Federal Student Aid Programs: What the Changes Mean to You

One factor that determines financial aid is the Expected Family Contribution (EFC).

One factor that determines financial aid is the Expected Family Contribution (EFC).

Paying for higher education can be difficult for many families. Costs continue to skyrocket at a time when many are struggling with economic and employment uncertainties. This makes applying and receiving financial aid critical for many college students. One factor that determines financial aid is the Expected Family Contribution (EFC).

After your completed FAFSA is processed, you will receive a Student Aid Report (SAR) that lists a dollar amount for your EFC. The colleges to which you requested to have your FAFSA information sent will use that information to calculate your EFC for their specific institutions. A lower federally calculated zero is likely to decrease the amount institutions expect you to pay and increase the aid they offer. Qualifying for the lowest EFC possible is calculated based on a combination of seven factors; parent income, parent assets, student income, student assets, the age of the parent, the number of household members, and number of students attending college at the same time. Completion of your FAFSA, is critical in determining your EFC and qualifying for all financial aid. The larger your family, the more children in college and the lower the income are all factors in lowering your expected family contribution as much as possible.

On December 23, 2011, President Obama signed into law the Consolidated Appropriations Act, 2012.  The new law significantly impacts the Federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA). Here are a few of the changes students need to know about.

Expected Family Contribution: The changes make it harder to qualify for an automatic zero EFC by reducing the maximum income allowed from $32,000 to $23,000 for the 2012-13 Award Year. A zero EFC usually makes a family eligible for the highest amount of financial aid. Experts say the change will hit low-income families hard since over 4 million students qualify for the automatic zero provision in the 2012 – 2013 year. Keep in mind that having an EFC of zero does not guarantee any type of amount of student aid.

Pell Grant Eligibility: Eligibility for Pell Grants has been restricted to 12 semesters of full-time enrollment, or the equivalent for part-time students. If you have been a full-time student and have received Pell Grants for 12 semesters, by law you cannot receive another one. Eligibility is pro-rated for part-time attendance. This affects current and future students.

High School Diploma or GED Required for Aid Eligibility: Beginning July 1, 2012, only students who hold a valid high school diploma or GED can receive state or federal financial aid.

To learn more about the changes that have been made to Financial Aid programs click here to visit the Education Legislation website by the Congressional Research Service.

Westface College Planning can help you navigate the college planning process from start to finish. To learn how we can help you call us at 650-587-1559 or sign up for one of our Tackling the Runaway Costs of College Workshops or Webinars.

Photo Credit: Editor B