The End of the “Sibling Discount” Is Making College More Expensive: Here’s What Families Should Do Next

–

For decades, many middle-class families had an important financial aid advantage when sending multiple children to college at the same time. If you had two children enrolled simultaneously, the federal financial aid formula effectively recognized that reality. Colleges understood that a family paying two tuition bills at once had less financial flexibility than a family supporting only one student, and the calculation reflected that.

That advantage is now largely gone. As part of the FAFSA Simplification Act, the federal government eliminated what many families knew as the “sibling discount.” While the stated goal was to simplify the financial aid application process, the practical result is that many families with multiple children in college are discovering they qualify for significantly less aid than they expected. For some households, the difference can amount to thousands, or even tens of thousands, of dollars over the course of a college education.

The question now isn’t whether the rules changed. They did, and the change is permanent for the foreseeable future. The question is how families should respond to a financial aid environment that quietly became more expensive without most parents noticing.

—

Why the Change Matters More Than Many Families Realize

Under the previous financial aid formula, a family’s expected contribution was divided among children attending college at the same time. In simple terms, if a family was expected to contribute $40,000 annually toward college expenses and had two children enrolled simultaneously, each student would effectively be evaluated as having access to roughly half that amount. That arithmetic made overlapping college years much more affordable than they otherwise would have been, and it shaped how millions of families planned for college.

The new formula no longer makes that adjustment. Instead, each student is assessed using the same Student Aid Index regardless of how many siblings are currently enrolled in college. A family with one child in school is treated the same as a family with three.

That may sound like a technical change, but the consequences can be substantial. A family expecting to pay $20,000 per student under the old formula might now be expected to pay $40,000 per student. Multiply that by two students for four years, and the difference can exceed $150,000 over a single decade of college expenses. Families who carefully planned their finances assuming overlapping college years would provide additional aid may suddenly find themselves paying significantly more out of pocket, often without any time to adjust.

For middle-income families especially, the timing can be painful. These are often households that earn too much to qualify for maximum need-based aid but not enough to comfortably write multiple tuition checks each year. They are the families most affected by the change and the least likely to receive offsetting support from other federal programs.

—

The Bigger Trend: Less Reliance on Federal Aid

This change isn’t happening in isolation. Over the past several years, we’ve seen a broader shift in how higher education is funded across the country. Federal and state governments are increasingly focused on controlling spending and reducing deficits, and the appetite for expanding aid programs has shrunk considerably. As a result, many aid programs have become more restrictive or less generous than families expected, and policy changes that reduce aid are arriving faster than families can adjust to them.

That’s why I’ve consistently advised students and parents not to build their entire college strategy around federal aid. Federal aid should be viewed as one piece of the puzzle, not the entire puzzle. Families who rely exclusively on government assistance often find themselves vulnerable when policies change, because every policy shift in recent memory has reduced aid availability rather than expanded it. Planning around the assumption that today’s rules will still exist in four years is a bet families consistently lose.

The smartest families plan as though federal aid will decline further over the next decade and build their strategy around resources they can actually control. That mindset shift, from passive recipient of federal aid to active builder of a college-funding plan, is the single most important adjustment families can make in the current environment.

—

Merit Scholarships Matter More Than Ever

The good news is that students have more control over merit-based aid than they do over federal formulas. Unlike need-based aid, merit scholarships are earned through academic achievement, leadership, extracurricular involvement, athletic performance, artistic talent, or standardized test scores. They are not subject to the same political and bureaucratic shifts that change need-based aid every few years, and they are awarded based on what a student does, not on what their parents earn.

In many cases, strong merit awards can offset losses caused by reduced need-based aid. A student who earns a $20,000 annual merit scholarship has effectively recovered the sibling discount their family lost, and they’ve done so through performance rather than paperwork. That kind of recovery is available to far more students than most families realize.

This is one reason I’m such a strong advocate for standardized testing. A strong SAT or ACT score can unlock scholarship opportunities worth thousands, or sometimes tens of thousands, of dollars per year. Many colleges publish merit scholarship grids that tie award amounts directly to specific test score thresholds, meaning the difference between a 1300 and a 1450 can literally be the difference between $5,000 and $25,000 in annual aid. That math should change how families think about test prep. Investing a few thousand dollars in serious preparation can return many multiples of that investment in scholarship money.

Many families focus exclusively on admissions when they should also be focusing on affordability. Getting accepted to a college is important. Being able to afford that college without overwhelming debt is even more important. The students who navigate this environment successfully approach test prep not just as an admissions strategy, but as a scholarship strategy.

—

Don’t Overlook Local Scholarships

One of the biggest mistakes I see families make is ignoring local scholarship opportunities. Students spend months competing for highly publicized national awards while overlooking scholarships offered by local businesses, community foundations, civic organizations, religious groups, and employers. The visible competitions attract enormous applicant pools, while the local ones often go quietly underutilized.

These scholarships often receive far fewer applications. That means the odds of winning can actually be much better. A scholarship that awards $2,000 might receive 30 applications locally, compared to a national award with 30,000 applicants for a similar amount. The math of those odds is rarely discussed, but it should be central to how families think about scholarship strategy.

I’ve worked with students who assembled substantial scholarship packages simply by applying consistently to smaller local opportunities that most of their peers ignored. One student earned over $15,000 by stacking six modest local awards together. Those awards may not generate headlines, but they can dramatically reduce borrowing, and they accumulate faster than most families expect.

