As college students head into classrooms this fall, their means for paying for school may have changed.
Regulatory changes have created a simpler form to apply for federal student aid, while at the same time, those changes impose limits on how much families can borrow for their children’s college education, two experts explained.
Carole Trone is executive director for the Wisconsin Coalition on Student Debt and executive director of the Fair Opportunity Project, a nonprofit focused on college access and opportunity. She told WPR’s “Wisconsin Today” that in past years, students faced a “pretty bumpy” rollout for the Free Application for Federal Student Aid, or FAFSA.
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“One thing to know is that FAFSA for this year is back on track,” she said. “Anyone who wants to be eligible for financial aid, they need to fill out their FAFSA. The aggravations that some of us older students know or remember — FAFSAs are much shorter now, with fewer questions. Most people can complete them in 20 minutes or less.”
Kevin Sheridan, assistant vice president of financial aid and students accounts at Concordia University Wisconsin, told “Wisconsin Today” he’s excited FAFSA is opening its application process for next year as early as Oct. 1, in accordance with new federal law.
Sheridan said delays and uncertainty around the program in the past have caused undue stress for Wisconsin families. He recommends all students take some time to fill out the free FAFSA application, even if they expect they won’t be using it.
“FAFSA is kind of like the bouncer at a club. You really can’t start the student aid process without it,” Sheridan said. “Even though you might not be eligible for federal grants, the Wisconsin state grants are tied to the results of your FAFSA. For private schools in the state of Wisconsin, their grants and scholarships are tied to FAFSA. It’s really that first step into seeing what options are available to you.”
Changes in borrowing limits
Students starting undergraduate programs face borrowing limits for the amount of federal loans they can accrue. Trone said the average Wisconsin student takes on about $32,000 in debt, which, while high, is far less than the hundreds of thousands some students in medical or law school graduate often borrow.
Direct PLUS Loans for Parents is a federal program where eligible parents can take out additional loans for their children. Trone said the program now limits borrowing to $65,000 in total per child beginning in July of next year.
“If you’re a student who is taking the long view — as you should — and you’re thinking about what you want to be doing, you should be paying attention now to what you would be borrowing, what you plan to be borrowing and what your budget looks like for undergraduate as well as for graduate,” she said. “Because with the new limits, they very well might cut you off below the amount that you actually need to fund your full program.”
Trone said that’s when people may start turning to the private loan market, which typically has less flexibility on repayment options and less ability to defer payments.
Trone said more than 700,000 Wisconsin residents currently have some form of student loan debt. Interest collections on students in the so-called SAVE forbearance plan — a federal program that under the Biden administration that paused loan payments for enrollees — resumed in August, with the Trump administration recommending borrowers switch to another plan. Roughly 8 million Americans had been a part of the SAVE plan, according to Trone.
