Imagine this, you purchased a weekly subscription to your favorite magazine. 

The first year was amazing but by year two, you’re told your current plan will be canceled and you now have to pay twice as much for a monthly plan.

Sucks right? 

Not only are you paying twice as much but you’re also getting fewer magazines (once a month)!

This is what front-loaded financial aid is in a nutshell.

What is front-loading?

Front-loading is the practice of disbursing a higher proportion of financial aid to incoming students and then reducing it in subsequent years. 

Basically, accepted applicants are lured by a generous financial aid package that is then reduced and supplemented with student loans by sophomore or junior year.

This practice is sometimes lovingly referred to as “bait-and-switch pricing” by the New America Foundation.

Continuing students typically lose thousands of dollars in scholarships and grants they had received during freshman year.

Research found that the average net price for returning undergraduate students is $1,400 higher than freshmen!

As a result, many returning students find themselves struggling to pay for college and must turn to student loans as a band-aid solution.

Why do colleges front-load financial aid?

Colleges front-load financial aid as a way to “sweeten the deal,” so to speak, and incentivize accepted applicants to matriculate to their campus.

According to financial aid expert, Mark Kantrowitz, “Colleges [also] practice front-loading because it is cheaper to have higher grants during the first year, when it affects enrollment, than during all four years.”

This should come as no surprise since applicants are more likely to attend a school that offers the most financial aid.

Mr. Kantrowitz estimates about half of all colleges practice front-loading as a way to attract promising students.

Here is a list of colleges on the U.S. News & World Report that reported the largest gap between the cost of attendance and met need among freshmen and upperclassmen.

Why should you care about front-loading?

If you’re barely able to pay for college even with financial aid then you SHOULD care about front-loading because there may be years when you won’t have a financial safety net.

It also complicates two other issues: 

• Rising tuition costs
• Misleading NPC

Most colleges increase tuition every year at an average rate of 8 percent, which means not only will you have less aid but you also have more to pay!

The final issue relates to the net price calculator (NPC) listed on a college’s website. You can never predict how much you actually have to pay for a four-year degree even if you do use the NPC because it is only based on the first year of college.

As you might imagine, freshman year is not be the best predictor of future aid or costs because it tends to be a financially favorable time. 

That’s what I call a triple threat: front-loading, rising tuition, and misleading NPC.

So if you would be strapped for cash during freshman year, then you will likely have a much more difficult time paying for college in later years.

This means you may want to consider other colleges that are more affordable and are realistically in your price range.

What are the pros and cons of front-loading?

Front-loading can be a godsend or a nightmare depending on your financial situation.

Let’s start with the advantages of front-loading.

When front-loading can be advantageous:

• You only need financial aid during your freshman year
• You decide to drop out of college

While front-loading is viewed negatively by many college students and their parents, it may be beneficial to those who would only qualify for financial aid during the first year because you can pocket any “free money” you have leftover.

Another scenario in which front-loading could be beneficial is if the student decides to drop out of college since s/he would not be “loaded” with student loan debt.

When front-loading can be disadvantageous:

• You need financial aid for all four years of college
• Financial aid does not match rising tuition costs

In most cases, front-loaded financial aid hurts students since many do not find themselves in favorable situations that benefit from this practice.

This is because (1) a majority of students who rely on financial aid typically need it for all four years of college and (2) most institutions increase tuition each year without providing additional funding.

What can you do to avoid front-loading?

Start by using the College Navigator, a resource developed by the U.S Department of Education, to compare the amount of financial aid (grants and scholarships) given to freshmen versus overall undergraduate students.

Then check the “first-time retention” and “overall transfer-out” rates among students. Although low retention and high transfer-out rates wouldn’t necessarily be a smoking gun, it would raise some questions as to why students aren’t staying at a particular college. 

Insufficient financial aid could be a factor given that students with front-loaded aid would have three options: 

1. Take out loans to stay at the school
2. Transfer to a cheaper school
3. Dropping out altogether

But either way, these students are screwed.

Lastly, Google search the percent of freshmen versus overall undergraduate students who receive grants and institutional scholarships. 

A significant gap between these two values could suggest that a particular college front-loads financial aid, especially if the rate is lower among overall undergraduate students.

But in your college’s defense…

Many colleges disagree that front-loading is a common practice and argue that there are many reasons why students receive less financial aid after freshman year – and it is not due to malicious intent. 

Here are the possible reasons:

• Fluctuations in funding from the state/federal government
• Change in a student’s financial situation
• Part-time enrollment status
• Not maintaining eligibility requirements to keep academic scholarships
• Many scholarships are limited to freshmen and end after the first year
• Different student loan limits
• Tuition increases each year
• Some students transfer and require less financial assistance