Watch Out for That Financial Aid Surprise

I bet when you were touring college campuses you never heard anyone utter the word “gapping.”

Gapping is an unpleasant phenomenon that strikes many families in the spring. It happens when a college offers a student a skimpier aid package than the financial aid formula would suggest.

Here’s an example:

Let’s say the formula concludes that your family could afford to pay $20,000 for your child’s freshman year in college. In higher ed lingo, this $20,000 would represent your Expected Family Contribution or EFC.

If your child applied to a school that cost $50,000, you might expect a $30,000 financial aid package to fill the gap between your EFC and the cost of the college. But let’s suppose the school only kicks in aid worth $20,000. That leaves a gap of $10,000.

Why do colleges and universities gap kids? Financial aid dollars are finite and schools would rather reserve their fattest packages to the students who they truly covet.

In some cases, the gap between what a family can afford and what the school offers can be tens of thousands of dollars. When the financial aid awards is ridiculously low an applicant will likely attend a different school.  Other times, a child might be put on a financial aid waiting list.

Oftentimes the high school seniors who get gapped are middle-class and low-income students, who are in the bottom half academically of the crop of teenagers who were accepted. Not all these students take the hint. Sometimes these kids decide to load up on crippling debt to attend their dream school. Before that happens, a school’s financial aid officer will sometimes call the family to try to talk them out of committing financial suicide.

A story in today’s New York Times takes a look at gapping in a behind-the-scenes look at financial aid practices at Boston University.

Learn more about how to pay for college — and avoid gapping — by reading my book, The College Solution.