Three "must know" financial aid changes:
- Perkins Loan program phased out.
- Asset Protection Allowance reduced
- Increased scrutiny of student debt
1. The Perkins Loan program's $5,500 per year in guaranteed loans has not been renewed by Congress. There will be no new loans offered after Sep 30, 2015. Students currently benefitting from Perkins Loans will be "grandfathered." The Stafford Loan program remains active in both the subsidized and unsubsidized modes. Students may borrow up to $5,500 for their freshman year; $6,500, $7,500 and $7,500 in subsequent undergraduate years. read more
2. Asset Protection Allowance (APA) is a variable within the FAFSA formula. [see formula guide] Its intended purpose is to fence off certain assets in respect to parents' retirement and old age. APA amounts are based on the age of the older parent, and their marital status. The scale has been cut dramatically for the 2016-2017 academic year reduced by 60% or more. I can't give a specific number because of the variables, but, as an example, a family that would have had more than $52,000 protected from college expenses, will have that reduced to under $19,000. For most families $33,000 put back in play to cover a college's Cost of Attendance would probably rule out need-based financial aid.
2. Asset Protection Allowance (APA) is a variable within the FAFSA formula. [see formula guide] Its intended purpose is to fence off certain assets in respect to parents' retirement and old age. APA amounts are based on the age of the older parent, and their marital status. The scale has been cut dramatically for the 2016-2017 academic year reduced by 60% or more. I can't give a specific number because of the variables, but, as an example, a family that would have had more than $52,000 protected from college expenses, will have that reduced to under $19,000. For most families $33,000 put back in play to cover a college's Cost of Attendance would probably rule out need-based financial aid.
3. Increased scrutiny of student debt (https://studentaid.ed.gov/-sa/repay-loans/default) is a fact of life for colleges. With default rates hovering around 20% the Department of Education is encouraging financial aid offices to keep loan awards to a minimum. The result is that students may not, initially, be offered the full amount of the Stafford Loan they are entitled to. Students may have to ask if more money is available. Although student debt is a legitimate concern for us all, student loans can be effectively leveraged by some families to better manage their cash flow during the college years.
Succeed Where It Counts, LLC http://www.succeedwhereitcounts.com is an independent college admissions and financial aid coaching company. We help students find the Right College, at the Right Price, and to Graduate on Time with the Right Degree. We can't make college free, but we can help make it affordable.
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