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You may not realize this, but when you get that financial aid letter from a college, nothing is set in stone.
"There's more haggling going on here in this industry," says Nick Ducoff, who adds that the overwhelming majority of colleges spend a fortune on recruiting students.
"Ultimately, they're trying to hit their enrollment goals, and so if they end up being off by some amount and they want that student to matriculate, they're often willing to engage with that student and their family to kind of close the gap," Ducoff says.
Ducoff co-founded Edmit, a Boston startup that tells students and parents how big a discount a particular college might be willing to offer. Edmit appears to have no competitors.
Mandy Fisher's daughter is starting college this fall. She says for $99, the Edmit app and the company's advice helped her — a schoolteacher and single parent — write letters appealing three colleges' initial offers of financial aid.
"One of the schools, the exact amount we asked for, they gave me," Fisher says. "It was almost $10,000 a year. And another school came back with an extra $4,500 a year. And the other school: zero."
Fisher's daughter chose the school that gave her the most financial aid: Ithaca College. Fisher says Ithaca is now charging her $20,000 a year, a third of the sticker price.
Ducoff estimates that his model enables customers to obtain, on average, an additional $5,000 in financial aid after a college makes its initial offer.
"One of the schools, the exact amount we asked for, they gave me. It was almost $10,000 a year."Mandy Fisher
Most colleges are fiercely competing for students who can afford tuition.
"And there are aspects of it that are really more about survival and living to fight another day," says Brian Zucker, president of Human Capital Research Corporation, a consultancy that forecasts for colleges how likely a particular student is to enroll. "So in an effort to enroll more students, schools are marketing harder. They are selling harder."
Their survival depends on it. So much so that they even offer discounts to families with a lot of means.
Edmit co-founder Sabrina Manville says their customers are families that earn $70,000 to $130,000 a year and face the financial pain of college most acutely.
"We just see that there's a lot of families in the middle who cannot afford the full price of tuition, but also are not eligible for a lot of need-based aid," Manville says.
Manville and Ducoff say more colleges are shifting from need-based aid to merit-based aid, which is granted based on some sort of achievement in academics, athletics, the arts or other areas.
That trend could prove daunting for low-income students, but it also provides opportunities that middle-class parents may not be aware of.
Colleges offer discounts to higher-income families for a number of reasons. They may want to improve their rankings. Or they want to make sure that students who can afford to pay actually enroll.
Ducoff says this is how colleges that do not have large endowments — which is to say 95 percent of colleges — ensure continuing revenue.
"So more and more families with higher household income are receiving discounts than they did in the past," Ducoff says. "Those students have the ability to get private tutoring and Princeton Review and private advising and help writing their essays, and so they look very attractive to a college and the college rewards them by offering them a merit discount."
Ducoff says as better-off families get more so-called merit discounts, other families struggle.
"The person that that merit discount is coming from is the middle- to low- income family that has somewhat average merit who's having to shoulder more of the responsibility," Ducoff says.
This, he says, has contributed to the increase in student debt. And it's all occurring amid a broader context: As colleges increase so-called merit aid, some research is finding that there's less money for traditional financial aid, need-based aid.
Editor's Note: After the story was published, Edmit gave WBUR a corrected income range. The organization said it typically works with families who make between $70,000 and $130,000 annually.
This segment aired on August 8, 2018.
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