Paying for college: What to know about federal financial aid changes, how to find scholarships and more – Newsday
Students walk across the Stony Brook University campus last year. New federal financial aid rules are set to take effect in 2026. Credit: Elizabeth Sagarin
Students starting college next year will face a dramatically different federal financial aid system than the one their older siblings and parents encountered, experts say, due to changes enacted this summer as part of President Donald Trump’s "One Big Beautiful Bill Act."
The changes are meant to address the nation’s student debt crisis. More than 40 million Americans carry student debt, with an average federal loan balance of more than $39,000, the Education Data Initiative reported this year.
Many of the changes — including new borrowing limits for students and parents, and more stringent repayment terms — will go into effect on July 1, 2026.
As students face stricter new federal loan rules, financial aid experts are urging college applicants to maximize their chances of getting grants and loans by submitting financial aid forms as early as possible.
Some families assume they won’t qualify for aid so they don't apply, but that can be a mistake, since need-based, academic, athletic and other scholarships from colleges and other non-government sources can reduce college costs, even for middle-income families, financial aid counselors said.
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“Even if people think they're not going to qualify for financial aid, it's always good to apply for it,” said Jason Stanton, director of careers and student services in the East Islip school district.
The federal Department of Education is still processing student loan and grant applications and making payments on Pell Grants and loans amid the government shutdown, according to the agency’s contingency plan. College financial aid officers on Long Island said the agency is processing aid applications, though when questions arise, it can be difficult to get answers.
Here's what Long Islanders need to know about paying for college:
The Free Application for Federal Student Aid, or FAFSA, for next year is available at studentaid.gov. In addition to federal aid, the form can also qualify students for private scholarships.
Students can also seek state grants of up to $5,665 a year from New York’s Tuition Assistance Program, either through the FAFSA or at hesc.ny.gov, which also has information about other aid, such as the Excelsior Scholarship, which gives families earning $125,000 or less a tuition-free education at SUNY and CUNY schools, and the NYS Dream Act program for certain immigrant students, including those who are undocumented.
The College Board’s CSS Profile allows students to apply for non-federal aid, including aid offered by individual colleges. Deadlines vary by school.
Not all scholarships use FAFSA or the CSS Profile. Students can get information about additional scholarships at high school and college financial aid offices, the federal Department of Labor’s Scholarship Finder (bit.ly/3W1XmMK) and the College Board (bit.ly/3WDfkoV), among other sources.
The new limits on federal Parent PLUS Loans are among the most significant changes. For students starting college after next June, parents can now borrow up to $20,000 a year, up to a total of $65,000 for each student in the family. Previously, parents could borrow up to the full cost of their child’s education, minus other grants or loans.
At Stony Brook University, almost one in four New York families who received Parent PLUS Loans borrowed more than $20,000 last year, with recipients borrowing nearly $25,000 on average, university figures show. Among out-of-state students, more than half the families who took out Parent PLUS Loans exceeded the new $20,000 limit, with an average loan amount of nearly $36,000, the university reported.
Stony Brook estimates the cost of tuition, on-campus housing, fees and meals at just over $30,000 a year for in-state students and $54,000 for out-of-state students. Books, transportation and other expenses add an estimated $4,000. Some of those costs can be offset by scholarships and other aid.
For undergraduates who are dependent on their parents, federal loans made to students, rather than parents, have long been capped at $5,500 to $7,500 annually, according to the Department of Education.
“There's a misperception among families that students can borrow, in their own name, enough to cover all their tuition,” said Nicholas Prewett, executive director of financial aid and scholarship services at Stony Brook. But for many students, federal student loans would not come close to covering their costs.
Separate from the new limits on loans to parents, students now face a lifetime federal borrowing limit of $257,500 if they start borrowing after next June, according to the National Association of Student Financial Aid Administrators, or NASFAA.
In addition, recipients of full scholarships will no longer qualify for Pell Grants for low-income students, said Sarah Austin, a policy analyst at NASFAA. That can have an especially big impact on student athletes, whose jam-packed schedules often make it impossible to work in addition to studying and playing sports, she said. Pell Grants can cover expenses other than tuition, including housing, meals and books.
New federal rules also mean that part-time students will qualify for less financial aid, with aid pro-rated based on their schedule, NASFAA reported.
“Many students take summer classes to catch up or get ahead,” often attending part-time, Sandra Mervius, director of financial aid at Hofstra University, said in an email. “Starting this summer, those students will see reduced borrowing capability.”
Overall, Mervius said, some of the changes “will make access to higher education even harder for middle- and low-income families.”
Sandra Mervius, director of financial aid at Hofstra University, said the federal financial aid changes could impact low- and middle-income families. Credit: Hofstra University, Matteo Bracco
Many turn to private loans. But they should be careful, said Carolina Rodriguez, director of the Education Debt Consumer Assistance Program at the Community Service Society of New York.
“With federal loans, you usually get more leniency,” she said. “If you are struggling financially, if you become sick, you could request a temporary payment pause through a deferment or forbearance. Private loans, you don't generally get that.”
It can also be harder to qualify for private loans, and in some cases they carry higher interest rates, Austin said.
Federal student loans have fixed interest rates of about 6.4% to almost 8%, and federal loans to parents have rates of almost 9%, Bankrate.com reported. By contrast, private loan rates range from less than 3% to almost 18%, the website reported.
Students should make sure they’re borrowing from a reputable source, shop around, check for hidden fees and make sure they understand options such as flexible payment options, Mervius said.
Hofstra, Stony Brook and other universities provide links on their websites to lists of lenders, and websites such as Nerdwallet and Forbes also offer lists of lenders with information such as minimum credit scores and interest rate ranges.
Borrowers who face hardships will have access to fewer repayment options from the federal government starting next year. For debt taken out after June 2026, most students will have access to either the standard repayment plan or an income-based plan called the Repayment Assistance Plan, or RAP, according to NASFAA. RAP sets payments at up to 10% of income, with a 30-year repayment period.
Those who took out loans before next July 1 — and who do not take on any new federal student loans after that date — can continue in their current repayment plans until 2028. The current plans include Standard, Graduated, Extended and Income Based repayment plans, NASFAA said.
The new rules could “force people to plan ahead” and avoid excessive debt, Rodriguez said. But those who get in over their heads could face “severe financial consequences,” including having the federal government seize their wages, tax refunds and other sources of income, she said.
Once they receive offers, students should negotiate for more aid, ask whether the aid will remain in effect for four years and find out if any requirements apply, such as minimum grades, Rodriguez said.
Starting last year, the FAFSA stopped asking whether families had more than one child in college, a factor that used to result in more aid for some families. However, some schools still take such factors into consideration. Hofstra asks students to document siblings’ college costs, Mervius said.
Another option is to start out at a less-expensive community college and transfer to a four-year college, Austin said.
It's a good idea to apply to at least one school near the family’s home, to save money on housing if needed, Rodriguez said.
Families can use online tools to estimate their out-of-pocket costs and future loan payments, to make sure the debt is affordable, she said. Studentaid.gov has a tool called Loan Simulator.
“If you're a parent, are you comfortable paying back $600 a month for 10 years, 20 years?” Rodriguez said.
Families “really need to assess how much will they need to borrow and what can they repay,” Rodriguez said, “and then make an informed decision based on that.”
Maura McDermott covers education. Since joining Newsday in 2012, she also has worked on the investigations team and covered real estate and the business of health care.
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