Baby steps: improving the college financing experience

From student borrowers to politicians and the schools themselves, the debates on what’s broken within the higher education system and how to fix it rage on. In the meantime, two recent tweaks were made that should help current and, especially, future students and their parents, make more informed college financing decisions.

 

Improving the application process.

As student loan borrowers already know, to receive money from the federal program each year that they are in school, they need to fill out the Free Application for Federal Student Aid (FAFSA).

The 108-question FAFSA can be intimidating and hard to navigate. It’s seen as the reason some would-be borrowers forgo low-cost financing and end up in more expense arrangements. In Georgia, for instance, it’s estimated that $82.3 million in federal grant dollars may have gone unused in 2013 because half of that state’s high school graduates didn’t fill out the FAFSA.

While revisions to the form are being considered, a change in the timeline for filing it will take effect in the fall of 2016 for the 2017–2018 school year.

Beginning with the 2017–2018 school year, the FAFSA application process will begin in October instead of January. This will allow students and their parents to determine the cost of college earlier, potentially before applying. It will also give them ample time to put together the best financing package for their circumstances before committing.

Additionally, the new process will allow students to base their application for aid on their family’s income from two years earlier. They’ll also be able to retrieve and autofill this information electronically, which will save time and reduce the opportunity for error. Currently, applicants for federal aid are expected to include the prior year’s tax information, which isn’t typically available in January.

 

Know before you choose.

Another new resource was announced in mid-September to help students make more informed higher education “purchases.” College Scorecard is a government-run site that provides the public with information that was previously unavailable or just difficult to find in one place. It offers users data on the schools they may be looking at, including graduation rates, the annual average cost, class and campus size, and how much previous graduates earned 10 years after leaving their schools.

While some assert the scorecard represents TMI (too much information), it’s an earnest attempt to help college students and their parents make more informed decisions.

More changes are coming.

Senator Charles Grassley, R-Iowa, has introduced legislation that would provide students with annual debt counseling before, during and after college. They also receive better disclosure regarding how much debt they should assume, given the expected salaries associated with their course of study. If the “Know Before You Owe Student Loan Act” were it to be passed, it would further advance the move toward a better system for financing college.

Regardless of what remains to be done to alleviate the burden of student debt for future borrowers, NFCC® Certified Consumer Credit Counselors are available now to answer your questions and help you manage the student loan debt you already have. Contact us now.

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