Many college students rely heavily on financial aid to help them pay for the enormous costs of attaining the ever important degree from a university. However, some students may find that the amount of financial aid they intended on receiving is lower than expected.
According to a recent Reuters article, students’ financial-aid packages should come with a disclaimer saying the “awards depend on how the fiscal showdown plays out in Washington.”
So, what does this mean for all of those students expecting a specific amount of financial aid? Originally, the automatic spending cuts that had been scheduled to go into action on January 1, 2013 included a ‘reduction’ of 8.2% in federal financial aid, which amounts to about $350 million. But, since Congress reached an agreement on the fiscal-cliff compromise, those cuts have been postponed until March 1.
And, since many schools are sending out award letters in the coming weeks, experts believe that many students will be left uncertain about the amount of their financial-aid package and if, in fact, they will receive the promised aid for school beginning in the fall.
Parents need to understand that financial advisers traditionally recommend comparing packages from different schools to determine which school has the lowest ‘out of pocket’ costs. But, since some colleges are assuming the spending cuts will happen while others aren’t, experts say that this advice ‘makes little sense.’ If the cuts are put into play, some students may find their financial aid cut back ‘after’ they have chosen a school.
Since most colleges and universities depend on the federal government for financial aid, students need to be aware of what could happen. Justin Draeger, president of the National Association of Student Financial Aid Administrators put it this way: “If Congress doesn’t come through, students and parents are going to be left in the lurch.”
In addition, Mark Kantrowitz, publisher of FinAid.org, says that Congress may also make cuts to the Pell grant, which is the most popular federal college grant. Approximately nine million students were involved with the Pell grant in 2011-2012.
So, what should students and parents do? Review financial-aid letters and look for contingency statements or discrepancies in awards. Does one school claim the student will receive a federal grant while another school does not? And, if discrepancies do appear, you should contact the financial-aid offices to find out what assumptions they will be making about the financial-aid.
Issues such as this have definitely “muddied the water” when it comes to financial aid for college. Truly, in today’s economy, you need someone like Advanced College Solutions in your corner to help you navigate through the process. We help students (and parents) get the financial assistance they need.