Students Are Totally Clueless About Financial Aid and It’s Costing Them a Lot of Money

A new report says better outreach and simpler financial aid information would help students choose the right college and know how to pay for it. The report, “Familiarity with Financial Aid” was published by the New America Foundation and found nearly a quarter of prospective students surveyed said they were unsure whether they’d receive financial aid, even though nearly nine out of 10 said the cost of college or availability of aid were important factors in deciding which school to attend.

The survey found that students were most familiar with scholarships they receive from a college (82%), student loans (79%), and state scholarships or grants (61%). Less than half, however, knew much about Pell Grants—the federal grant worth $5,775 this year that’s given to low- and moderate-income students—and only about a third knew other ways to make college costs more affordable, including tax deductions and federal work-study.

Of the undergraduates who filed for federal financial aid, 92% with family adjusted gross incomes of less than $50,000 were awarded a Pell Grant, according to data from the U.S. Department of Education. Yet in this survey, 48% of students in the same income bracket weren’t familiar with the Pell Grant, including more than a quarter who’d never heard of it.

Knowing about the “free money” that’s available to them could change where low- and moderate-income students apply to college or whether they apply at all, said Rachel Fishman, a senior policy analyst at New America and the paper’s author. Pell Grant status also is used as a qualifier for many state and school aid programs, so receiving a Pell Grant often opens the door to a lot more money for school. Here is a link: Students Are Totally Clueless About Financial Aid and It’s Costing Them a Lot of Money