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Paperwork Changes Create Headaches For Financial Aid Applicants

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Applying for federal financial aid for college has always been complicated. Now college-bound students and financial aid officers need to be especially vigilant in filling out and reading paperwork.

Changes in the paperwork college applicants fill out to apply for financial aid have created some problems. The new format could put assistance out of reach for students who deserve it. There is also a stricter standard that could allow the federal government to suspend assistance to more colleges where students are not paying their debts.

Applying for federal financial aid for college has always been complicated. Now college-bound students and financial aid officers need to be especially vigilant in filling out and reading  paperwork. The free application for federal student aid, or FAFSA, asks that family income be entered in a row of boxes — one for each digit of the reported income. You are supposed to round that amount off to the nearest dollar. But if you don’t, and you enter cents as well as dollars, you will look a lot wealthier than you really are.

If they miss the instruction, their income can look a hundred times higher than it really is, and they could be rejected for aid. The federal government estimates this could affect about 165,000 applicants.

Tanya Bradley, financial aid director for Lyndon State College, says the application is fairly well marked, but it doesn’t look like it used to.

“I guess what happened is, sometime for 2014-15, families’ income increased enough so they had to add a couple of boxes or blocks to expand that income,” Bradley said. “And I am wondering if people perceived that as, ‘Oh, there’s space here for my whole income, it tells me to use this particular line from my tax return,’ so maybe they are not seeing that it says right above it, 'Use whole numbers.'”

If they miss that instruction, their income can look a hundred times higher than it really is, and they could be rejected for aid. The federal government estimates this could affect about 165,000 applicants, and is trying to reach out to them. It’s also made that part of the application easier to fill out correctly.

The other change is that starting this fall: Colleges will be held to a stricter standard of loan defaults.

The federal government will take that measurement every three years, rather than every two. That means more students will have an extra year to build up more debt. A college with a 30 percent loan default rate can find itself on probation, and financial aid for that tuition can become much harder to get. That means that a few big debtors can ruin the borrowing prospects for everyone.

Luckily, Lyndon State’s new default rate — around 11 percent — is still too low to trigger that sort of punishment.

“It is a little bit higher than the two-year default rate, but we’re still well under the threshold, and I think most schools in Vermont are, so I'm happy about that,” Financial Aid Director Bradley said.

But she is not happy about how much debt today’s students are carrying when they graduate. She advises them not to borrow more than they absolutely need. Ninety percent of Lyndon State’s students receive some sort of financial aid.

Applications are still being accepted, along with financial aid requests, for next year.

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