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Problems with financial aid
Mercy Ochoa, a freshman at California State Polytechnic University-Pomona, crawls on all fours – other challenges involved jumping over a fees obstacle, rear, and jumping through hoops – on an inprovised obstacle course that ends in earning a degree – during what a group known as CSU Students for Quality Education call a “Protest Carnival,” mainly in opposition to an increase in student fees, outside a meeting of the trustees of the California State University, at CSUC headquarters in Long Beach, Calif., Wednesday, Nov. 10, 2010. Credit: AP Photo/Reed Saxon

Dalia Garcia breathed a sigh of relief when she got news that she’d been given enough financial aid to nearly cover the cost of tuition for her first year at California State Polytechnic University at Pomona.

Because her father earned less than $20,000 a year as a janitor, college would have been out of reach without the help. It meant “having a sense of security,” she recalled. And as a high school valedictorian with a high grade-point average, Garcia soon added several scholarships to her bounty, which — having grown up thrifty — she managed to stretch into her sophomore year.

Then the money stopped.

“I would go to the financial aid office, they would direct me to websites, and everything was for first- and second-year students,” Garcia said, explaining that the college officials told her she would have to find work-study programs or loans to cover whatever her family couldn’t afford.

“I was shocked,” she said. “Especially being closer to graduating, I thought, ‘Why wouldn’t they want to help me?’ ”

Many parents exulting at the financial-aid offers their children have received from colleges this spring are in for a similar surprise, several experts say, citing federal data.

Like Garcia, they will eventually discover that the institutions often dangle more aid in front of prospective students who are still deciding where to go, and reduce the flow later.

“Bait-and-switch pricing.” That’s how Ben Miller, a senior policy analyst at the Washington think tank the New America Foundation, describes it. Mark Kantrowitz, senior vice president at Edvisors, an organization that researches and advises on financial aid, calls it “front-loading.”

Related: Colleges appeal to Congress to cut regulations they say drive up costs

The bottom line, said Kantrowitz, is that institutions offer more to first-year students and their parents as a kind of “leveraging; they’re using financial aid as a recruiting tool.” And once the student has been recruited, the financial aid declines.

The problem is that, coupled with rising tuition rates, front-loading leaves many upperclassmen facing the difficult choice of going deep into debt to stay in school, transferring or dropping out. To make matters worse, many private scholarships are also restricted to freshmen, and end after the first year.

Discovering this as suddenly and unexpectedly as many students do is like “getting to the edge of a cliff,” said Amy Weinstein, executive director of the National Scholarship Providers Association, or NSPA.

Kantrowitz estimates that about half of all colleges and universities do this. Federal data bear out that the practice is widespread. They show that a lower percentage of undergraduates in general receive financial aid from colleges and universities than freshmen alone do. The amount awarded to the typical freshman is higher, too, before it then declines.

Related: The unexpected reason some in higher ed fear free community college

More than 46 percent of freshmen get tuition discounts, according to an annual survey by the National Association of College and University Business Officers —but fewer than 41 percent of all undergraduates do.

Garcia ultimately graduated. A nonprofit organization called Bright Prospect gave her the money to fill the gaps, and she now works there. She manages scholarships, and “absolutely” sees the same thing going on with others: “The first year looks amazing and then, from the second year on, the financial aid goes down, and the loans increase.”

Some who defend the universities and colleges say there are other things at play.

“The numbers are what they are, but there are so many reasons why it might be happening,” said Megan McClean, managing director of policy and federal relations at the National Association of Student Financial Aid Administrators. She said a family’s financial situation may change during the course of a student’s time in school, for instance. A grant may have been designated for first-year students only. Some upperclassmen are transfers, who may arrive needing less grant money.

Related: Rich school, poor school

“I don’t think it’s intentional,” McClean said.

Weinstein, of the NSPA, scoffed at this.

“They’re mission driven,” Weinstein said of financial aid administrators who front-load this way, “and have goals and numbers that they have to meet.”

A 2013 report by the NSPA urged that financial aid administrators disclose to families of students whether they practice front-loading or not, either in person or in financial aid award letters.

McClean said her organization “encourages parents and students to talk up front” with colleges about their financial aid packages.

Related: The financial aid policy that shuts out millions of students

But Kantrowitz said they may not get an honest answer.

“Schools aren’t necessarily open about this,” he said. He has attended meetings, he said, at which parents ask school officials if they front-load their financial aid packages, and the “school acts dumb. They prevaricate.”

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