University financial aid officials are requesting that the government include cost of living in the “expected family contribution” criteria for students applying for federal financial aid. Financial Aid Director Daniel Small said the current system should be altered to give greater weight to regional cost of living differences in calculating students’ financial aid packages.
The new criterion would “recognize where students are coming from” and help them “meet daily expenses,” Small said.
When students apply for need-based aid, their expected family contributions are determined by tuition and other costs, total family income and assets, family size, number of children attending college and extenuating circumstances. The expected contribution is subtracted from the cost of attendance to generate the amount of money the government will contribute.
This method leaves cost of living out of the equation, although these costs vary widely across the country. The Department of Education, which evaluates federal aid applications, subtracts state income tax, which varies from state to state. Some officials say more regional distinction is needed.
Small said altering the criteria is a “big issue in discussion with parents,” and the office is taking preliminary steps to make changes.
“People are paid a higher income because of where they’re living,” Small said.
He also said he urges parents, students and officials to write to their representatives in Congress to change the criteria. He said the financial aid office has sent letters to various congressional representatives already.
Certified financial adviser Michael Toussie, who counsels companies and families about investments and purchases, said, “it’s obvious that cost of living in the Northeast and the West Coast and certain Midwest cities like Chicago and Denver is higher.”
“A person making $150,000 in the New York/New Jersey area could have a tough time getting by,” Toussie said, “but if the same person was making the same in Mississippi or Iowa, he would be the richest man in town. It’s unfair.”
Sylvia Davis, who works in the Department of Education’s information office, defended the system, explaining that regional distinctions are specific enough.
All U.S. residents pay the same federal income tax, which ranges from 10 to 38 percent depending on a resident’s income, but each state determines its own income tax. State income tax funds programs and departments including education, road work, welfare and law enforcement, according to the IRS Web site.
“Let’s say you make $50,000 and you live in New York. You only get to (keep) $35,000, but if you live in Florida and make $50,000, you (keep) $42,000,” Toussie said. “So to an extent (taking state income tax into consideration) is fair, but cost of living still isn’t taken into account.”
Although GW allocated an additional $10 million in aid this year to about 60 percent of undergraduates, most students said the aid they received is not sufficient to foot GW’s $39,180 yearly bill. The average student’s need-based aid package increased from about $19,000 last year to about $20,700 this year in what Small called a “good jump.”
But many students said they still do not receive enough aid and wish the criteria would be changed.
“My parents make $100,000 combined,” senior Aaron Costello said. “How does GW expect me to pay for school?” He said every year he receives less of a financial aid package and is forced to take out more loans, which might cause him to go into debt after graduation.
“I didn’t have a scholarship freshman year and my parents freaked out,” sophomore Beth Mosenthal said.
But some other students said they have not had problems with the financial aid process.
“They actually gave me a large amount of financial aid, and I have a work study of 11 hours per week,” freshman Danielle Schmidt said.
“I wish they could give out more, but you know what you’re getting into when you come to GW,” said medical student Mike Kuhn, who also received his undergraduate degree at GW. “Cost is part of your decision to come here.”