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.
58% of parents whose students are in college and did not plan to apply for federal aid now changed their mindaccording to a new report from Discover Student Loans.
“Given 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 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.
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 college costs, free money from scholarships and grants accounts for about a quarter of the costs, 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 — like scholarships and grants,” Sallie Mae spokesman Rick Castellano said — 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 1 — and the sooner students file, the better.
The earlier 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 through limited-funds programs.
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“The FAFSA is the single most important thing you can do to apply for scholarships and grants,” Castellano said. “At the end of the day, it’s free money that you don’t have to pay back, and it should help make college affordable.”
Scholarships are a key source of funding, but only 60% of families take advantage of them, according to the education lender.
About 6 out of 10 of those who used scholarships received them directly from school. These students received an average of $6,335.
Most of the families who didn’t take advantage of the scholarship said it was because they never applied.
According to Sallie Mae, 70% of families completed the FAFSA last year, up slightly from 68% the year before, which was a record low. This year, Discover estimates that up to 72% may apply.
“I always hope that more families will fill out the FAFSA,” Castellano said.
Among those who do not applySallie Mae found that the most common reason was that they thought their income was too high to qualify for help and then felt the application was too difficult or they just didn’t know about it.
In fact, “virtually every family will qualify for some form of college aid,” 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 home loan or child support payments.
The application process itself is another hurdle, families say.
However, experts say you can complete the FAFSA form online at fafsa.gov or in the myStudentAid app in less than an hour, especially if you have documents including W-2s and last year’s tax returns. Sallie Mae also has a free online FAFSA tool to help families navigate the process.
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