The Supreme Court’s ruling nullifying the Affirmative Action Program and President Biden’s plan to end student loans will affect millions of people, whether they’re trying to apply for college or pay off their loans.
Student loan payments that were suspended early in the pandemic are about to resume for the first time in three years, and Tara has created a guide to reopening. The Biden administration plans to implement a new income-driven repayment program that could lower monthly payments for millions. Tara also has a FAQ about it.
And last week, the Biden administration vowed to try new legal tactics to write off widespread student loans, using laws different from those that relied on failed efforts. There is an article written by our colleague Charlie Savage about this.
We asked our readers to send us their college tuition payment questions, some of which we have answered below.
Preparing for college expenses
How can I pay for college tuition? It’s daunting. How can you put an 18-year-old into six-figure debt? I feel irresponsible. — Janet Green, Burlington, Vermont
The mildest answer to this question is something like this: Kevin McKinleyA financial planner in Eau Claire, Wisconsin, responded:
If you can save half, a third, or even a quarter of college costs in the first 18 years of a child’s life, that’s great. That way, you can pay part of the balance with your current income while your child is in college, and pay the last part with debt. Ron wrote here and here about what he calls the McKinley Rules.
Aren’t you saving a cent? Do not despair. If her four years of state school costs her $100,000, students can usually borrow. up to $31,000 from the federal government. If you work part-time during the school year and full-time during the summer, you can easily make another $20,000 over four years. Parents may then tighten their belts and pick up the rest. My main job. Side job. borrow. Or any combination of those possibilities.
Starting at a community college is also a good option. Ron wrote about tactics for community college students here.
Financial aid for international students
Do all these changes mean that real financial aid for international students will be limited? – Anastasia Michaelson, St. Petersburg, Russia
Neither ruling is expected to affect financial aid to students coming from outside the United States, which has already been severely restricted.
“Most colleges look at international student enrollment as a source of income, so I doubt it will have any impact on international student enrollment,” said a student aid expert and author of How to Get More Financial Aid from Colleges. Author Mark Kantrowitz says:
However, it is wise to learn as much as you can about the university’s individual policies for international students. statistics upon some The government has acknowledged this in the past, asking them if they are providing assistance. University websites often have this information as well as resources for international students. Edupath and usa education.
Only eight universities offer needs-blind admissions that meet all the financial needs of international students (without considering the applicant’s ability to pay). According to Kantrowitz, they are Amherst College, Bowdoin College, Dartmouth College, Georgetown College, Harvard University, Massachusetts Institute of Technology, Princeton University, and Yale University.
529 College Savings Plan
I am a parent of young children. For a long time, I thought 529 was the best way to help pay for my kid’s college tuition. Later, I heard from a parent of a college student that having a college student reduces my chances of financial assistance, so I should put the money in a retirement account and not report it to the school. Another parent of a college student told me that he had $529 available for his child, but didn’t ask the school to increase financial aid. What are the implications of following these two approaches: betting on financial aid or becoming unethical? — california readers
529 There are many misconceptions about how college savings plans affect a future student’s eligibility for financial aid, but your initial hunch was correct.
These accounts are state-run and can be tax-free to grow or withdraw money tax-free, as long as they’re used to pay for eligible expenses, but they’re typically used for your child’s higher education. The best way to save for. And they have minimal impact on eligibility for federal financial aid. After all, income is far more important than savings when the federal government calculates your income. aid package, using the information in the Free Application for Federal Student Aid (FAFSA). (Falsifying information about FAFSA can result in fines and imprisonment beyond obvious ethical considerations.)
But like anything related to personal finances, it’s complicated.
If the 529 is owned by a parent or dependent, it is considered parental property. This means that only a small portion of the account’s value, up to 5.64 percent, will be counted when calculating eligibility for financial assistance through FAFSA. For example, if a parent saves her $30,000, the amount of assistance is reduced only to her $1,692. It certainly is, but it’s never worth abandoning your savings strategy.
If the 529 account is owned by a grandparent or other relative, it will not be included in the financial assistance calculation. But when that money is withdrawn for college tuition, it counts as tax-exempt income reported in the annual FAFSA. Some good news: Grandparent withdrawals will no longer be reported on the next financial aid form released in December for the 2024-25 school year, Financial Aid and 529 Professionals said.
