Families are paying closer attention to financial aid for college, either because of belt-tightening or the promise of federal student loan forgiveness. Either way, this is a positive development that can help more people afford a college education.
According to a new report by Discover Student Loans, 58% of parents with college-bound students who didn't originally plan on applying for federal aid have now changed their minds.
With the economy being uncertain right now in terms of inflation and the possibility of a recession, it's understandable that some families are feeling the financial strain of paying for college and are reconsidering applying for federal aid, according to Rich Finn, vice president of Discover Student Loans. The Free Application for Federal Student Aid can help you pay for college.
The Federal Reserve's interest rate hike may have several impacts on your personal finances. For example, it could affect your credit card debt, tax bracket, and other financial obligations. Taking steps to reduce stress and manage your finances can help you weather any potential challenges.
As tuition rates continue to increase, most families are relying on a combination of resources to make college more affordable. According to Sallie Mae's annual "How America Pays for College" report, income and savings cover more than half of college costs, while scholarships and grants account for roughly a quarter of the total. Student loans make up the majority of the remaining costs.
According to Sallie Mae spokesman Rick Castellano, it's important to take advantage of free money sources like scholarships and grants before borrowing. This can help you minimize your overall debt.
Students who want to access financial aid for college must fill out the FAFSA form. The sooner students file the form, the better, as it opens up more opportunities for aid. For the 2023-2024 school year, the FAFSA filing season opens on Oct. 1.
According to Castellano, families who fill out the FAFSA as early as possible have a better chance of receiving financial aid. This is because some aid is awarded on a first-come, first-served basis, or from programs with limited funds. Castellano emphasizes the importance of the FAFSA in qualifying for scholarships and grants. She notes that this is free money that does not need to be repaid, making college more affordable overall.
According to the education lender, only 60% of families use scholarships as a key source of funding.
According to a recent study, about 60% of students who used scholarships received them directly from their school. The average amount awarded was $6,335.
The majority of families who didn’t use scholarships said it was because they never applied. This suggests that many families are not aware of the scholarship opportunities available to them.
Last year, more families completed the FAFSA than ever before, according to Sallie Mae. This year, even more families are expected to apply, Discover estimated.
Castellano said that she always hopes that more families will complete the FAFSA.
According to Sallie Mae, the most common reason why people don't apply for financial aid is because they think their income is too high to qualify. Other reasons include feeling that the application is too complicated or simply not knowing about the process.
Castellano stated that nearly every family will qualify for some type of college aid.
There are many factors that go into determining how much aid students receive, such as the total number of people in the household, the number of children in college, and other financial commitments like a home equity loan or child support payments. Income is just one of many factors that are considered.
Families say that the application process itself is another hurdle.
Although it may take some time to gather all the necessary paperwork, experts say that the FAFSA form can be completed online in less than an hour. The myStudentAid app can be used to complete the form, and Sallie Mae has a free online FAFSA tool to help families navigate the process.
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