College admissions for high school seniors is well underway; and we all know this can be a stressful time for students and parents. I know firsthand having gone through it recently with my two daughters and having two sons who are fast approaching the college search!
Am I going to get admitted to my first choice? Will I go out of state or stay local? Who will be my roommate? These thoughts are all going through your student’s mind.
What is going through the parent’s mind right now? How am I going to pay for this?
Using the FAFSA
Filling out the FAFSA (Free Application for Federal Student Aid) is one way to help with the cost of college. Most colleges require the FAFSA for any merit scholarships or any financial aid the college may award to the student. Completion of the FAFSA is required to receive the Federal Student Loans. The Federal deadline for the 2021-2022 school year is June 30, 2021. However, the college your child will attend may have a different deadline. Please be sure to check with the school so you do not miss out.
Read this article to understand all the upcoming deadlines:
Types of Loans Available
Although not ideal, Federal Student Loans are a great way to help with the cost if you do not have the assets or cash flow to pay for your child’s college. Make sure you fully understand the three types of Federal Student Loans available:
- Direct Subsidized and Unsubsidized Loans for Undergraduate…current rate is 2.75%
- Direct Unsubsidized Loans for Graduates…current rate is 4.30%
- Direct PLUS Loans for Parents…current rate is 5.30%
Updates for the 2023-2024 School Year
Important FAFSA changes are coming for the 2023-2024 school year; and they will most likely impact your situation! Here are the highlights and a video from our partners at College Aid Pro explaining the updates:
- The EFC (Expected Family Contribution) formula will be renamed as the SAI (Student Aid Index).
- The number of questions on the FAFSA will be reduced from 108 to about 36.
- In cases of divorced and separated families, the one responsible for completing the FAFSA will no longer be the custodial parent (parent which the child lives with >50% of the time). The parent that provides the greater amount of financial support will be responsible for submitting the FAFSA form.
- Several items previously defined as “untaxed income” will be reduced or eliminated in the new formula (child support, workers’ compensation, Veterans benefits).
- Changes to the Simplified Needs Test should positively impact lower income families.
- FAFSA will no longer divide the parent assessment by the number of children in college at the same time. This will likely reduce the amount of aid to middle and high-income families with multiple kids in college at the same time.
See the full video here:
The Wealth Planning Corporation team has vast knowledge and personal experience with the ins and outs of paying for college. Right now, our collective team has 7 children in college and 6 kids in high school; so, we have the experience to guide you through the process. Let us help you identify YOUR college funding strategy and demystify the financial aid process!
Written by: Jerry Yox, CFP®