Personal Finance

Here’s how to understand your college financial aid offer

Published

2 months ago

March 17, 2025

We are overly reliant on student loans to fund higher education, says NACAC CEO Angel Perez

For college hopefuls, there is a letter that is arguably more significant than an acceptance notification: the financial aid award.

Nearly 75% of all undergraduates receive some type of financial aid, according to the National Center for Education Statistics.

For a majority of students and their families, financial aid is the most important factor in their decisions about choosing where to attend and how to pay the tab. The amount of aid offered matters, as does the breakdown between grants, scholarships, work-study opportunities and student loans.

And yet, “the system lacks transparency, especially around the true cost of attendance, making it very difficult for families to comparison shop and make informed financing decisions about their education,” said Rick Castellano, a spokesperson for education lender Sallie Mae.

“Financial aid offers are a good example,” he said. “There isn’t a standard format and it can be difficult to determine what is grant and scholarship aid versus what needs to be paid back, making it tough for families to compare and fully understand what’s being offered.”

Understanding the financial aid offer

In most award letters, there are often several financial aid options, including grants, scholarships, work-study opportunities and student loans.

The goal is to maximize gift aid — such as scholarships, fellowships and grants — and minimize loans that will need to be repaid with interest, Castellano said.

But even with gift aid, it’s important to read the fine print, such as whether a grant is renewable for all four years or if a minimum grade point average must be maintained. It’s worth noting that if a student fails to meet the terms, like a GPA requirement, they may have to repay some or all of a grant or scholarship.

Ultimately, “a bigger financial aid offer may not be better, especially if it includes more loans to cover expenses,” Castellano said.

Some federal loan programs allow students and families to borrow virtually unlimited amounts, he said, leading to ballooning debt burdens. The average undergraduate loan balance is currently around $30,000, according to the College Board. But as a general rule, experts advise students against borrowing any more than they absolutely need.

There may be more college aid available

“Even after receiving aid offers, there’s still money out there,” Castellano said.

For families who have already filed the Free Application for Federal Student Aid, or FAFSA, but are concerned about making ends meet, it is possible to ask the college financial aid office for more aid, especially if your financial circumstances have changed.

To appeal for more college aid, document any changes in assets, income, benefits or expenses. Or, if the financial aid package from another comparable school was better, that is also worth noting in an appeal.

In fact, 71% of families who appealed their financial aid offers in the 2023-24 academic year received additional funding, according to Sallie Mae.

How changes at the Education Dept. factor in

This year, the U.S. Department of Education, which is responsible for underwriting student loans and disbursing college aid, is in the middle of a massive upheaval, after slashing nearly half of its staff.

The agency said in a press release on March 11 that it would “continue to deliver on all statutory programs that fall under the agency’s purview,” including Pell Grants and student loans.

Still, the Education Department also runs the FAFSA and handles oversight of colleges, such as audits and program reviews, as well as technical support to college financial aid offices — and staffing cuts could impact what support is available, according to higher education expert Mark Kantrowitz.

“There might be delays in responses to student and borrower inquiries and the accuracy of the responses may be affected,” he said.

When in doubt, turn to private scholarships

High school students attend Cash for College, a college and career convention, in Los Angeles.

Getty Images

In addition to the collage aid offer, there are more than 1.7 million private scholarships and fellowships available, often funded by foundations, corporations and other independent organizations, Kantrowitz said. The total value of those awards is more than $7.4 billion.

It’s never too late to tap alternative sources for merit-based aid, according to James Lewis, co-founder of the National Society of High School Scholars, an academic honor society.

“A lot of families assume they won’t be eligible for scholarships,” he said — that’s not the case. Scholarships could help bring a pricier school within budget.

“Get beyond, ‘Well, I can’t afford that,'” Lewis added. “Don’t self-select out.”

If you’re pursuing this strategy, check to make sure your college of choice doesn’t have a so-called displacement policy, which could mean private scholarships will reduce other sources of aid.

Continue to look for more scholarships, even through the spring, Lewis advised. “My advice to students and their families is to research and apply often. Google is their best friend.”

Students can also ask their high school counselor about opportunities or search websites such as Scholarships.com or the College Board.

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Personal Finance

How appealing property taxes can benefit new homeowners

Published

24 hours ago

May 24, 2025

Business Finance News

If you just bought a house, it may be a good time to check the accuracy of your property tax assessment, experts say.

Your property tax assessment is the way officials determine the value of your property for tax purposes. Inaccuracies about your home that factor into that formula could mean that you’re overpaying.

If it’s inaccurate, you likely have most of the essential documents you need to appeal, as part of your recent home purchase, according to Sal Cataldo, a real estate lawyer and partner at O’Doherty & Cataldo in Sayville, New York.

