With the agonizing Washington debate on the budget deal behind us (for the most part), it is worth noting that Pell Grants, those precious federal dollars that are awarded to low-income families, will be preserved (for now) at $5,550 for the maximum award. Also preserved (for now) are student direct loan subsidies, making borrowing more affordable for undergraduate college students. After 2012, the future of both the Pell Grants and Direct Loan subsidies remains unclear, as Congress may consider reducing or eliminating these programs.
For the upcoming year, this is great news for low income Americans who are trying to pay for college, and in my view it’s the right policy for America’s future. We need policies that improve access to higher education, especially for America’s working poor.
For most of America’s middle class, however, the Pell Grant decision will have little direct impact. That’s because Pell Grants are rarely awarded to the middle class. But that doesn’t mean the middle class doesn’t have access to financial aid, including grants. You see, in addition to federal aid, colleges and universities will award their own need-based aid in the form of grants to middle class students, which includes families earning up to $250,000 in adjusted gross income. And these amounts may greatly exceed the maximum Pell Grant of $5,550 by 4x or more, depending on the school.
That’s why all families, regardless of income, should start the college planning process as early as possible, and it’s why all families should apply for financial aid.
I’m holding two events for parents of high school students this month, as we prepare to send our kids back to school this fall. The events are designed to help parents financially prepare for college. We’ll also discuss trends in admissions, and how these may be financially motivated. Higher education is a big business, with cost of attendance ranging from $20K to $60K per year. It’s your responsibility, as a consumer, to understand the economics of higher ed and learn how to minimize your out of pocket costs.
My first event is a LIVE webinar on August 9 at 7 pm. If you cannot join the webinar then you should come see me in person on August 25 at the Pinecrest Community Center. You can register for either event by clicking here. If you are the parent of a 10th, 11th, or 12th grader, you need to hear this information before attacking the college application, admissions, and financial aid process. Putting this off will only cost you money and increase your frustration.
P.S. I’m also offering my “Thick Envelope Magic” College Admissions and Application Boot Camp on Saturday, August 13 to rising 12th grade students. This is a great kick in the pants for your student to get a jump start on those dreaded college apps. For more information on the Boot Camp, click here.