Quote:
Originally Posted by Munchkin03
I have no clue. But remember, the majority of the most expensive (and selective) schools do not give merit scholarships; at those places, financial assistance is based on actual need.
|
Here's the deal with financial aid at most elite (but not Ivy) private schools. They do give merit scholarships, but very few of them. The point of merit aid is to attract the stars of the applicant pool, usually meaning students that are in a whole 'nother league versus the rest of the applicants. For example, a student who gets a perfect score on the ACT or SAT and has a 4.0 unweighted gpa will probably need an extra incentive to get him/her to actually attend Small State University, and money or a free ride is a great incentive. But many private schools have what's called a "self selected" applicant pool, meaning certain types of students tend to apply there - usually high achieving students - whereas other types won't bother. When everyone applying is in the top 10% of their high school class, with great test scores, and extracurriculars out the ears, there's only so much you can do to decide who is the cream of that crop. My school, if I recall, gave merit scholarships to the top 1% of the incoming freshmen, because, well, with so many excellent students, how are you supposed to separate the excellent from the more excellent? At a point it gets silly.
Instead, most private schools tend to give out need-based grants. They're conditional on family finances, but since private schools are so expensive, most students qualify for them. 75% of the students at my school were on financial aid. Since my school has a good endowment for its size, half of my tuition was covered immediately by grant aid from the school. Compare that to the $0 in grants I was offered from Univ. of Washington.
Then there are the loans. The first loans a financial office looks into on behalf of students (the purpose of filling out the FAFSA), are federal stafford loans. There is a maximum amount one can take out each year. Right now, the annual limit for first year is $3,500, $4,500 second year, and $5,500 for remaining years of undergraduate work. There are also federal Perkins loans, which are lended from the school. These federal loans are capped at low interest rates, and I was able to consolidate mine when I graduated to lock in my 3.0% interest rate. However, if you are still not able to pay your school fees with the grant and loan aid I've listed so far, you may qualify for private loans also offered through the financial aid office. These have higher interest rates (I have a small one with an interest rate of around 8%), and they are variable. There's no point in consolidating them because their interest rates cannot be locked in. And you're right, usually you can take these out for the remainder of what's needed for tuition, room & board, etc.
Most of the students today taking on the insane amounts of loan debt ($50k, $60k, $70k, etc.) have private loans - the worst kind. Stafford loans don't allow students to rack up that much in debt, only private loans can do that. And unfortunately, they're going to end up paying a ton of interest on those loans because of the rates. I am a big fan of a liberal arts core curriculum, and I believe education is one investment that will pay off, but I don't think I would (nor would my school) ever advise a student to take on $50,000 or more in private loan debt. When students are in college they have no idea how hard it will be for them to make those payments for many years after they've graduated.