The practical approach is to spend an afternoon researching scholarships available specifically in your town, county, and state. Check your high school’s counseling office. Look at your parents’ employers, religious community, and any civic organizations your family is connected to. Apply broadly to local awards even when individual amounts seem small. Five $2,000 scholarships is $10,000, and that money is meaningfully easier to win than one big national award.

—

Community College Is an Underrated Financial Strategy

Another option families should seriously consider is starting at a community college and transferring later. For some reason, this strategy still carries a stigma in certain circles. It shouldn’t, and the families who can see past that stigma often save enormous amounts of money.

Many community colleges offer excellent instruction at a fraction of the cost of four-year institutions. Students can complete general education requirements, maintain a strong GPA, and transfer to a university later, often graduating with the same bachelor’s degree as students who paid far more from day one. The diploma at graduation makes no mention of where you spent your first two years. Future employers don’t ask, and admissions data shows that strong community college transfers compete well at top universities, including selective ones.

For families facing increased costs due to the loss of the sibling discount, this approach can save tens of thousands of dollars. A student who completes two years at community college before transferring to a state university might cut their total college cost by 40 to 60 percent, with no effect on the value of their final degree.

Many states have also introduced articulation agreements that guarantee credit transfer from community colleges to specific four-year universities, which removes one of the historical concerns about this path. Before assuming community college isn’t right for your family, look up the articulation agreements available in your state. The financial case is often far stronger than parents initially assume.

The goal should be maximizing educational value, not maximizing educational spending. Those two goals have always been different, and in the current aid environment, the gap between them is growing.

—

Avoid the Prestige Trap

One concern I have is that families sometimes respond to aid reductions by borrowing more rather than reassessing their college choices. That can be dangerous, and it’s a pattern I see repeatedly with families who feel committed to a specific school regardless of cost.

You do not want to attend college simply because it’s the most recognizable brand name and then graduate with hundreds of thousands of dollars in debt. The reality is that return on investment matters, and a degree from a slightly less prestigious school with no debt almost always outperforms a degree from a more prestigious school with significant debt, both financially and in quality of life during the years it takes to pay that debt off.

Students should evaluate colleges based on:

• Total cost after aid
• Graduation rates
• Employment outcomes
• Expected earnings in their intended field
• Debt burden after graduation

Prestige alone doesn’t pay student loan bills. The first ten years of a graduate’s career often determine whether they buy a house, start a family, save for retirement, or take entrepreneurial risks. Crushing student debt during those years narrows every option, regardless of how impressive the diploma is. Families who weigh those long-term consequences honestly often end up making different choices than they originally planned, and the students who make those choices rarely regret them.

—

Is College Still Worth It?

Despite rising costs and changing aid formulas, my answer remains yes. The data consistently shows that college graduates experience lower unemployment rates, higher lifetime earnings, and broader career options than individuals with only a high school diploma. That advantage has held up across decades and across multiple economic cycles, even as costs have risen.

That doesn’t mean every college is worth every price. It means students need to make thoughtful financial decisions about where they enroll and how they pay for it. The “is college worth it” question is the wrong question. The right question is “which college, at what price, is worth it for this specific student pursuing this specific goal.” That question has very different answers depending on the student and the school.

College remains one of the most valuable investments many students will ever make, but like any investment, success depends on making smart choices about which version of college, paid for in which way, fits your specific situation.

—

For Parents of Younger Children, Start Planning Now

If your children are still years away from college, the best response to changing aid rules isn’t panic. It’s preparation. The families with the most flexibility when their children reach college age are almost always the families who started planning earliest.

One of the simplest and most effective tools available is a 529 college savings plan. These accounts allow investments to grow tax-advantaged when used for qualified education expenses, and they have flexible rules that allow funds to be transferred between siblings if one child needs less than expected. The earlier families begin contributing, the more time they have to benefit from compound growth, and compound growth is the most powerful tool available in this entire conversation.

Even modest monthly contributions can grow significantly over time. A family contributing $200 per month from a child’s birth through age 18, at a reasonable rate of return, will accumulate far more than a family contributing $500 per month starting when the child is twelve. Time matters more than amount.

Beyond 529s, families should also consider Roth IRAs for older teens with earned income, custodial accounts, and savings bonds for specific purposes. None of these are substitutes for a 529, but they add flexibility. The families who navigate college costs most successfully are usually not the wealthiest families. They’re the families that start planning the earliest and use multiple tools rather than relying on one.

—

Final Thoughts

The elimination of the sibling discount is yet another reminder that families cannot assume today’s financial aid rules will still exist tomorrow. College planning has become increasingly complex, and flexibility is more important than ever. The families who adapt fastest to changing rules end up in much better positions than those who plan around assumptions that turn out to be temporary.

Families should focus on the factors they can control: academic performance, scholarship opportunities, college selection, savings strategies, and borrowing decisions. Each of those is a lever a family can actually pull. Federal aid policy is not, and treating it as the centerpiece of a college plan has become an increasingly risky bet.

The financial aid landscape will continue to evolve, almost certainly in directions that require families to contribute more rather than less. But students who prioritize affordability alongside opportunity, who treat test prep as a scholarship strategy, who consider all paths including community college, and who start planning early will always be in the strongest position to succeed. The rules changed. The smartest families changed with them.

—

Dr. Shaan Patel is a Shark Tank winner, bestselling author, and founder of Prep Expert®, an education company that has helped students improve test scores, win scholarships, and gain admission to top universities. He scored a perfect SAT and is passionate about expanding access to education worldwide.