Then there is the issue of retirement benefits. Some financial experts suggest depositing at least some of your college savings in a Roth IRA, but it won’t be considered for financial assistance purposes until you start withdrawing funds. Once withdrawn, withdrawals count as income, which may disqualify you for financial aid after a few years. Student aid expert Kantrowitz said disbursements from the Ross IRA after January 1 for sophomores don’t affect eligibility for aid if students graduate in four years.
independent status
How much will each grade cost (for a 4-year college degree) to enroll full-time in 2023? In addition, there are costs such as books and course-based equipment/materials, on-campus meals, living in university-run dormitories or apartments, and insurance. University-sponsored health insurance/medical expenses and transportation expenses to and from home will be provided four times a year, regardless of race.As an independent student with an irregular income at a poverty level?
independent student Generally, you are eligible for more federal financial assistance than dependents, but attaining such status means moving out of your parent’s home or making a claim to your parents when you file your tax returns. It’s not as easy as disappearing.
There are several eligibility requirements. For example, being over the age of 24. married; graduate student; Or if you have dependents of your own.
Independent students can typically borrow more money, up to $57,500. in total Instead of most dependents being awarded $31,000, undergraduates will receive $31,000 and are more likely to qualify for the maximum Pell grant amount.
However, the actual cost varies by institution, but most students end up paying less than the listed price. The best way to get those estimates is to visit the university. net price calculator Then do the math yourself.
Availability of merit aids
What assistance options (besides debt-bearing loans) are available for families who are “earning too much” to qualify for financial assistance but do not have enough income to comfortably pay for themselves? ? — William, Dallas
I can see where these scary quotes came from. You can’t believe the financial aid administrator thinks you can pay the full amount.
In fact, these administrators are acutely aware of what users call “feeling needs.” That’s why they offer what they call Merit Aid. This is, at least in theory, about what the child has achieved, not how much money the family has.
How Much Merit Assistance Can I Get? It depends, and as Ron repeatedly writes, it’s not always easy to predict. However, hints on how schools do it can be found in so-called common datasets published by universities. Look at the H2A section (Code for Merit Subsidies) to find out how much money schools give to people who do not qualify for need-based aid and the percentage of schools giving any discounts. please give me.
Needs Blind and Needs Aware
I am a senior in high school and would like to know how much your economic class and need for financial assistance affect your chances of admission. — Quinn Patwardhan, Kensington, MD
Schools may be need-blind, meaning they do not consider financial need when deciding whether to grant admission. Also, they may be aware of their needs and may turn you down if they don’t have enough help they can afford to offer.
Universities do not always state on their website that they are aware of the needs. Ron wrote here about how schools communicate about these issues.both Muhlenberg University and Oberlin College You have a good (and humane) explainer of the process.
Schools also accept admission but may not offer adequate aid packages. In this case, you will need to determine whether you can and are willing to take loans or other strategies to bridge the gap between your estimated cost of entry and what you are willing to pay.
Now that the Supreme Court has nullified race-sensitive admissions programs, schools with large financial aid budgets could tip the scales toward those who can’t afford to pay the full price. In some schools Berea College Kentucky tries to enroll only students who, in Mr. Beria’s words, have “limited resources.”
Are there any benefits for out-of-state schools?
Is moving out of state worth considering, even if it costs more? — Cathy Deligianis, Reston, Virginia
Let’s start with the assumption that out-of-state schools cost more. In some states, reciprocity agreement Other states allow out-of-state students to pay in-state fees at public universities.
Private colleges and universities offer the merit subsidy described above, and the more you receive, the more out-of-state private schools can be cheaper than in-state public schools. But public agencies can and do play the merit aid game as well, especially for out-of-state applicants with grades and test scores above average for the agency.
“Enrollees and financial aid officers have an incentive to sprinkle benefits aid to help them achieve the geographic diversity they want to achieve,” he said. Shereme Herndon-Brown』Co-author.College Admissions Guide for Black Families“
Schools that attend major sports conferences are often particularly keen on this. “ESPN is the biggest marketing tool for colleges out there,” Herndon-Brown said. “But once you get that interest, you have to hang carrots in front of your parents.”
As for whether an out-of-state school is worth the extra money, it depends. Can your child learn more or access programs not available closer to home? What kind of friends can your child make who are similar or different in beneficial ways? And does a far-flung school’s reputation mean more to certain industry’s arrogant recruiters or certain graduate school gatekeepers?
The answers may be cryptic, but asking good questions at the beginning of the process can help.