The title report, for instance, is going to tell you the age of the house, Cataldo said. You might have a home inspection report on hand that details the property’s flaws, as well as an appraisal and your mortgage, which show the value of the house and the comparable value in the neighborhood.

“You’ve gotten a wealth of information about your house, whether you realize it or not,” Cataldo said.

A home sale will typically trigger a property tax reassessment because the property is changing hands, with the new market value applied to the assessment. But the specific rules of when the new value is applied and the frequency of reassessments will depend on your area.

Here’s why it may be valuable to add reviewing your property tax assessment to your to-do list as a newly minted homeowner:

Property taxes on the rise

In addition to your mortgage payment, home insurance and maintenance costs, property taxes are another factor to consider as you assess your housing expenses.

In recent years, property taxes have climbed because of rising home values and tax rates.

The median property tax bill in the U.S. in 2024 was $3,500, up 2.8% from $3,349 in 2023, according to an April report by Realtor.

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How much you pay varies widely depending on where you live, and some areas see higher bills and price hikes.

As of 2023, the median property tax for homeowners in New York City was $9,937, LendingTree found in a recent report. The city ranks first among the metropolitan areas with the highest median property taxes. Rounding out the top three are San Jose, California and San Francisco, where homeowners paid a median $9,554 and $8,156, respectively.

Inaccuracies may be costing you

It’s not uncommon for properties to be over-assessed, meaning you end up paying more taxes than you should be, said Pete Sepp, president of the National Taxpayers Union Foundation: “It pays to check.”

Sometimes it’s because details in your assessment were never corrected over the years, such as an incorrect square footage of livable space or the amount of bathrooms that are actually in your home.

NTUF estimates 30% to 60% of taxable property in the U.S. is over-assessed, based on reports from individual state tax assessors.

Success in the appeal can lead to savings for several years as the change becomes the basis for the next assessment, said Sepp. While some state or local governments reassess annually, others have less-frequent cycles with gaps of several years. Some have no set schedule at all.

Over 40% of homeowners across the U.S. could potentially save $100 or more per year by protesting their assessment value, with median savings of $539 a year, per Realtor.com estimates.

Personal Finance

Deferred capital gains tax on mutual funds: Lawmakers pitch rule change

Published

2 days ago

May 23, 2025

Business Finance News

Artistgndphotography | E+ | Getty Images

If you own mutual funds, year-end payouts can trigger a surprise tax bill — even when you haven’t sold the underlying investment. But some lawmakers want to change that.

Sen. John Cornyn, R-Texas, this week introduced a bill, known as the Generate Retirement Ownership Through Long-Term Holding, or GROWTH, Act. If enacted, the bill would defer reinvested mutual fund capital gains taxes until investors sell their shares.

Bipartisan House lawmakers introduced a similar bill in March.

Why mutual funds incur capital gains tax

When you own mutual funds in a pre-tax 401(k) or individual retirement account, growth is tax-deferred. But if you hold assets in a brokerage account, capital gains distributions and dividends incur yearly taxes.

Depending on performance, some mutual funds can spit off substantial gains during the fourth quarter. In 2024, some paid double-digit distributions, Morningstar estimated.

These payouts are subject to long-term capital gains taxes of 0%, 15% or 20%, depending on your taxable income. Some higher earners also pay an extra 3.8% surcharge on investment earnings.

About $7 trillion of long-term mutual fund assets held outside of retirement accounts could be impacted by the legislation, according to the Investment Company Institute, which represents the asset management industry.

Bill would ‘provide parity’ for mutual funds

In a statement Wednesday, Cornyn described the mutual fund proposal as a “no-brainer” that would “help provide parity with other investment options.”

If enacted, the proposal would “incentivize Americans to save and invest for their long-term goals” without the stress of an “unexpected tax bill,” Eric Pan, president and CEO of the Investment Company Institute, said in a statement following the bill’s introduction.

However, it’s unclear whether the bill will advance amid competing priorities. Lawmakers are wrestling over President Donald Trump‘s multi-trillion-dollar tax and spending package, which passed in the House on Thursday, and could face hurdles in the Senate.

The U.S. Department of the Treasury has also asked Congress to raise the debt ceiling before August to avert a government shutdown.

Switch to exchange-traded funds

While deferring yearly taxes could benefit some investors, you could also make portfolio changes, financial experts say.

You can avoid mutual fund payouts by switching to similar exchange-traded funds, or ETFs, which typically disburse less income, Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, previously told CNBC.

Of course, the trade could also trigger taxes if the mutual fund has embedded gains, which may require some planning, he said.

