Latest news with #HowAmericaPaysforCollege
CNBC
2 days ago
- Business
- CNBC
Education Department launches key college financial aid form sooner than expected
The U.S. Department of Education is making the Free Application for Federal Student Aid available earlier this year, which experts say may address some of the bugs that have plagued previous application cycles. The FAFSA serves as the gateway to all federal aid money for college-bound students, including federal student loans, work-study and especially grants. The 2026-27 FAFSA is already available to a limited group of students in a beta test. Starting on Sept. 1, anyone can request to participate in the second phase of testing, according to an announcement from the Education Department. All students will have access to the coming academic year's form at the beginning of October, in keeping with the typical start date. More from Personal Finance:These college majors have the best job prospectsFamilies feel confident about paying for college, until tuition bills arriveStudent loan borrowers: How will the end of the SAVE plan impact you? Tell us "We're pleased to hear that Federal Student Aid has launched FAFSA beta testing sooner than expected," said Melanie Storey, president and CEO of The National Association of Student Financial Aid Administrators. "An earlier and longer testing window will give the Department of Education the time it needs to address any potential bugs or errors, with valuable feedback from applicants and financial aid professionals, which should lead to a smoother process when the application is opened to the broader public," Storey said. Kim Cook, CEO of the National College Attainment Network, said she was "pleased" that beta testing for the new FAFSA is already underway and that the new FAFSA is on track to open to the public on Oct. 1. "All these positive changes portend that the high school class of 2026 will achieve an all-time high FAFSA completion rate by the time they graduate next spring," Cook said. For many families, financial aid is essential when it comes to covering the cost of college, which has jumped significantly in recent decades. Grants — including federal ones such as the Pell Grant — have become the most crucial kind of assistance because they typically do not need to be repaid. The earlier families fill out the form, the better their chances are of receiving aid, since some financial aid is awarded on a first-come, first-served basis, or from programs with limited funds, experts often say. Submitting a FAFSA is one of the best predictors of whether a high school senior will go on to college, according to the National College Attainment Network. Seniors who complete the FAFSA are 84% more likely to enroll in college directly after high school, according to an NCAN study of 2013 data. Yet, only 71% of families submitted the FAFSA for the 2024-25 academic year, down from 74% in the previous academic year, according to Sallie Mae's recent How America Pays for College report. That's in part because of previous complications with the new form, which initially launched in late December of 2023 after a monthslong delay. "Families reported having an easier time completing the FAFSA last year, but 58% indicated they still needed assistance, so having a head start can be beneficial especially for first time FAFSA filers," said Rick Castellano, a spokesperson for Sallie Mae.
CNBC
3 days ago
- Business
- CNBC
New federal student loan limits are a 'punch in the face' for aspiring doctors: American Medical Association president
A measure in President Donald Trump's "big beautiful bill" that caps federal student loans could make it harder for medical students to finance their education or force them to abandon their medical school plans, experts say. Starting next year, the legislation caps the amount of federal loans students can borrow for graduate school at $100,000 over a lifetime — and sets a lifetime loan limit of $200,000 for professional programs, such as medical, dental or law school. Grad PLUS loans will also be eliminated entirely. Those changes go into effect for new borrowers on July 1, 2026. Some experts say the new loan limits will provide a much-needed check on soaring tuition costs, which have jumped significantly in recent decades, outpacing inflation and other household expenses. Higher costs have made college and graduate school seem out of reach for some while saddling others with crippling student loan debt. More from Personal Finance:These college majors have the best job prospectsFamilies feel confident about paying for college, until tuition bills arriveStudent loan borrowers — how will the end of the SAVE plan impact you? Tell us Families, too, support having additional guardrails. Roughly two-thirds, or 67%, of parents said there should be limits on how much federal student loan debt students can take on, according to Sallie Mae's annual How America Pays for College report. However, for aspiring doctors, the limits may mean drastic changes. The average cost of medical school already exceeds $200,000. At private institutions, the average cost is more than $300,000, according to 2024 data from the Association of American Medical Colleges. "This is now a generation that has a big-time punch in the face," said Bobby Mukkamala, president of the American Medical Association. "People view medical students as future rich people and that's not the case at all," said Kylie Ruprecht, a third-year student at the University of Wisconsin School of Medicine. "You go into crazy, crazy debt to go into medicine," said Ruprecht, 24, "and then repay those loans over decades." Ruprecht relies on a combination of unsubsidized student loans and Grad PLUS loans to cover her costs. Once she graduates, she will begin a four-year residency to become an anesthesiologist. It will be years before she is on solid financial footing, she said. Ruprecht declined to say how much she will owe, in total, when she graduates. Although Ruprecht is grandfathered into the old borrowing limits, her current debt load, with Grad Plus loans, would surpass the new loan caps, she said. In fact, about 27.5% of medical school students and 60% of those in dentistry programs graduated with more debt in 2020 than is allowed under the new loan limits, according to calculations by higher education expert Mark Kantrowitz. "Medical school is the 'hair on fire' situation because the numbers are big, period, and the gaps between the federal loan limits and the program costs are sizeable," said Ken Ruggiero, co-founder and CEO of private education lender Ascent Funding. Nearly every year, students and their families are borrowing more to make up the difference. Now, around 44 million Americans owe a combined $1.7 trillion for their education. Roughly 40% of that outstanding federal student loan debt is taken on for master's and PhD programs. The new legislation "doesn't affect everyone equally," Mukkamala said — it's students from underserved communities who will be less likely to go into the medical field as the new loan limits fall short of the total cost of attendance, which is over $200,000. "If someone like that gets through college and looks at that number, they are going to say, 'no way,'" he said. According to 2024 projections by the Association of American Medical Colleges, the U.S. was already on track to have a shortage of up to 86,000 physicians by 2036. "The new annual and aggregate loan limits could create challenges for some medical students to finance their education, resulting in an additional financial barrier to attending medical school and ultimately worsening the current and projected physician shortage," said Kristen Earle, program leader for student financial aid services at the Association of American Medical Colleges. "We are concerned that this added barrier could deter qualified candidates, particularly low-income students, from pursuing a medical career altogether," Earle said. It's likely the new limits on federal student loans will spur borrowers to find other lenders to bridge the gap, Earle said. "The changing landscape does present an opportunity for private lenders." Private student loans often come into play once students have reached the federal loan limits and still need additional education financing. "The new loan limits for Parent PLUS loans and graduate/professional school loans will shift some borrowing from federal loans to private student loans," Kantrowitz also recently told CNBC. "This will particularly impact low-income students, who are less likely to qualify for private student loans." Unlike federal loans, private loans are not guaranteed. Private student loan lenders rely on a borrower's credit score to determine eligibility and interest rate. "We want to lend to people who can afford to pay us back, that's how the model works," said Ascent's Ruggiero. Private loans also come with fewer safety nets and less flexible repayment options compared with federal loans. "The idea behind [the loan limits] is great, but it's not putting the burden on the universities. It's putting the burden on students," said Ruprecht, the aspiring anesthesiologist. "It's students who will have to scramble."
Business Wire
4 days ago
- Business
- Business Wire
Families Report Spending More, But Also Missing Out on Opportunities to Make College More Affordable According to ‘How America Pays for College 2025'
NEWARK, Del.--(BUSINESS WIRE)--Families reported spending an average of $30,837 on college during the 2024–25 academic year—up 9% from $28,409 last year and a return to pre-pandemic spending levels, according to 'How America Pays for College 2025,' the annual study by Sallie Mae and Ipsos. Family income and savings covered nearly half of costs (48%), followed by scholarships and grants (27%), borrowing (23%), and contributions from family or friends (2%). Families See Value in College and Remain Focused on Cost Nearly nine in 10 (89%) families said college is a worthwhile investment, and 82% are willing to stretch their finances to ensure the best opportunities for their students. Eight in 10 families (79%) reported eliminating a school based on cost, but nearly half (47%) of all families also reported paying less than the sticker price for college. Families most often cited proximity to home (40%), affordability (39%), and specific academic program (39%) as reasons for choosing a school. While 59% of families created a plan to pay for college before enrolling, just 38% considered starting salaries after graduation. 'While families continue to see college as a valuable long-term investment, they also remain cost-conscious,' said Annaleise Lohr, vice president, Ipsos. 'It's encouraging to see families are taking the time to plan for this significant investment but coupling that financial focus with expected post-college outcomes could lead to even more informed decisions.' Misconceptions Around FAFSA and Scholarships Could Be Costing Families Roughly two-thirds of families (64%) found the new Free Application for Federal Student Aid (FAFSA) easier to complete, but overall completion rates dropped to 71% from 74% the year prior. In addition, just 21% of families knew the FAFSA is available beginning in October. That could mean families are missing out on financial aid that is limited or available on a first-come, first-served basis. In addition, 40% of families did not utilize scholarships to pay for college due to lack of awareness (34%) and the belief they wouldn't win (28%). Access to Loans Leads Some Families to Reach for Higher-Priced Schools Nearly half of families (48%) borrowed to help pay for college, consistent with prior years, and 72% of all families said they would rather borrow than miss out on attending. Roughly six in 10 families (59%) said the availability of federal student loans has driven up college costs, and 35% of those who borrowed said access to loans led them to consider more expensive schools. In addition, 42% of families with federal student loans expect their loans to be forgiven. 'Students and families navigating higher education today need greater transparency when it comes to the actual cost of college so they can make the most informed decisions about this significant investment,' said Rick Castellano, vice president, Sallie Mae. 'We also need to continue to promote FAFSA completion and reinforce the availability of scholarships, so families don't inadvertently leave free money on the table.' Free tools like Scholly Scholarships by Sallie and Scout College Search by Sallie help families plan smarter by finding thousands of scholarships and comparing schools based on majors, location, cost, and more—no registration required. In addition, the company offers responsible private student loans to cover any remaining financing gaps. "How America Pays for College 2025" reports the results of Ipsos' online interviews of 1,000 undergraduate students and 1,000 parents of undergraduate students between April 8 and May 8, 2025. Explore the full report and discover insights, trends, and free planning tools at Sallie Mae (Nasdaq: SLM) believes education and life-long learning, in all forms, help people achieve great things. As the leader in private student lending, we provide financing and know-how to support access to college and offer products and resources to help customers make new goals and experiences, beyond college, happen. Learn more at Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America. Category: Research
