Archived - Illustrative Examples--Managing the Price of College

Archived Information

Illustrative Examples

To clarify these tables, take a look at two examples of students planning on attending a public 4-year college. Our first example is Sharon. Sharon lives in Arizona with her mother. Our second example is Michael. Michael lives in North Carolina with his mother, father, and brother. Michael also has a sister who will be entering her junior year of college this fall. Both Sharon and Michael have decided they would like to attend one of their state's 4-year public universities.

The first step for Sharon and Michael is to find their state on the "tuition-level" table.⁹ Sharon finds Arizona is a lower-priced state, as does Michael for North Carolina. Therefore, both Sharon and Michael turn to the tables for public 4-year colleges and universities in lower-priced states. If Sharon lived in Wisconsin, she would turn to the medium-priced tuition tables. If Michael lived in Massachusetts, he would turn to the higher-priced tuition tables.

By turning to the first table for students at a public 4-year college in a lower-priced state, Susan and Michael find that the average tuition was $2,350, and the total average price of attending that includes all other expenses was $9,050 in 1995-96.

To see the amount of financial aid provided to students like Sharon and Michael, we start with their family income. Sharon's family income is $35,000, based on her mother's income. Therefore, Sharon will look for information on the family income-level row labeled "$20,000-40,000" on the table. Michael's family income is just over $90,000, based on the combined earnings of his mother and father. Therefore, Michael will refer to information provided on the "$80,000-100,000" row. Take a look across the table row by row.

What Are My Chances for Receiving Aid?

What are Sharon and Michael's chances for receiving financial aid? Look at the first two columns of the table.

**Family income and the likelihood of receiving financial aid**
	Family income level	Percent of students who received any type of financial aid
	Below $20,000	83%
Sharon	$20,000-40,000	76%
	$40,000-60,000	56%
	$60,000-80,000	54%
Michael	$80,000-100,000	40%
	Above $100,000	32%

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995-96.

Find your family income in the first column. The second column shows the percentage of full-time students attending 4-year public colleges and universities that got financial aid in 1995-96. Sharon sees that three-fourths of students like her received some financial aid (76 percent) when they attended a public 4-year college.

Michael sees that his chances for receiving financial aid are not as high as Sharon's. Only 40 percent of students from families with income levels similar to Michael's received financial aid. Michael knows that based on other factors that are considered, he may be more likely to receive aid, because he has an older sister who will also be attending college next year. Although the table shows he has less than an even chance of getting aid, given this major additional factor, his chances could be better.¹⁰ In fact, Michael's sister, who will be entering her third year of college, may find that she is now eligible for aid, perhaps for the first time.

There are other additional factors that could affect your financial aid award. These factors are presented in the section About Percentages and Ranges.

How Much Financial Aid Might I Get?

Now that Sharon and Michael have a sense of how likely it is that they will receive financial aid, the next question is, "How much?" The next column provides the range of financial aid awards received by most aid recipients within a given range of family incomes. By "most," we mean the middle half. One-quarter of aid recipients received less and one-quarter received more than the indicated range.

**Family income and typical aid awards**
			For those students who received financial aid:
	Family income level	Percent of students who received any type of financial aid	Most got between
	Below $20,000	83%	$3,200	&	$6,500
Sharon	$20,000-40,000	76%	$2,800	&	$6,550
	$40,000-60,000	56%	$2,300	&	$5,500
	$60,000-80,000	54%	$2,000	&	$5,100
Michael	$80,000-100,000	40%	$1,500	&	$4,950
	Above $100,000	32%	$2,250	&	$6,000

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995-96.

Assuming Sharon receives financial aid, she might expect to receive between $2,800 and $6,550. Note that this range is rather wide; it extends over $3,000. If Michael is among the college students in his family's income category to receive aid, the total assistance typically received by families like his recently ranged from $1,500 to $4,950. This is also a wide range. Where Michael and Sharon fall within this range, or if they fall outside of it, depends on other factors that are typically considered when awarding financial aid. Some of these factors are presented in the section About Percentages and Ranges.

Will Financial Aid Meet My Needs?

How far do typical aid awards go in meeting the expenses associated with going to college? The next two columns in the table address this question by showing the percentage of aid recipients who receive enough financial aid to pay all of their tuition bill, and the typical ranges of financial aid left over to cover other educational and living expenses.

