More students are completing the FAFSA early for 2009-2010 according to data collected by the Department of Education. By the end of February, more than 3 million students had filed their FAFSA for the next academic year, an increase of over 20 percent from the first two months of 2008. As application deadlines approach, this flood of applications could slow, but right now it looks like there will be more demand for financial aid in the coming school year.
Federal student financial aid is becoming an increasingly attractive means of paying for college. For starters, federal aid is up for 2009-2010--in the case of Federal Pell Grants, way up. A combination of factors has boosted maximum grants to $5,350 in 2009-2010, while simultaneously raising the minimum award to $976 and the maximum qualifying Expected Family Contribution to $4,671. Low interest rates and expanded federal loan cancellation and consolidation options are also making federal student loans more appealing.
Meanwhile, several other payment options aren't doing so well. Private loans became harder to obtain in 2008, and also saw fairly substantial interest rate increases. College savings plans, such as 529 plans, took big hits in the stock market, and even some prepaid tuition plans are struggling to guarantee payouts for upcoming years. College endowments have also been affected by financial troubles, and some endowed scholarships may be reduced or unavailable for the coming academic year.
However, this doesn't mean the FAFSA is the only option for student financial aid. Most states are maintaining funding for their scholarship programs, many colleges are increasing aid where possible, and scholarship opportunities are still out there--though many deadlines are approaching--for students who are willing and able to take the time to do a scholarship search and complete some scholarship applications.