With FAFSA errors and rising education costs, the return of unused financial aid may be a welcome relief to students.
Many students use their federal financial aid to enroll in meal plans at their universities. Traditionally, any unused money from those plans gets returned to the college. However, a new Education Department proposal would require colleges to pay out that money to students instead.
Student meal plans typically consist of "flex" accounts that students can use at dining halls and campus grocery stores. Under the new proposal, if students don’t use all the money by the end of the academic year, their college has 14 days to return unused funds.
If schools can’t meet this deadline or refuse to return the money to students, they will face a financial penalty. Other penalties are also on the horizon for universities that withhold non-Title IV aid.
Students receive financial aid in a variety of forms. Some is Title IV aid, which includes grants and federal aid. Students who receive Title IV aid from their school get any extra money after tuition and other fees are taken out.
If students receive aid other than Title IV aid, universities haven’t been required to return the leftover balance. The Education Department’s proposed changes would require schools to offer a credit balance for any extra money to students within 14 days of the balance occurring.
If you’re in the market for a student loan to help you cover the costs of your education, visit Credible to learn more about private student loan options and get personalized rates from multiple lenders without dinging your credit score.
NEW STUDENT LOAN LAWS CAN HELP BORROWERS MANAGE BETTER IN 2024
The Free Application for Federal Student Aid (FAFSA) got off to a rocky start this year and has yet to fully recover. When the Department of Education rolled out the FAFSA after making some required changes, the math used to determine aid amounts was incorrect.
This mistake made many families appear to have inflated incomes, leading to incorrect financial aid amounts. If left unfixed, this mistake could cause students and their families $1.8 billion in federal aid, NPR reported.
An Education Department spokesperson told NPR that the department plans to fix this mistake before the 2024-2025 award year but declined to say much else.
Financial aid officers are struggling with this mess-up and face a lack of communication from the U.S. Dept. of Education.
"We're in a situation where we really can't help students or their families," Charles Conn, an aid administrator at Thornton's university, Cal Poly Pomona, said. "They're getting some information from the Department of Ed. We're not."
Don't worry about having to navigate student loan options on your own. Credible can help compare student loan companies and help you land low-rate loans.
EDUCATION DEPARTMENT PLANS INFLATION FIX FOR NEW FAFSA
The price tag of a college education is too much for many incoming students. About 42% of prospective students didn’t feel confident that the school of their choice was affordable, according to a Niche study.
Some students aren’t applying to the schools of their choice due to a high sticker price — 83% of students in Niche’s study chose not to apply or even consider certain schools due to the high cost.
"Students and their families have become more astute shoppers in recent years, including how they consider the cost and value of higher education," Will Patch, Senior Enrollment Insights Leader at Niche, said. "Our research demonstrates that students are writing off colleges with high sticker prices, even before they find out what the final price would be after financial aid."
The average cost of attending college in the U.S. is $36,436 per student per year, according to an Education Data Initiative report. The cost has been steadily increasing for years, with an annual growth rate of 2% for the last decade.
If you’re one of the many students looking to use student loans to cover college costs, visit Credible to view a rates table that allows you to compare fixed and variable rates from multiple lenders.
THESE ARE THE 5 STATES WITH THE HIGHEST AND LOWEST STUDENT LOAN DEBT BALANCES
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.
