As of June 30, Free Application for Federal Student Aid (FAFSA) completions in Kentucky were up 11 percent from 2016, according to a report from the National College Access Network. This increase represents 3,055 additional FAFSA filers in Kentucky. Nationally, FAFSA completions rose 6 percent overall and 9 percent among 2017 high school graduates, reversing a four-year decline.

These increases follow a 2015 executive action that allowed families to file the FAFSA three months earlier (in October instead of January) and use income tax returns from two years ago, also known as prior-prior year income data. Now, income data can be uploaded into the application automatically, saving time and reducing errors. Students are notified of their expected aid packages sooner, leaving them more time to make informed decisions and plan for college costs.

The FAFSA determines a student’s eligibility for federal Pell grants, work-study programs and Stafford loans. Additionally, colleges and universities often use the FAFSA to determine eligibility for their own need-based financial aid programs.

A recent analysis by NerdWallet estimated that just over 11,000 Kentucky seniors, who were eligible for Pell grants in 2014, left $40.6 million on the table because they didn’t complete a FAFSA. The average Pell award in Kentucky in 2013-14 was $3,689, which is money that does not need to be paid back.

The bottom line is that anyone planning to go to college should fill out a FAFSA, regardless of family income. The formula used to determine Pell awards takes into account the difference between the cost to attend college and the family’s expected financial contribution, so students going to more expensive schools may qualify for aid even if their families are not needy. Also, the FAFSA provides access to federally subsidized loans with lower interest rates, which are available regardless of income. Unlike commercial loans, these may be eligible for federal loan forgiveness programs if the student works in the public sector or in select fields, such as teaching and nursing, after graduation.

For more information about student financial aid, contact KHEAA at 1-800-928-8926.

A recently released report on college affordability from the State Higher Education Executive Officers Association (SHEEO) presents Kentucky as more affordable for low-income families than the national average; however, the report calls for a stronger partnership between states and the federal government to make college more accessible by allocating additional student grants.

SHEEO presents the college cost burden for low-income families based on net price[1] for first-time, full-time undergraduates at public two-year and four-year institutions. As Figure 1 shows, net price varies between sectors and among states. Kentucky’s net price at public four-year institutions is lower than the national average and for Ohio and Tennessee, but higher than West Virginia. At two-year institutions, Kentucky’s net price is the lowest among the comparative states and the nation.

Figure 1: Net price at four- and two-year institutions for families earning up to $48,000 in Kentucky and other states.

States vary greatly in the level of cost burden for students. Figure 2 presents net price as a percentage of the US lowest income families earning $30,000 at public two-year institutions for 50 states. The shares range from the highest of 51 percent in New Hampshire to the lowest of 15 percent in Mississippi, with the national average of 23. Kentucky’s low-income families pay approximately 19 percent of their annual earnings to cover out-of-pocket college costs.

Net price of two-year institutions as a percent of income for families earning $30,000.
Figure 2: Net price of two-year institutions as a percent of income for families earning $30,000.

A similar variation exists for families earning $30,000 enrolled at four-year public institutions, presented in Figure 3. Kentucky is below the national average, with 32 percent of family income dedicated to paying the net price of a college education (32 percent in Kentucky compared to 36 percent nationally). For low-income families, the average cost of a public four-year education in Kentucky after receiving financial aid accounts for 32 percent of their annual income.

Net price as a percent of income for families earning $30,000.
Figure 3: Net price of four-year institutions as a percent of income for families earning $30,000.

To meet the affordability thresholds for low-income students, SHEEO proposes that states should increase per-student educational appropriations and the federal government should match each state's effort dollar-for-dollar. To learn more about the SHEEO college affordability model, please review the report. To learn more about affordability in terms of student debt and repayment, view the Council's report.

[1] Net price is the actual costs to the student after financial aid has been awarded. A low income family with children is defined by yearly earnings up to $48,000.