Alternatively, investors could opt to keep mutual funds in tax-deferred accounts, such as pre-tax 401(k)s or IRAs.

House advances President Trump's tax & spending bill

Personal Finance

What Medicaid, SNAP cuts in House Republican bill mean for benefits

Published

2 days ago

May 23, 2025

Business Finance News

A “Save Medicaid” sign is affixed to the podium for the House Democrats’ press event to oppose the Republicans’ budget on the House steps of the Capitol on Tuesday, February 25, 2024.

Bill Clark | Cq-roll Call, Inc. | Getty Images

The multitrillion-dollar tax and spending package passed by the House of Representatives on Thursday includes historic spending cuts to Medicaid health coverage and the Supplemental Nutrition Assistance Program, or SNAP.

Now, it is up to the Senate to consider the changes — and to perhaps propose its own.

As it stands, the legislation — called the “One Big Beautiful Bill Act” — would slash Medicaid spending by roughly $700 billion and SNAP, formerly known as food stamps, by about $300 billion.

“Bottom line is, a lot of people will lose benefits, including people who are entitled to these benefits and who are not the target population of this bill,” said Jennifer Wagner, director of Medicaid eligibility enrollment at the Center on Budget and Policy Priorities.

The cuts to Medicaid and SNAP — the largest in the programs’ histories — come as the reconciliation bill would add roughly $3 trillion to the nation’s debt including interest over the next decade, estimates the Committee for a Responsible Federal Budget.

To help pay for a variety of tax perks included in the bill, House Republicans have targeted Medicaid and SNAP for savings.

“We don’t want any waste, fraud or abuse,” President Donald Trump said Tuesday on Newsmax when asked about prospective Medicaid changes. “Other than that, we’re leaving it.”

Likewise, some Republican leaders have pointed to rooting out abuse of SNAP benefits.

One way House Republicans are seeking to curb the programs’ spending is through new work requirements.

New Medicaid work requirements to get earlier date

Under the House proposal, new Medicaid work requirements will apply to people who are covered through the Affordable Care Act expansion. To be eligible, those individuals will need to participate in qualifying activities for at least 80 hours per month unless they can prove they have an approved exemption, according to Jennifer Tolbert, deputy director of KFF’s Program on Medicaid and the Uninsured.

In last-minute negotiations, House Republicans moved the date for implementing those work requirements to no later than Dec. 31, 2026, up from a previously proposed effective date of Jan. 1, 2029 — around two years earlier than the original version, CBPP’s Wagner noted.

Notably, it also gives states permission to start implementing the work requirements earlier than that date.

“On the Medicaid side, the work requirement is arguably the harshest provision,” Wagner said. “It will lead to the greatest cuts of enrollment in Medicaid.”

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The new accelerated timeline also doesn’t allow time for rulemaking, a process by which the public can submit comments, and the Centers for Medicare and Medicaid Services may respond to those submissions, Wagner noted. Instead, the legislative proposal calls for guidance to be issued by the end of 2025, which she said is a “big deal” because it eliminates the opportunity for adjustments to be made in response to public comments.

Moving up the effective date also limits the ability to conduct public outreach to notify individuals of the coming changes, said Tolbert of KFF. States will also have less time to adjust their systems to track whether individuals are working the required number of hours or engaging in other necessary activities, she said.

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Within the work requirements, the House also moved to limit the discretion to determine other medical conditions that may make someone exempt that had been in the original version, Wagner said.

Notably, the proposal also calls for states to conduct more frequent eligibility redeterminations for adults who are eligible for Medicaid through Affordable Care Act expansions. Starting Dec. 31, 2026, states will be required to conduct redeterminations every six months, compared to current requirements that require eligibility reviews within 12 months of changes in a beneficiary’s circumstances, according to KFF.

The increased frequency of the redeterminations are “likely to have a big impact,” Tolbert said.

Ultimately, the work requirements may make it difficult for people to access the health coverage they need, she said.

“What this may end up doing is having the opposite of the intended effect,” Tolbert said. “They may lose access to the very treatments and services that are enabling them to work.”

SNAP work requirements would be expanded

Under the House Republican bill, work requirements would also be expanded for SNAP benefits.

Individuals ages 18 to 54 who have no dependents and are able to work are already face SNAP benefit limitations based on 80-hour per month work requirements.

The proposal would extend those requirements to individuals ages 55 to 64, as well as households with children, unless they are under age seven. In addition, states would also be limited in the flexibility they may provide with waivers of the work requirements or discretionary exemptions, according to the Urban Institute.

In addition, federal funding cuts would make it so states would have to contribute more toward benefits and administration of the program.

Ultimately, those changes could take away food assistance for millions, according to the Center on Budget and Policy Priorities.