Student Loans, Scholarships & FAFSA: Expert Answers to Families’ Biggest College Funding Questions
Paying for college has never been simple but this year, it’s become even more complicated.
Between the new Parent PLUS Loan limits, rising college costs, changing financial aid rules, and countless borrowing options, families are asking the same question:
“How are we supposed to make this work?”
On this Q&A episode of Ol’ College Try, College Aid Pro Co-Founder Matt Carpenter answers some of the most common questions families are asking right now. From comparing loan options and navigating FAFSA to understanding scholarship displacement, Matt offers practical guidance to help families make informed financial decisions before signing on the dotted line.
Choosing the Right College Loan Starts With Your Family Not the School
One of the biggest misconceptions Matt addresses is that the “best” loan depends on whether a student attends a public university, private college, or out-of-state school.
In most cases, it doesn’t.
Instead, the right borrowing strategy depends on your family’s financial profile, credit history, and available lending options, not the type of institution your student attends.
Matt encourages families to compare three primary borrowing sources:
- Federal Parent PLUS Loans
- State-sponsored education loan programs
- Private student loan lenders
Each option comes with different interest rates, eligibility requirements, repayment terms, and credit standards.
The key is shopping before borrowing instead of assuming one option is automatically best.
The New Parent PLUS Loan Limit Changes Everything
One of the biggest changes affecting families this year is the new federal borrowing cap.
Beginning this year, Parent PLUS Loans are limited to $20,000 per academic year.
For families who previously relied on Parent PLUS Loans to cover large funding gaps, this creates an entirely new planning challenge. If your remaining college bill exceeds that amount, you’ll likely need to combine multiple financing strategies.
That’s why Matt urges families, especially those with incoming freshmen, to explore their borrowing options now rather than waiting until tuition bills arrive.
Multiple Children in College? Financial Aid May Not Help as Much as You Expect
For years, families received significant financial aid consideration when multiple children attended college at the same time.
That’s no longer true at many schools.
Today, only a smaller group of institutions, typically those that require the CSS Profile and use institutional financial aid formulas continue to meaningfully account for multiple students enrolled simultaneously.
For younger families, this makes early college planning even more important.
Understanding which colleges may provide additional assistance can dramatically change long-term affordability.
Hope Is Not a College Funding Strategy
One of the strongest messages in the episode comes when Matt addresses a belief he hears from families every year:
“We’re hoping our child earns a full scholarship.”
His response is direct:
Hope is wonderful but hope isn’t a strategy.
After working with tens of thousands of families, Matt explains that full scholarships whether athletic, academic, artistic, or otherwise are exceptionally rare. Even incredibly talented students should not build their college plan around winning one.
Instead, families should begin by understanding:
- What they can realistically afford
- What financial aid they may qualify for
- Which colleges are most likely to offer generous aid
- Whether borrowing will be necessary
Planning around facts creates options.
Planning around hope often creates financial stress.
What Is Scholarship Displacement?
One of the most frustrating topics Matt discusses is something many families don’t discover until after they’ve won outside scholarships:
Scholarship displacement.
Here’s how it works.
A student earns a private scholarship from a community organization, employer, or local foundation.
The college then asks whether the student received any outside scholarship money.
At some institutions, reporting those awards allows the college to reduce the student’s institutional financial aid package sometimes dollar for dollar.
While not every college handles outside scholarships this way, Matt encourages families to appeal any reduction whenever possible.
His reasoning is simple:
Students shouldn’t be penalized for working hard to earn additional scholarship money.
FAFSA Doesn’t Have to Be a Guessing Game
Financial aid forms often feel intimidating because families worry they’ll make costly mistakes.
Fortunately, one part of the FAFSA has become simpler.
Income information is now transferred directly from the IRS after families grant permission, reducing manual entry and minimizing reporting errors.
For families with more complicated financial situations such as business owners, divorced households, or blended families Matt recommends seeking guidance before submitting the application rather than correcting mistakes afterward.
How Parent PLUS Loans Are Distributed
Another common question involves loan timing.
Many families receive only their fall tuition bill and wonder whether they should borrow semester by semester.
Matt explains that, in most cases, educational loans are approved for the entire academic year.
The lender then sends half of the approved amount directly to the college for the fall semester and automatically sends the remaining half before the spring semester begins.
Families can choose to borrow only for a single semester if necessary, but annual borrowing remains the standard approach.
The Best Way to Reduce College Stress
The episode closes with perhaps Matt’s most important reminder.
Many families delay planning because thinking about college costs feels overwhelming.
Unfortunately, waiting rarely improves the situation.
Instead, Matt encourages families to replace uncertainty with action.
Research borrowing options.
Understand your financial aid eligibility.
Ask questions early.
As he puts it:
“Action absorbs anxiety.”
The Bottom Line
College financing isn’t about finding one perfect loan or hoping scholarships solve everything.
It’s about understanding your options early, comparing borrowing strategies, and building a plan that fits your family’s financial reality.
Whether you’re evaluating Parent PLUS Loans, exploring private lenders, navigating FAFSA, or trying to avoid scholarship displacement, the more informed you are today, the more flexibility you’ll have tomorrow.
Because when it comes to paying for college, preparation almost always beats panic.
