Should Wealthy Families File the FAFSA?

Most college aid is provided by the government and colleges.  In order to obtain financial aid from the government in the form of grants and loans, students must file the FAFSA, a questionnaire inquiring about parental and student assets.

The same is true for students seeking need-based awards from colleges.  (Some colleges require the CSS Profile, which demands greater disclosure of parent and student finances, and usually results in a lower aid award.)

A few parents earn so much money that they are very unlikely to obtain need-based aid.  Should they ask for it anyway?

The answer might appear obvious (even without considering the ethical issues involved), but not to the author of a recent piece in the Wall Street Journal, entitled “Why Wealthy Families Should Apply for College Financial Aid” (1/15/16).

Her arguments for doing so, and my rebuttals, follow.


It demonstrates your ability to pay without any help

The author claims that colleges and universities need to build a freshman class that includes families that can pay the full cost of attendance along with those who cannot. For well-off families, “the FAFSA can be used as a positioning tool” that might give a student an admissions edge.  

Colleges and universities do not “need” to build a class which includes families paying full-freight.  They do so to pay the bills.  In some cases, parents and students can gain an edge in admissions by declaring their ability to pay full tuition.

However, that same “edge” can be obtained by checking the “I am not asking for financial aid” box on the application.  Turning down potential aid sends the same message as disclosing your wealth on a federally filed form.  Not sending a FAFSA also avoids angering an admissions officer who has wasted his or her time on an application for financial aid which clearly will not succeed.

To qualify for merit aid

The article states that “many schools won’t consider students for merit aid unless a FAFSA is filed”.  That is simply wrong.  Indeed, the first version of that article identified several of those schools, including William & Mary.  Being skeptical, I checked that college’s web site — no FAFSA is required.  In the current version of the article, the WSJ has corrected the claim.  “Merit aid” has always been treated differently from “need based aid”.  The former does not depend on financial need.

To give kids “skin in the game” via federal loans

I am not a fan of saddling students with debt unless it is necessary.  If you are wealthy, it is not necessary.  If something goes wrong for your student (e.g., he or she does not finish school and find a job), those loans can become an albatross.

“Because you just might qualify, particularly with multiple children.”

The “multiple children” scenario has merit.  But parents only qualify for such aid when both children are in school simultaneously.

“Because your situation might change”

The author gives an example of a student whose parents lose their jobs but are saved from ruin because they filed a FAFSA. This is alarmist.

I am not aware of any college that refuses to grant aid after a parent’s financial situation has deteriorated on the grounds that the parents should have filed a FAFSA form before their circumstances changed.  In such cases, parents file a FAFSA and their need for aid is determined from that form.

In sum, spend the time that you would waste filling out the FAFSA with your student instead.  You will both be happier in the long run.

Not sure whether you are “too wealthy” for financial aid?  Use the “net price calculator” for each college to get an idea of your eligibility.  You will find it by searching for “net price calculator” on the college’s web site. You can also “plug in” your financial information at, a “FAFSA forecaster” provided by the Department of Education.

For parents of means, the route to college funding runs through merit aid scholarships.  Many colleges will provide scholarships to their best applicants which defray the cost of tuition.  Some public colleges offer very large discounts, particularly to out-of-state students (typically eliminating the gap between in-state and out-of-state tuition).

For example, The Ohio State University (and woe unto those who omit the “The” in the title) offers its National Buckeye Scholarship to students in the top 40% (yes you read that correctly) of their high school class with a minimum SAT (Reading plus Math) of 1260 or an ACT of 28 or higher.  A lot of students can qualify.

How much money is involved?  The scholarship awards $11,400 per year, roughly the spread between in-state and out-of-state tuition.  Ohio State is a very fine university, and that is a very sweet deal.

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