Too Poor To Pay For College, Too Rich For Financial Aid
CNN/Stylemagazine.com Newswire | 4/28/2016, 2:47 p.m.
Gage Marquez's dream is to become the first in his family to go to college, get his degree from the University of California at San Diego, and eventually become a cardiologist.
He nearly cried tears of joy when he found out he got in.
But then he and his parents took a look at the financial aid award. He was given a grant for a little less than $3,000. And the school, which determines how much a student can take out in federal loans, will let him borrow just $6,800.
That still leaves his parents with a bill of $18,000 for the first year alone.
Now, not only does Gage face borrowing more than $27,000 over four years, but his parents will need to take out about $72,000 in higher interest loans.
Paying $18,000 out of pocket per year is more than his parents Stacy and Alfred Marquez can afford. On an income of less than $100,000, there's not much left after paying the mortgage, two car payments, health care premiums, braces for their eighth-grader, and food for three boys.
The family also has high medical costs, since one of Gage's brothers has a learning disability and the other has a heart condition -- which inspired Gage's interest in cardiology. His mother, Stacy, has stayed home to raise her boys.
"At the end of the month, I'm lucky if there's $10 left in my checking account," she said.
The Marquez family once had some savings put away for college. But they had to live off that money when Gage's father, Alfred, lost his job during the recession. He's back at work now, but earns less than he used to and he doesn't get health care benefits.
"We are very blessed and make a decent living, but when it comes to college we feel poor," she said.
Financial aid award letters are typically sent out in late March or early April and most students have until May 1 to decide where to enroll. The Marquez family probably wasn't the only one surprised to find out just how much they'd have to pay for college.
While colleges advertise their "sticker price," many families expect to receive need-based financial aid in the form of grants and student loans. The amount they are awarded is based on what the college estimates they can afford and is supposed to help fill in the gap. But some middle and upper-middle class families find that what the college expects them to contribute is more than what they can afford.
"We generally hear that schools attempt to meet the full need for students from families whose household income is below $75,000," said Joe DePaulo, the founder of College Ave, which offers private student loans to families who find themselves in this funding gap.
As family income increases, aid declines. Very little is offered once incomes approach $200,000, DePaulo said.
Colleges don't say exactly how they will make this determination, but it depends a lot on the information you submit on the FAFSA form. This includes things like your income and assets -- but not necessarily your home value. College financial aid offices may also consider things like how many children in a family are enrolled in college and how close the parents are to retirement age.