What are the FAFSA changes for 2025?

For the 2025–26 school year, the FAFSA form has been simplified with fewer questions and direct IRS data transfer. Pell Grant eligibility has been expanded, but the sibling discount that reduced the expected family contribution for multiple students in college is no longer available.

How do 529 plans help with college savings in 2025?

529 plans in 2025 allow higher contribution limits and, under new rules, leftover funds can roll into a Roth IRA (within limits). Many states, including Indiana, continue to offer tax credits or deductions for contributions, making 529 plans one of the most tax-advantaged ways to save for college.

What other funding options are available besides savings?

Families can explore scholarships, federal loans, and work-study programs. Scholarships exist beyond academics and athletics, while federal loans usually offer lower interest rates than private loans. Work-study programs provide income while a student is enrolled in school.

How much are college costs expected to increase?

Tuition has historically increased 5–7% annually. At that pace, a $25,000 annual tuition today could cost about $33,500 in five years. On top of tuition, families should plan for housing, meals, books, and travel, which can add $15,000–$20,000 per year.

Why is early financial planning important for college?

Because tuition costs rise steadily each year, starting early allows families to spread out savings, take advantage of tax benefits, and plan around financial aid eligibility. Early planning helps ensure education funding doesn’t derail retirement or other long-term financial goals.

Shielding Family Finances from Soaring College Costs: 2025 Planning Essentials

HFF Staff Writer
3 hours ago
3 min read

Historic red-brick building with arched entrance, large windows, and green lawn, set against a clear blue sky, exuding a collegiate vibe.

College isn’t getting cheaper. In fact, tuition has been climbing at an annual clip of 5–7%—faster than most family incomes. For parents and grandparents hoping to support the next generation, that’s a financial headwind you can’t ignore.

But here’s the good news: with the right tools and a little forward planning, you can soften the blow of rising college costs. Let’s walk through what’s changing in 2025, the strategies that actually work, and a simple way to forecast what those four (or more) years might mean for your budget.

FAFSA and Aid: What’s New in 2025

The FAFSA—the Free Application for Federal Student Aid—has gotten a facelift. For 2025–26, the form is shorter and simpler, but there are also new calculations for Expected Family Contribution (now called the Student Aid Index). Key changes include:

Simplified income reporting: Tax information flows directly from the IRS. Less paperwork, fewer errors.
Expanded Pell Grant access: Families with moderate incomes may now qualify where they didn’t before.
Sibling discount gone: Previously, having multiple kids in college at once lowered your contribution. That benefit is phased out.

Translation? Some families will see more aid, others less. Knowing where you fall before you’re knee-deep in tuition bills is critical.

529 Plans: Quietly More Powerful

If you haven’t looked at a 529 college savings plan in a while, 2025 brings some new perks:

Unused funds can roll into a Roth IRA (within limits), giving leftover dollars a second life in retirement savings.
Higher contribution thresholds: Annual gift exclusions have risen, letting you tuck away more without triggering gift taxes.
State tax benefits: Many states, Indiana included, continue to offer credits or deductions.

Think of a 529 as your dedicated “college account”—with the bonus that Uncle Sam is willing to cut you a tax break for using it.

Scholarships, Grants, and Loans: Still on the Table

Yes, 529s are powerful. But don’t overlook the old standbys:

Scholarships: Beyond academics and athletics, there are awards for community service, hobbies, even niche career goals. Encourage your student to apply broadly.
Federal loans: Interest rates reset each year, but they’re often still better than private loans. Subsidized loans don’t accrue interest while the student is in school.
Work-study: A part-time campus job can help cover expenses without eating up savings.

It’s a layered approach. Rarely does one strategy cover it all—you’ll need a mix.

Budgeting for Reality: A Simple Template

Here’s where families often stumble: not putting hard numbers on paper until senior year of high school. By then, options are limited.

Try this quick exercise:

Look up today’s tuition at a school your child might attend.
Apply a 5–7% growth rate each year until their freshman year. (Example: $25,000 today at 6% growth is about $33,500 in 5 years.)
Multiply by 4 (or 5) for the full program.
Add living expenses—housing, meals, books, travel. Easily another $15,000–$20,000 per year.

Now compare that number against your current savings and projected contributions. The gap you see? That’s where planning strategies—529s, scholarships, loans—come into play.

Why Early Wealth Planning Matters

Here’s the thing: college costs don’t explode overnight—they creep up year after year. The families who come out ahead aren’t necessarily the ones with the biggest incomes. They’re the ones who start planning early, layering savings, tax advantages, and financial aid strategies into a coherent plan.

If you’re a parent or grandparent who wants to support education without derailing retirement, the time to act is now—not when tuition bills hit the mailbox.

Let’s Build Your Blueprint

Every family’s situation is different. Maybe you’re balancing college savings with caring for aging parents. Maybe you’re a grandparent wondering how much to help without crossing into “spoiling.” Or maybe you’re a young parent just getting started and unsure how to balance student debt, mortgage payments, and saving for your kids.

That’s exactly where we come in. At Halter Ferguson Financial, we help families like yours create a Custom Financial Blueprint that accounts for education costs, retirement, and everything in between.

If rising college costs are keeping you up at night—or you just want a clearer picture of what the future holds—let’s talk. You don’t have to navigate this on your own.

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