The World of Higher Education is Changing
If you’re a parent of a high school student, you probably dream of your child someday earning a college education. But college isn’t what it used to be; a lot of things have changed since you went to school! Here is what you should know about recent and emerging trends in higher education.
Prices are rising. The average cost of a college education for the 2015/2016 school year increased about 3 percent over the previous year, up to $24,061 for public in-state schools, $38,855 for public out-of-state schools, and $47,831 for private colleges.
Graduates carry more debt than ever. Seven out of ten 2014 graduates carried student loan debt, with the average amount totaling $28,950 per person. Student loan debt continues to grow each year, and is the largest category of American consumer debt.
New repayment plans are available. With all of that debt weighing down college graduates, the federal government has instituted the REPAYE (Revised Pay As You Earn) plan for federal student loans. All federal student loan borrowers are eligible for the new program, regardless of when they signed their loans. Monthly loan payments are capped at 10 percent of discretionary income, with remaining debt forgiven after 20 years of on-time payments.
Calculations for federal student aid have changed. When a student applies for federal financial aid, his or her parents’ income and resources are included in the formula to calculate an award amount. In the past, the asset protection allowance allowed parents to shield a certain amount of their non-retirement assets from being included in the formula (resulting in larger aid packages for students). However, the asset protection allowance has been steadily lowered over recent years, meaning families must pick up more of the tuition bill.
The FAFSA timeline is more efficient. Speaking of federal financial aid, the government has decided upon a new timeline for processing FAFSA applications. Beginning this year, you can now file your FAFSA for the following school year on October 1, rather than waiting until January 1 of 2017. This change was designed to help families access financial aid information earlier in the college application process, so that more timely decisions can be made.
Tax credits can help. The American Opportunity Tax Credit was considered on a year-to-year basis in the past, and often at risk due to budget cuts. The Protecting Americans from Tax Hikes Act of 2015 made this tax credit permanent, helping families to offset the cost of college tuition.
Remember that we have several ways of assisting high school students and even graduate students with many aspects of the college admissions process. Call us to schedule an appointment if you have any questions.