Whether it’s because of belt-tightening or the promise of federal student loan forgiveness, suddenly families are paying more attention to financial aid for college.
Of those parents with college students who did not plan to apply for federal aid, 58% now they have changed their mindsaccording to a new report from Discover Student Loans.
“With the uncertainty in the economy right now around inflation and fears of a recession, it’s understandable that some families are feeling the effects of paying for college and reconsidering their federal aid application,” said Rich Finn, vice president of Discover Student Loans.
That’s where the Free Federal Student Aid Application comes in.
With tuition on the rise, most families rely on a combination of resources to make college affordable. Income and savings cover more than half of the cost of college, free money from scholarships and grants makes up about a quarter of the cost, and student loans make up most of the rest, according to Sallie Mae’s annual “How America Pays for College” report.
“You want to maximize that free money first,” such as scholarships and grants, said Sallie Mae spokesman Rick Castellano, “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 getting aid, Castellano said, because some financial aid is awarded on a first-come, first-served basis or from programs with limited funds.
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“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 you don’t have to pay back that should help make college affordable.”
Scholarships are a key source of funding, yet only 60% of families use them, according to an education loan provider.
About 6 out of 10 who took advantage of the scholarships received them directly from their student’s school. These students received an average of $6,335.
Most families who did not take advantage of the scholarships said it was because they never applied.
Last year, 70% of families completed the FAFSA, up slightly from 68% a year earlier, a record low, according to Sallie Mae. As many as 72% may apply this year, Discover estimated.
“I always hope more families will complete the FAFSA,” Castellano said.
Among those who do not applythe most common reason is that they thought their income was too high to qualify for assistance, followed by feeling that the application was too complicated or they just didn’t know about it, Sallie Mae found.
In fact, “almost every family will be eligible for some form of college assistance,” Castellano said.
Many factors, not only incomego 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 obligations such as a home equity loan or child support payments.
Another hurdle is the application process itself, families say.
But experts say you can fill out the FAFSA online at fafsa.gov or in the myStudentAid app in less than an hour, especially if you have your paperwork handy, including your W-2 and last year’s tax return. Sallie Mae also has a free online FAFSA tool to help families navigate the process.