Study urges better financial aid formulas

Oct. 2, 2009 at 10:40 AM

COLUMBIA, Mo., Oct. 2 (UPI) -- New U.S. rules for student financial aid should use a method of assessing net worth that doesn't foster inequalities in distribution, researchers say.

A study by the University of Missouri released Friday concludes that the Federal Application for Student Financial Aid, known as the FAFSA, needs a better way of assessing a family's net worth.

UM researcher Tansel Yilmazer says under the current method two families with the same income can end up with widely different amounts of financial aid.

"Right now, if one family invests more in retirement or in huge homes with high equity, then that family might be eligible for more financial aid than the family that doesn't make these investments, " Yilmazer says.

The Missouri study, "The Impact of College Financial Aid Rules on Household Portfolio Choices," will be published in the December issue of the National Tax Journal.

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