College financial aid season has just kicked off, and experts say students seeking state grants had better act fast.
At least six states, including Illinois, Kentucky and Tennessee, now have "until funds depleted" policies on grants, meaning late filers risk getting nothing. Other states are shrinking the application window. Oklahoma, for example, moved its grant application deadline to March 1 this year, two weeks earlier than last year. Oregon's Feb. 1 deadline is the earliest of any state for the second year in a row. "It's essentially a technique for reducing the number of students who qualify because not everyone will [apply] on time," says Mark Kantrowitz, publisher of FinAid.org and FastWeb.com.
States defend their actions. Thanks to growing budget deficits and rising demand for financial aid, they say they're running out of grant money earlier and earlier each year. In Illinois, for example, the primary grant program was depleted in early April last year, compared to late April in 2010, mid-May in 2009 and late July in 2008, says Katharine Gricevich, director of government relations for the Illinois Student Assistance Commission. In Oregon, applications for aid are already 32% higher than they were a year ago, says Josette Green, executive director at the Oregon Student Access Commission.
The moves come as many families are in greater need of financial help. Many cash-strapped states have cut student aid, while colleges have been raising tuition. The average annual cost of tuition and fees at a four-year private university in 2011-12 is $28,500 -- a 15% increase from five years ago, according to the College Board. The cost at a four-year public college has risen 28% to $8,244. At the same time, many families are still struggling to rebuild battered college funds.
For some, acting quickly still won't be enough. Last year, New Hampshire announced it was ending its grant support to college students because of state budget woes -- making 2012-2013 the first year that residents can't apply for state aid. (Last year, students were told they would receive state grants but the money never came through, says Tom Horgan, president of the New Hampshire College & University Council.) The cut also impacts Maine residents, who previously could use their state's grant when attending a New Hampshire college, but Maine ended that practice after New Hampshire terminated its grant program. (Maine still offers its state grant for students attending college in its state and in five other states on the East Coast, including Connecticut, Massachusetts and Pennsylvania, as well as Washington, D.C.)
To increase their chance of receiving aid this year, parents should file the Free Application for Federal Student Aid or FAFSA as soon as possible, says Rod Bugarin, a financial aid consultant and former financial aid officer at Brown and Columbia universities. Even parents in states with spring deadlines might want to consider filing soon since more states may run out of aid early, he says. Filing early also helps maximize the free aid students will get directly from colleges, advisers say.
Of course, submitting the required paperwork in the next few weeks may be a challenge, especially for families who have not yet filed their taxes. Rather than waiting, parents should consider filing the FAFSA with estimates based on 2011 paystubs, bank account and brokerage statements and their 2010 tax return, says Kantrowitz. If any changes need to be made on the FAFSA after tax season, students can go online to update it or they can inform the financial aid office at the school they ultimately decide to attend and the school will notify the state.
Experts recommend parents keep in mind that revisions could impact the grant money students receive when school begins. For example, a state may lower the amount of aid given to a specific family if the tax return shows higher income than reported on the original FAFSA. Still, that's better than delaying your application, say experts, and missing out entirely.