COVID-19 shifted all areas of life, including the number of students applying for financial aid.
According to recent studies, the national number of FAFSA filings — the Free Application for Federal Student Aid — is significantly below its yearly average.
By the end of last year, there was a nearly 20 percent reduction in high school senior FAFSA applications since 2019. While that number has improved over the last six months, the number of FAFSA filings remains far below where colleges expect it to be.
At the same time, tuition discount rates have reached an all time high among private colleges.
Can this be a coincidence, considering the plummeting FAFSA filing rates? More importantly, how do these changes affect your clients?
In this brief blog, we’ll examine the causes of these changes, discuss what they mean for college-bound families, and reveal how financial advisors can adapt to them with confidence and ease.
The State of Higher Education
The FAFSA is more than a gateway to financial aid (including grants, loans, and work-study jobs); it’s the leading bellwether of future college enrollment.
In a typical year, more than 50 percent of America’s high school seniors complete the form — amounting to just under 4 million FAFSA filings per year (in addition to the millions more completed by returning college students).
According to a study published in February of this year, however, only 39 percent of the graduating high school class of 2021 have completed their FAFSA. Compared to the previous year, that amounts to 150,000 fewer students pursuing pathways to financial aid.
It’s reasonable to assume that many of these students will not matriculate in the fall.
At first glance, these statistics suggest that the drop-off in college attendance may continue beyond the peak of the pandemic. There are myriad reasons for this trend, including:
- Fatigue and frustration with online classes
- Financial stress caused by COVID-19
- A lack of confidence in the value of higher education
- Dissension over vaccine mandates on college campuses
The dip in college attendance and FAFSA filings are further complicated by a rise in college tuition discounts. Make no mistake: we’re thrilled to hear that the average discount rate has climbed to nearly 54 percent.
However, there’s one word in that sentence that deserves special attention: “average.”
Why? To put it bluntly, averages are useless when assessing the cost of college.
While enticing on the surface, averages can be dangerously misleading for consumers, because they fail to identify the specific costs of what your college-bound family should expect to pay.
The most expensive programs can sometimes be the most affordable, while seemingly affordable schools can prove to be the most expensive. Never rule a school out based on the sticker price.
At College Aid Pro™, we lovingly call each family’s college profile a snowflake for a reason: because they’re that unique. A families opportunity for free money depends not only on the family’s financial situation for need based aid and the students academics for merit scholarship, but the part that is often overlooked and possibly the most important is the schools business model. For example, the Ivy League schools do not offer any merit scholarships. They along with dozens of other top private schools only offer need based financial aid. So if a family does not qualify for financial aid, they will pay full price. On the flip side, there are hundreds of private schools that would provide that same student with tens of thousands of dollars in merit scholarship money!
It’s Time to Shop Smarter
Rather than settling for averages, we encourage advisors to pursue the facts. Your college-bound family deserves more than a “guesstimate” — they need to know exactly what their college discount will be, and whether they will come in the form of merit scholarships or need-based grants.
To get specific, you can start with a net price calculator, but be cautious when using the ones featured on college and university websites. Because these institutions are behind in enrollment numbers, they may be less likely to provide an accurate assessment of the total cost of attendance.
Your clients are relying on you to separate the facts from the fiction.
With College Aid Pro™, you’ll get the independent analysis you need. Our state-of-the-art software will not only calculate the real price of your family’s favorite colleges, but we’ll provide the tools to run net-cost comparisons of over 3000 schools.
While assessing the up-front costs, we’ll also provide detailed numbers on the return of that investment (or as we like to call it, the return on education).
Want to see the first, five, and ten year salaries for graduates from your top schools? We can calculate that.
Curious about your monthly student loan payments? We’ll show you exactly what you’ll pay today, rather than after graduation.
Get An Aerial View
College-bound families deserve expert advice on financial aid planning, but here’s the good news: you don’t actually need to be an expert to help. You just need to have access to the right tools.
We recommend using our FREE College Money Report™ as a starting point to help clients demystify their college financial aid outlook.
It’s free, it’s fast, and it’s driven exclusively by the facts.
Here’s how it works: after accessing the College Money Report™, you will be asked to answer a few basic questions about their top 3 schools, the students’ GPA and standardized test scores, their gross earnings, non qualified assets, and their household size.
Our team collects this information, creates a custom report, and emails it directly to your client or you can have it sent to you directly as the advisor. When they download the College Money Report™, they receive a highly tailored deliverable that reveals how much colleges think they can afford (AKA Expected Family Contribution (EFC)), net price estimates at 3 schools side by side, and so much more. Knowing the net price is much more important than the sticker price that traditional financial planning software will show you. Helping your clients understand precisely how much free money their student can expect from each college is not only a huge value add for clients, but it helps better inform your overall financial plan.
Click here to access the report and try it out today!
Facing the Future
The college landscape is constantly changing, but at College Aid Pro™, we welcome that evolution.
Our tools are built to take the guesswork out of college planning and provide actionable answers for you and your clients — today, tomorrow, and for years to come.
Want to check out a free demo? Click here to give it a try!