March 2018

man looking at question marks and dollar signs

Middle-income families often feel like they’re caught between a rock and hard place: They make too much to qualify for much need-based aid, but not enough to foot the entire college bill. So how do they make it work?

“Some of these families understand after completing the FAFSA that they don’t qualify for a Federal Pell Grant, but fail to realize there is other gift aid available to help with the cost. Some have been able to save for their child’s college education, but many have not been able to do so,” said Jeff Younge, director of financial aid at Bethany Lutheran College.

Colleges work hard to meet the needs of these middle-income students. While the meaning “middle-income” is notoriously slippery, for this article we’re defining it as those who the FAFSA determines make too much to receive the Federal Pell Grant but are still eligible for state grants or federal subsidized loans.

“A large portion of Augsburg's population is considered middle income,” said Gina Jones, director of financial aid at Augsburg University. “A common question we are asked is ‘How can we make this work because my child really wants to come here?’ We spend a great deal of time with these families in counseling sessions to make sure they understand all their options and have a plan in place before their child begins classes.”

Understanding financial aid

Middle-income families aren’t in it alone. When it comes to paying for college, Younge stressed that it’s a partnership with five potential players: the parents, the student, the government, the school and private parties offering scholarships. “If we can get all five players contributing, it can make college very affordable,” Younge said.

“Middle-income families should understand that there are multiple avenues and components when it comes to paying for college and the determination of aid eligibility,” Jones said. That often means using a combination of need-based grants, scholarships, work-study, loans, savings and current income. Many colleges work with families to set up payment plans for out-of-pocket costs. “We counsel families setting up a payment plan by semester and by academic year. We also counsel them on Parent PLUS loan and private loan options.”

It’s important to note that financial aid eligibility isn’t just determined by income. The FAFSA uses a number of components to determine need, including the age of the oldest parent, marital status, non-retirement assets, the number of family members and how many family members are enrolled in college. One the biggest surprises is the effect of having two children in college at the same time. “For some, that means that both students receive a Minnesota State Grant, when prior to the second child enrolling, the enrolled student did not receive one,” Younge said.

Merit aid from the intuition or scholarships from private organizations may factor in other criteria such as the student’s major, high school GPA or ACT/SAT scores as well as the parent’s professional affiliations.

“Another piece of advice we give these families is to have the student apply for student work-study positions on campus,” Jones said. “This is a great way to help the student gain work experience and contribute to their educational expenses.”

Save for retirement or college?

Often wrapped up in the broader conversation about paying for college is how to balance saving for college with saving for retirement, especially since many parents reach the peak of their earning years when their child is in high school or college. Unfortunately, there is no one-size-fits-all approach or advice when it comes to saving for college and retirement since every family’s financial situation is unique.

Younge did point out that for some families it might be better to prioritize saving for retirement over saving for college. “While the money for college will likely be needed sooner than money for retirement, there are really no loans available to subsidize a retirement plan. They will be in a much better position to help their children with college expenses through a monthly payment plan with the school if the concern about retirement savings is being satisfied.”

And Jones advised that families make sure they complete the FAFSA accurately and completely. “Sometime parents leave out information or don't include the correct number in the household and this can have a significant impact in their child's aid eligibility. Also, if a family has experienced a large debt burden — such as bankruptcy or the medical or college expense for another child — we recommend inquiring about a professional judgment to ensure the income on the FAFSA is a true representation of the family's financial situation.”

Planning ahead

Estimating how much you might pay for college doesn’t need to be a mystery. Each colleges has a net price calculator on its website to help families get an idea of what a school might cost based on your specific circumstances. “While only an estimate, many parents are very surprised by how affordable private schools can be,” Younge said. “Many don’t realize the amount of institutional dollars that are available until they use the calculator or receive their official financial aid award from the school.”

Jones emphasized that it’s never too early to ask questions and to make appointments with the college financial aid offices to find out more information. “At Augsburg we hold two separate open houses each year and invite local high school students with their families to visit our campus and get all their questions answered.”

“I’d also recommend that students get to know their guidance counselor at their high school,” Younge said. “Many times these folks can point families to local scholarships that they can apply for.”

And don’t forget to check if your local high school holds FAFSA completion nights, which can be a good option if you need help or just advice on completing the FAFSA.

Learn more about how to pay for college.