The ‘Sibling Discount’ for College Financial-Aid Is Ending
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Here's your money briefing for Tuesday, July 25th. I'm J.R. Whelan for The Wall Street Journal. The so-called sibling discount that's allowed parents with more than one child in college at the same time to save some money on tuition is going away.
For some families, this is really going to change the financial aid award that they're used to getting every year. They may see a smaller financial aid package than they've seen in previous years.
We'll talk to Wall Street Journal personal finance reporter Oyen Adedoyen about what this means for families sending students off to college. That's after the break.
How does the current FAFSA sibling discount reduce a family's expected contribution?
and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise.
Parents paying tuition for two or more children in college could lose some financial aid under new government rules. WSJ personal finance reporter Oyen Adedoyen joins me. So, Oyen, how does it work now if a family has more than one child in college at the same time?
With the current system, the information that parents plug into the Free Application for Federal Student Aid, also known as the FAFSA, is what's used to determine how much a family can afford to pay annually. That's a number that the Education Department calls the expected family contribution. That number is then divided by the number of siblings that a family has in college in order to estimate how much a parent can contribute per sibling.
What specific formula example shows how sibling count affects aid per student?
Oh, so they're taking into account the size of the family.
Yes, the entire family unit is what's taken into account with the current formula.
Okay, so take us into the numbers a bit. What is this formula about and how does it work in terms of affecting students applying for financial aid?
So let's say, for example, a family is determined that they can afford to pay $10,000 a year with one child in college.
What changes remove the sibling discount under the new FAFSA rules?
If that same family now has two children in college, that expected contribution is going to be cut in half to $5,000 per kid. That increases each student's ability to qualify for financial aid, for example.
So what's changing under the new rules?
Now that discount, so to speak, is going away. So the education department is no longer going to include the number of siblings in college as a factor in determining whether or not you qualify for more aid.
Which families will lose or gain aid and what real-family examples illustrate the impact?
Now you spoke to families who are affected by this. What do they tell you?
Yeah. So the interesting thing about this is that some families are going to lose out on financial aid that they may have qualified for in the past, but others are actually going to be more able to qualify for financial aid. So one mother I spoke to in Tennessee has three kids. Her oldest daughter is already in college, but her younger two aren't too far behind her. Her and her wife make a combined household income that's over $100K. So her oldest daughter didn't qualify for any Pell Grants or other types of federal student aid. However, she has another daughter that's about to graduate high school. And she was kind of hoping that when her daughter now comes into college and her youngest son then follows behind her, she would begin to qualify for those sibling discounts, which would make college overall more affordable for that family.
Why is the government pushing these changes through?
These changes are really part of a greater goal to simplify the FAFSA. The current system is pretty clunky and complicated for families to navigate through. So the new FAFSA is going to have different questions, it's going to be a lot shorter, and it's going to be directly connected to federal tax forms.
So how is this related to students' eligibility for other financial aid, like the Pell Grant that you mentioned a moment ago?
This new formula is going to expand access to systems of federal aid like the Pell Grant.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:00–1:01
2
How does the current FAFSA sibling discount reduce a family's expected contribution?
1:01–2:17
3
What specific formula example shows how sibling count affects aid per student?
2:17–2:42
4
What changes remove the sibling discount under the new FAFSA rules?
2:42–3:11
5
Which families will lose or gain aid and what real-family examples illustrate the impact?
3:11–4:45
6
How will the new FAFSA simplify questions and expand Pell Grant eligibility?
4:45–5:36
7
When does the new FAFSA take effect and how many families could be affected?
5:36–6:53
Speakers
3 identifiedMore from WSJ Your Money Briefing
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