College Financial Aid: Bait and Switch?

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

Warning: If you've got kids heading to college this fall, be aware that the financial aid they're offered as freshmen may dwindle in later years.

The following guest post comes from Irene Steinman, a good friend of Money Talks founder Stacy Johnson.

Here’s what colleges don’t tell students they’re wooing:  They might offer excellent financial aid the first year, but the free money might slowly disappear as the student advances.

When my son was admitted to a top-tier university three years ago, his financial aid package made the sticker price of $55,000 affordable (barely) by effectively granting a 15-percent discount on the tuition through a university scholarship, as well as Federally Subsidized Work Study and loans. With all that help, the decision to enroll him in the prestigious university was a no-brainer.

But that was year one. As the years progressed, we’ve been dismayed to watch a lot of that aid disappear. After it was too late to turn back, we fell victim to a hidden catch:  As students continue beyond the first year, some colleges adjust their packages, expecting them to bear a greater financial burden.

Below are three lessons I’ve learned from my trip to the school of hard knocks…

1.  Merit-based scholarships may require stratospheric grades, possibly as high as a straight-A average.  Earning lofty grades might have been easy in local high school classes, but students soon learn the effort behind a high school A might earn only a C in some college classes.  Result? Some students can’t keep up and lose their aid after the first year.  My neighbor lost her full ride at a private university by dropping to a B average in her second semester.

2.  The “Expected Student Contribution” from summer jobs and work study increases yearly and is figured in the “Expected Family Contribution.”  Through The Federal Work Study program, students are essentially allowed to earn money toward their tuition by working at subsidized campus jobs.  Fine, if they have the time. But student athletes or performing arts majors have to practice hours each day.  My son is on his school’s varsity baseball team – after practicing and travel, he’s lucky to be able to maintain his grades, much less work.

3.  In succeeding years, students will be assigned a greater federal loan.  Freshmen are eligible for subsidized and unsubsidized Stafford loans of $5,500 – sophomores can get $6,500, and juniors and seniors $7,500.  As the amount of the loan rises, grants or need-based scholarships (the free money) decrease.  In his junior-year financial aid package, my son’s grant was reduced by the $2,000 increase in his Stafford loan.

Worse yet, with dwindling resources and tight credit, some states are cutting aid to higher education, and the federal government is refusing to fund existing programs. State schools everywhere have been shocking their returning students with tuition and fee increases, and financial aid packages that are more loan than aid.

As of April 15, 2011, the federal government has eliminated funding for the popular Robert C. Byrd Honors Scholarship Program.  Scholarships already awarded will not be paid, and no new awards will be granted.  Current students expecting that money will have to make other plans.

There’s an appeals process.  In our case, we were told that claiming hardship would get us a hearing with a financial aid officer, and providing additional information about income, job status, or dependents could increase our chances of additional help.  But we were also told that the ever-increasing portion of the student burden couldn’t be altered.

So here’s a warning: If you’ve got a kid heading to college this year, they may one day find themselves in the same boat as my son.  So before you sign on the dotted line, understand the conditions of your scholarship and/or aid, and always ask about future years.  Consider the consequences if the A-plus aid you’re offered as a freshman earns an F as a senior.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Considering a Fixer-Upper? 15 Ways to Avoid a Money Pit

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,094 more deals!