Paying For College May Be About To Get Easier...Or Harder


According to our Census Bureau, a college education generally continues to provide higher annual earnings compared to lower levels of educational attainment. What’s a bit harder to determine is the lifetime result of those higher incomes after netting out the cost of paying for a college or post-graduate education and the required delay in entering the workforce to enjoy those earnings. 


As Baby Boomers continue to age out of the workforce, our country faces an increasing shortage of people working in the skilled trades. While some white-collar jobs may be threatened by ChatGPT and other artificial intelligence applications, it’s hard to imagine being able to build and/or maintain a dwelling, office building or factory without human involvement. 


Today’s tradespeople can still learn ‘on the job’ via apprenticeship programs – much more common in Europe than in the US – but they also have other options. A central Indiana plumbing and heating contractor, Peterman Brothers, recently set up its own training program, paying people to learn to become HVAC technicians. The United Brotherhood of Carpenters has offered something similar for well over 100 years. 


Indiana’s own Ivy Tech has over 70 widely varied majors available but has, in fact, been offering vocational training for the entire 60 years of its existence. You can study business administration, biotechnology and informatics there, but you can also choose from trades such as electronics, construction and welding. Designed for working adults as well as those coming directly from high school, many of their programs offer certifications in one or two semesters, as well as associate and bachelor’s degrees. Because Ivy Tech is a college in its own right, various forms of financial assistance are available, generally through the Free Application for Federal Student Aid: the FAFSA. 


We have been helping students and their families complete FAFSAs for nearly as long as there’s been a WWA. There’s a reasonable chance that doing so will no longer be necessary, though, as the form is being streamlined under 2021’s FAFSA Simplification Act. The most obvious change to the form is a reduction in the number of questions from 108 to 36. For no apparent reason, what was known as the Expected Family Contribution (EFC) is now known as the Student Aid Index (SAI). 


Depending on the family income, more aid may now be available as the income protection allowance has been increased and the new SAI calculation makes it easier to qualify for Pell Grants. As grants, not loans, these are intended to provide more lower-income students with post-secondary education options, whether through a certificate or degree. Additionally, foster youth and those living on their own can be more easily classified as being independent, again making more aid possible (since parental contributions may not be required). 


On the negative side, a benefit to families including more than one student will disappear. Previously, the expected contribution from parents with more than one student was divided by the number of students, meaning the dollar amount remained constant regardless of the number attending. That adjustment has been eliminated, so the SAI applies to each student. This will add to the cost of college, especially for families in the $75,000 to $200,000 income range with multiple students attending at once. 


Instead of the usual October release date, the new version will be available in December this year. To get an idea of what aid might be available in your specific situation, go to this government website which provides an estimate of what the final result will be. If it indicates that aid might be available, prepare for the process by making sure all information is accurate using your Federal Student Aid ID. The new website automatically populates some fields with updates, so be sure they are correct. You are no longer required to estimate next year’s income, so allow the website to import the proper year’s income directly from the IRS. Finally, start early. Some aid, such as work/study funding, is given out on a first-come-first-served basis. Under no circumstances, allow yourself to miss your schools’ priority filing deadline. 


You might want to read the entire bill for yourself but, at 139 pages, you may prefer one of the summaries which are available. The one I recommend comes from the Brookings Institution and begins with this quote: It is well understood that nobody understands college financial aid. I’m sorry to say that they are correct. 


The FAFSA Simplification Act was intended to streamline the application process. However, getting it passed required ‘something for everyone’ so, while shorter, I’m not sure the new form is truly simpler. If you are a client of the firm, remember that we have read the bill and are ready to help if necessary.