Changes in FAFSA May Reduce College Aid for Some Families

By comparison, a family with identical finances but two children separated in age by four years would have just one child in college at a time and a parent contribution of just over $12,000, Mr. Kantrowitz calculated.

The change to the formula, however, means each family would end up with a parent contribution of just over $12,000 per child. (Other, separate tweaks to the formula may further increase the parent contribution for both families.)

The elimination of the sibling break has a smaller impact on families with lower incomes, Mr. Kantrowitz said. Under the current formula, the family with twins but $50,000 in income and $25,000 in assets would have a parent contribution of $855; the second family, with children spaced apart, $980. Under the new formula, both families would have parent contributions of $435 per child.

So while there are “crosscurrents,” Mr. Kantrowitz said, the fact that the parent contribution is no longer divided by the number of children in college “has the biggest impact for middle- and high-income families with multiple children in college at the same time.”

Sandy Baum, a nonresident senior fellow at the Urban Institute, said she understood the financial strain that families might feel when multiple children were in college. But given that college costs are now paid by saving and borrowing over a decade or more, she said, it doesn’t make sense to give, essentially, a bonus to families just because they have two children attending college simultaneously.

“There’s no reason why a family with twins should get more money,” she said. “It’s not fair to families with different spacing” of children.

In the big picture, the changes to the formula increases access to college aid for low-income students who sorely need the help, said Justin Draeger, president and chief executive of the National Association of Student Financial Aid Administrators. For instance, he said, the updated formula greatly expands eligibility for federal Pell grants for low-income students, making them newly available to about half a million more people and giving more access to the maximum grant.

Article source: https://www.nytimes.com/2021/01/29/your-money/fafsa-changes-college-aid.html