This article has been updated. It was originally published on Jan. 11, 2018 as “You can negotiate your college tuition. Here’s how.”
On Tuesday, federal authorities revealed that they indicted 50 people — including college administrators, coaches and wealthy parents like Felicity Huffman and “Fuller House” star Lori Loughlin — in the “largest college admissions scam ever prosecuted by the Department of Justice,” as described by U.S. Attorney for the District of Massachusetts Andrew Lelling.
While the students who benefited from the alleged scam probably didn’t sweat their tuition to top schools like Stanford, Georgetown, USC and Yale, most current high school seniors getting their acceptance letters are feeling the pinch.
You know the statistics, but here’s a refresher — the average class of 2016 borrower graduated $37,000 in debt. More than 40% of students who take out loans owe at least $20,000 when they graduate. This is double the amount a decade ago, according to the Consumer Financial Protection Bureau.
Given the exorbitant cost of college, students and parents should remember that most things in life are negotiable, even tuition.
Money Mentor, formerly called NextGenVest, is a startup that helps students find financial aid and scholarships by providing advice via text message. The company’s holistic goal is to help students reduce their student loan burdens, according to Money Mentor founder and CEO Kelly Peeler.
Free financial aid review
So, last year, the company decided to offer a financial aid package review — for free.
“It’s really hard for an end user to actually compare financial aid packages apples-to-apples. That makes it complex for students and their families to figure out what’s the best deal,” Peeler told Yahoo Finance.
By categorizing and comparing scholarships, loans, tuition and out-of-pocket costs, Money Mentor’s advisors (called money mentors) can provide a detailed breakdown of a student’s options.
After doing a full comparison, there are two criteria that can determine whether you should appeal your financial aid package, according to Peeler.
If your family’s financial picture has changed since you submitted your FAFSA (e.g. a parent lost his/her job, a family member became ill). This could constitute as a change in status and would definitely give you reason to appeal
The college really wants you. You can definitively say to one or two colleges, ‘Here are the other offers I’m considering. Would you consider increasing your reward/matching?’ Students should not do this for every college, but make a concerted effort with your top choice. Money Mentor helps customize an appeal letter and communication calendar so students can interact with the financial aid offices at the school they really want to attend.
Students should start comparing their financial aid packages, which tend to arrive one or two weeks after the acceptance letters, as soon as possible.
“Do not jump the gun”
“[College] is the biggest financial decision of your life. You can start negotiating your tuition as soon as you get your acceptance letters and your award packages. We really recommend that you do not jump the gun and immediately commit to a school because then you’ve really lost your negotiating power,” Peeler said.
She emphasizes that the best way to correspond with a financial aid office is via email, and the content should be detailed and specific, explaining how you would add value to the college and why that college is a good match for you. Students should follow up if the school doesn’t respond within 10 days.
While there’s no guarantee that you’ll get more money from a school, students and families often don’t know that a university actually has more resources than it offers.
“Financial aid is a pie — it’s not limitless and there’s a finite amount of resources,” said Peeler. “You have to be proactive, you always have to ask. In any given semester a university might underallocate the amount of financial aid that they might initially give out.”
Money Mentor’s negotiation and broader text message services are completely free to students and families. The company makes money through referral fees, similar to Mint.com’s business model.
Overall, Money Mentor has helped users negotiate over $280,000 in tuition costs. While the success rate is still quite low, with only one in 40 students actually getting additional financial aid, it never hurts to try.
Disclosure: BBG Ventures, AOL’s venture arm, is an investor in Money Mentor. AOL and Yahoo Finance are both owned by Verizon.
Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.