In the wake of the coronavirus crisis, many American families are under severe financial strain. Meanwhile, others are also facing a $40,000 college tuition bill.
Nearly 40% of parents who didn’t plan to apply for federal aid, now will as a result of the pandemic, according to a recent survey by Discover Student Loans.
Roughly half of parents lost income as a result of the pandemic and 44% said they can’t afford to pay for as much of their child’s education as they had originally planned, the survey found.
At the same time, college costs are skyrocketing.
Tuition and fees plus room and board for a four-year private college averaged $49,870 in the 2019-20 school year; at four-year, in-state public colleges, it was $21,950, according to the College Board.
For the first time in five years, the majority of college-bound seniors plan to take out a loan. This percentage had been declining steadily before spiking in 2020, according to a separate survey by college comparison site Niche.
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The Free Application for Federal Student Aid, or FAFSA, serves as the gateway to all federal money, including loans, work-study, and grants, which are the most desirable kind of assistance. For the 2021-2022 school year, the FAFSA filing season opens Oct. 1 — and, for the most part, the sooner students file, the better.
Some financial aid is awarded on a first-come, first-served basis, or from programs with limited funds. The earlier families fill out the FAFSA, the better the chance to be in line for that aid, according to Ashley Boucher, a spokeswoman for lender Sallie Mae.
“Given the weight of this year’s uncertainties, it’s critical that families apply as early as possible when the application becomes available,” said Manny Chagas, vice president of Discover Student Loans.
At the same time, “make haste slowly,” cautioned Kalman Chany, a financial aid consultant and author of the Princeton Review’s Paying for College. “This is not the Oklahoma land rush,” Chany said.
Some careful financial planning may improve your overall standing.
For starters, families might be able to boost their chances by considering how their assets will be measured in aid calculations, Chany said.
For example, if you have credit card debt and cash in the bank, it is better to pay down the debt and show less cash on hand. (Most types of debt, including credit-card debt, car loans and the mortgage on your primary residence, are not reported on FAFSA and as a result don’t reduce your family’s net worth in aid calculations.)
You want to apply when you demonstrate the most need.
Kalman Chany
author of the Princeton Review’s “Paying for College”
“You want to apply when you demonstrate the most need,” Chany said.
In addition, keep in mind that financial aid is calculated based on a family’s income from two years earlier. So, if you’re filling out the FAFSA for the 2021-2022 academic year this October, it’s your income in 2019 that’s considered.
Those figures could be significantly rosier than the reality many people are facing today due to the pandemic, said Veronica Leyva, a college counselor Collegewise.
Families who have experienced a financial shock due to Covid-19 should reach out to the college financial aid office and ask for a “special circumstances” form to account for any changes in 2020, such as a job loss or furlough, advised Sallie Mae’s Boucher.
This strategy will kickstart the process, Leyva explained.
In ordinary years, high school graduates miss out on billions in federal grants because they don’t fill out the FAFSA. Many families mistakenly assume they won’t qualify for financial aid and don’t even bother to apply.
This year, schools have increased their aid budgets and there are many people previously might not have qualified in the past that could still get aid, Chany said.
“This is a buyer’s market,” Chany said.