College Connect: Savings Can Make College Less Affordable for Some Families

Posted By Crystal Beasley

By Nathaniel Berg

For parents of prospective college students, it’s important to plan ahead financially. And while conventional logic would suggest that saving money is the best way to prepare for your child’s higher education, a professor in the University of Georgia College of Family and Consumer Sciences said that is not always the case. According to Patryk Babiarz, the algorithm responsible for deciding the amount of financial aid awarded to students comes with a myriad of disincentives to saving. The formula gives more money to students who appear needier, so hiding a family’s assets can be the best way to maximize awarded financial aid.

“There is a certain kind of irony to the system,” Babiarz said. “The financial aid is given to people based on the assets test, so how much savings they have already. But at the same time there are also different types of savings that are exempt. This is an incentive for them to actually hide some of the savings.” It’s a phenomenon that affects thousands of students at Georgia as Babiarz described in a research paper. He described a group of students who come from families too financially well off to receive the level of benefits collected by poorer students, but they are not financially secure enough to pay for school without those benefits. This group gets the raw end of the deal, he said. Marcel Ogir, a senior economics major at Georgia, said belonging to the middle class has made paying for college more difficult than it has to be.

“There are so many people that really need this money,” Ogir said. “But because of the way people’s income tiers them into different levels of financial aid some struggle more than others.”

Once Ogir fell behind financially, the problems started to compound. “I have to work so much in order to make up all the money I don’t get for financial aid,” he said. “And because I’m making money, I get even less financial aid.” Luckily for students like Ogir, there are things that can be done to improve one’s standing in the eyes of the financial aid office. For example, savvy parents can benefit from either paying off a mortgage or investing some portion of their income in a retirement plan. The algorithm used to decide financial aid award is complicated, but it can be exploited. Babiarz said taking the time to learn about how the system works is the best thing prospective college students and their parents can do to ensure they maximize gains from the system.  “It is never too early to plan for your child’s college,” he said. “People should get familiar with those algorithms. Even if not with the details, at least have a general picture of how this algorithm works and how it can affect the eligibility of their child.”

Nathaniel Berg is a student at the Grady College of Journalism and Mass Communication at the University of Georgia

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