Too Poor For College, Too Rich For Financial Aid

Sarah Reese
Apr 22, 2021

What do you do if you're too poor for college, yet too rich for financial aid? It seems like most people in the middle-class fall into this category, so you're not alone. We explain why this happens and offer you some tips on how to find other ways to pay for college that are actually realistic.  

It’s a tough situation that millions of families across the country find themselves in. Students work their hardest to get into amazing schools, only to find out that their financial aid package doesn’t go as far as they thought it would (Pssst, did you know you can actually negotiate your financial aid package?)

While it’s not always avoidable, there are some steps students' families can take to avoid falling into this trap. But first, let’s break down why this funding gap exists in the first place.   

Why does this happen?

There are a number of reasons why families are struggling to pay for tuition, but here are the two biggest ones:
  1. Rising college costs
  2. Financial aid calculations that really only look at your family’s income and not your expenses

The cost of tuition at both private and public institutions is reaching an all-time high. In the last 10 years alone, average tuition and fee prices have increased by 36% at public four-year institutions and 26% at private four-year colleges.

In other words, families today can expect to pay anywhere between $2,000 to $7,000 more per year for college tuition than families a decade ago. This is a steep hike, and once you factor in room and board the yearly price tag for some schools can be upwards of $50,000.    

This isn't the only reason that the student loan crisis is growing and not going anywhere anytime soon.

First of all, you should familiarize yourself with how financial aid is calculated. A major reason that families end up in the “too rich for financial aid” trap is because of the Expected Family Contribution formula. When students submit a Free Application For Federal Student Aid (FAFSA), schools calculate how much need-based financial aid a student should receive based on a family’s income, assets, and more.  

As family income increases, aid declines, but this formula doesn't consider important family expenses like saving for retirement, medical bills, or possibly the costs of saving for your siblings’ college education. So if your family earns more than $150,000 a year or has a lot of financial assets, the government may assume that they could contribute thousands of dollars towards your education. In reality, they may not be able to.   

What can I do?

If you find yourself in this funding gap (or want to avoid it at all costs), there are a number of things you can do before you start applying to colleges that can help make that tuition bill a little easier to manage.  

Apply for financial aid as early as possible.

Did you know that you can start getting scholarships and grants as a freshman in high school? Since most grants are typically for less than $1,000, if you start early and apply to different grants often, you can save up a nice sum of money before you even submit your college applications.  

Keep reading: Everything you need to know about financial aid and deadlines


Look at schools that grant merit-based awards

Got good grades? These awards can go a long way. While financial aid is determined by income and assets, merit aid isn't. 

Find schools that offer deep tuition discounts

Despite the annual sticker price shock, many students and their families are receiving tuition discounts at private colleges that are cutting prices nearly in half.

According to a 2018 report from the National Association of College and University Business Officers, the average discounting of tuition and fees at colleges for grant-based aid hit a record high of 49.9% percent for first-time full-time students and 44.8% for all undergraduates.

Apply for a tuition waiver

A tuition waiver is a discount on tuition that can come in many shapes and sizes based on need and certain requirements.  Each school has different opportunities for different tuition waivers, and you should contact your school's financial aid office for information.  

The application process is straightforward once you know which tuition waiver(s) you'll be applying for. Be sure to adhere to deadlines and have the proper documentation to be considered.   

Consider an honors program at a national university

Many of these institutions have a full range of undergraduate majors as well as masters and doctoral programs. Plus, they’re known for offering merit aid to attract high-achieving students to their campuses.  planning.  

Take out a loan

While this isn’t the greatest solution, federal student loans come with fairly low-interest rates (about 5.05%).   The catch? There’s a limit to how much you can borrow, and some come with extra fees.   Parents can borrow additional money from the federal government through a PLUS loan, but at much higher rates: 7.6% last year.  Private loans should be a last resort, since they usually come with the highest interest rates. We have the top private student loan options for you to explore.  

Apply for scholarships

This is hands down your best option. There's a lot of scholarship opportunities that exist that you can take advantage of. The best part about scholarships? It's free money.

Make sure you have all your ducks in a row when applying for scholarships. A little research can go a long way when it comes to winning as much scholarship money as you can get your hands on.

While it may not be a consolation, if you’ve fallen into the “too poor for college, too rich for financial aid” trap, know that you’re not alone.  

Pretty much everyone these days is having a difficult time paying for college. But if you’re proactive about applying for financial aid and keep an eye out for tuition discounts, bursaries, and scholarships, you can get a quality education and shave thousands of dollars off the price tag.