Getting ready for higher education involves many steps, but one thing everyone has to cope with is the unexpected. While you can stay on top of everything happening with college financing issues, you can’t always rely on the information you have today being pertinent the next year. One big example of this is the recent changes to the Free Application for Federal Student Aid (FAFSA) process.
Changes to the formula used to determine aid eligibility and amounts received have potential implications for students and families seeking financial assistance for higher education. While students overall will benefit from increased funding, those with siblings in college are likely to experience a reduction in financial aid. The elimination of the sibling discount in the new formula means that families with more than one member in college will face an increased financial burden. Additionally, their eligibility for certain financial aid programs may be affected.1
Students from the lowest income levels may not be impacted by these changes. However, students from some families could experience reduced Pell Grants. The amount of aid from schools for these students may also be reduced compared to the current formula, potentially amounting to thousands of dollars less.
While some families may face disadvantages, the changes to FAFSA are expected to bring positive outcomes for the majority. The changes to FAFSA are likely to result in decreased aid eligibility for middle- and high-income families as the focus shifts from cash flow to a slightly greater emphasis on wealth.
Changes like this underline the advantages your family has in forming your college financing strategy with a financial professional in the picture. I’m very enthusiastic about setting the families I work with on the path of saving and investing for college, and I hope we can all get together to discuss it soon.
1. USA Today, April 30, 2023
