Whether it’s because of belt-tightening or the promise of federal student loan forgiveness, families are suddenly paying more attention to financial aid for college.
More than half of parents with college students, or 58 percent, didn’t plan to apply for federal aid, but now have changed their minds, according to a new report from Discover Student Loans.
“Given the uncertainties in the economy right now around inflation and fears of a recession, it’s understandable that some families are feeling the impact of paying for college and are reconsidering applying for federal aid,” said Rich Finn , vice president of Discover Student Loans.
That’s where the Free Application for Federal Student Aid comes in.
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With tuition increasing, most families rely on a combination of resources to make college affordable. Earnings and savings cover more than half of college costs, free money from scholarships and grants make up about a quarter of the costs and student loans make up most of the rest, according to the annual report “How America Pays for college” from Sallie Mae.
“You want to maximize that free money first,” said Sallie Mae spokesman Rick Castellano, such as scholarships and grants, “before you borrow.”
But students must fill out the FAFSA to access any aid. For the 2023-2024 school year, FAFSA filing season opens on October 1st, and the sooner students file, the better.
The sooner families fill out the FAFSA, the better their chances of receiving aid, Castellano said, since some financial aid is awarded on a first-come, first-served basis or from programs with limited funds.
Scholarships are key to university affordability
Miljan Živković | Stock | Getty Images
“The FAFSA is the most important thing you can do to qualify for scholarships and grants,” Castellano said. “At the end of the day, it’s free money that doesn’t have to be paid back and should help make college affordable.”
Scholarships are a key source of funding, but only 60% of families use them, according to the education lender.
About 6 in 10 who used scholarships got them directly from their student’s school. These students received $6,335, on average.
Most families who didn’t use the grants said it was because they never applied for them.
Why more families don’t fill out the FAFSA
Last year, 70 percent of families completed the FAFSA, up slightly from 68 percent the year before, which was an all-time low, according to Sallie Mae. This year, up to 72% may apply, according to Discover estimates.
“My hope, always, is that more families will complete the FAFSA,” Castellano said.
Among those not applying, the most common reason was that they thought their income was too high to qualify for aid, followed by that applying was too complicated or they just didn’t know, it found Sallie Mae.
In fact, “almost every family will be able to qualify for some form of college aid,” Castellano said.
Many factors, not just income, go into determining how much aid students receive, including the total number of people in the household and the number of children in college, as well as other financial commitments such as a student loan home or the payment of child support.
The application process itself is another hurdle, families say.
However, experts say you can fill out the FAFSA form online at fafsa.gov or in the myStudentAid app in less than an hour, especially if you have your documentation, including W-2s and your income tax return last year. Sallie Mae also has a free online FAFSA tool to help families navigate the process.
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