Early Decision Risks: Missing Out on Financial Aid

With October here, temperatures are dying down and the college application process is just heating up!  Many high school seniors are contemplating making an Early Decision (ED) application to their first choice college, a binding admission process through which the student guarantees a college that, if accepted, they will attend and withdraw all outstanding applications to other schools. ED has its benefits.  An early acceptance to a first choice college can minimize the stress that senior year brings and reduce the time and money spent applying to multiple schools.  In addition, colleges hoping to increase their yield may accept a larger percentage of ED applicants, who offer guaranteed enrollment, than Regular Decision (RD) applicants, who may turn the offer down to attend a different school. When You Should (and Shouldn’t) Apply Using Early Decision Despite its benefits, as a College Coach finance educator, I rarely recommend an ED application to families needing aid.  The ED process has significant drawbacks, particularly on the financial side. Though a student should theoretically receive the same financial aid offer  in ED as in RD and an inadequate financial aid offer is usually the one reason a student can legitimately decline an ED acceptance, by making an up-front commitment an ED applicant is giving up the opportunity to compare financial aid offers from different colleges and shop around for the best educational value. A student considering applying ED should think about whether that school would still be her first choice if the school did not offer her any financial aid, while her second choice school awarded her a full scholarship, making it free to attend.  If the answer is yes, an ED application may be the right choice.  If not, the student may want to rethink making that early commitment. The Inability to Compare Financial Aid Packages Without the ability to compare financial aid offers, an ED applicant is also unable to negotiate financial aid offers.  If an RD applicant receives competing scholarship offers from different schools, he may be able to negotiate scholarship increases by letting the less generous college know about a larger scholarship offer from another school.  A first choice college that initially offered only a small scholarship may be willing to increase its offer if the student lets them know that he may be lured away by his second choice school’s generous package.  Again, this option is off the table when applying ED, as there are no other financial aid packages to use as negotiating material. The one kind of student who might find an ED application worth doing is the candidate on the bubble. As mentioned earlier, students who apply under binding programs are often more likely to be admitted than those who apply under non-binding programs. Since a candidate who has a lower probability of being admitted is not likely to get merit-based aid anyway, losing the ability to negotiate probably won’t have an impact on the ultimate cost of the education to the family. Discuss the Long-Term Impact of College Costs Before Applying ED The submission of an ED application is a serious commitment, financially and otherwise, and should not be taken lightly.  Students should discuss the pros and cons of ED with their parents, and, if applicable, their college counselors.  If a family is committed to one school regardless of what others may offer, ED may be a good choice.  If, however, a family is looking for the best college value, ED may not be the wisest decision.