of any institution that would leave you with significant unmet need.

College Affordability Solutions offers free consultations to students and families trying to analyze the affordability of different colleges. Contact us if we can help you.

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