**Financial aid remaining after paying tuition according to family income group**
			For those students who received financial aid:
	Family income level	Percent of students who received any type of financial aid	Most got between:			Percent whose tuition was fully covered	After paying tuition, aid was used for living expenses and other educational needs. Such aid ranged between:
	Below $20,000	83%	$3,200	&	$6,500	87%	$800	&	$4,200
Sharon	$20,000-40,000	76%	$2,800	&	$6,550	83%	$600	&	$4,350
	$40,000-60,000	56%	$2,300	&	$5,500	76%	$50	&	$3,550
	$60,000-80,000	54%	$2,000	&	$5,100	71%	0	&	$3,050
Michael	$80,000-100,000	40%	$1,500	&	$4,950	64%	0	&	$2,600
	Above $100,000	32%	$2,250	&	$6,000	84%	$300	&	$3,550

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995-96.

When looking across the correct income row, Sharon can see that 83 percent of students with a similar income background who received aid, receive enough to completely pay for tuition. Sharon can see that aid in excess of tuition typically ranged from $600 to $4,350. This extra money can be used to pay for books, supplies, room, board, and other living expenses. Michael sees that 64 percent of aid recipients in his family income category received aid that fully covered tuition charges. While most students in his income category received no aid at all, among those who did, this aid played a substantial role. Financial aid awards, when they were received, were sufficient to cover the tuition payments of the majority of aid recipients in Michael's relatively high-income category.

What Kind of Aid Might I Get?

Sharon and Michael are also interested in knowing the form of any financial aid they might receive. They know that loans must be paid back with interest and work-study dollars are earned by taking a part-time job, usually on campus. Therefore, grant aid is the most attractive because it does not generally have to be repaid. Most often students get a mix of different kinds of aid. The next table indicates the percentage of students who received various types of financial aid packages according to their family income group.

**Combinations of financial aid that students received**
		Percent of students who received
	Family Income level	No aid	Grants only	Loans only	Grants and loans	Work study	Grants, loans, and work study
	Below $20,000	17%	28	4	39	3	8
Sharon	$20,000-40,000	24%	22	8	33	5	8
	$40,000-60,000	44%	18	19	14	3	2
	$60,000-80,000	47%	23	19	7	4	1
Michael	$80,000-100,000	61%	14	14	8	3	0
	Above $100,000	69%	19	5	5	2	0

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995-96.

Looking at the row that includes her family's income, Sharon sees that a combination of grant and loan aid was the most common aid package received by those attending a public 4-year college in a lower-priced state. One-third of the students in Sharon's situation received this type of aid package. Over a fifth (22 percent) received only grants, and an additional 8 percent received grants, loans, and work study. Grants, either alone or combined with other forms of financial aid, play a prominent role in the aid packages for students like Sharon. Only 8 percent of students like Sharon received an aid package that consisted only of loans.

Most students in Michael's situation received no financial aid. For those who received assistance, the two most common packages were either grants (14 percent) or loans (14 percent) only. Approximately half as many students (8 percent) combined both loans and grants and a small number (3 percent) received an aid package involving work study.

How Much Aid Might I Get From Each Type of Aid?

Finally Sharon and Michael need to know, "How much money did students like me receive from these different kinds of aid - grants, loans, and work study?" The last set of tables provides this information. Again, the percentage of students who received each type of aid and the typical range of dollar amounts are shown by family income category. And again, the ranges presented in the tables are defined by the middle 50 percent of students who received a given type of aid; that is, one-quarter received less and one-quarter received more.

Average amounts of grant, loan, and work-study aid received

Grant Aid
	Family income level	Percent who got grants	Students who got grants received between:
Sharon	$20,000-40,000	66%		$1,000	&	$2,850
Michael	$80,000-100,000	22%		$500	&	$2,250

Loan Aid
	Family income level	Percent who got loans	Students who got loans received between:
Sharon	$20,000-40,000	49%		$2,600	&	$5,250
Michael	$80,000-100,000	21%		$2,600	&	$5,000

Work-Study Aid
	Family income level	Percent who got work study	Students who got work study received between:
Sharon	$20,000-40,000	13%		$600	&	$1,650
Michael	$80,000-100,000	3%		insufficient information ¹¹

SOURCE: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study: 1995-96.

Sharon sees in these tables that among college students like her, 66 percent received grants, 49 percent took out loans, and 13 percent received work study. She notes the typical range of grant awards ($1,000 to $2,850) was smaller than the typical loan amounts ($2,600 to $5,250). Students like Sharon were more likely to receive a grant than take out a loan, but the typical amount borrowed exceeded the typical grant. A smaller percentage, but still a substantial number of people like Sharon received work study and the amount received typically ranged from $600 to $1,650.

Michael sees that college students in his situation were equally likely to receive grants (22 percent) and loans (21 percent). Just as was the case for Sharon, loan amounts ($2,600 to $5,000) tended to be higher than grants ($500 to $2,250) among people in Michael's family income group.¹² Only a small fraction (3 percent) of college students in Michael's situation received work-study awards.¹³