Beginning in the fall of 2016, the Free Application for Federal Student Aid (FAFSA) will be available October 1. This change has major implications for families planning to apply for financial aid.
What the Changes Mean
- Students will have a better opportunity to gather the financial information required.
The new guidelines allow students use “prior-prior” tax information. For example, students who will be applying for 2017-2018 financial aid, they will submit information from the 2015 tax return. In the past, students needed to estimate parent’s income. Families who filed for a tax extension should have their tax return in hand by October 15.
The Department of Education estimates the FAFSA’s previous January 1 availability contributed to 2 million Pell-eligible students not completing due to the complicated timing with tax filing.
- Students may be able to get FAFSA tax information swiftly with the handy IRS Data Retrieval Tool.
If families qualified to use the IRS Data Retrieval Tool, students can import the numbers directly into their FAFSA form.
This not only simplifies the process, it means the FAFSA is much less likely to be selected for verification. In the past, about one-third of applications were subjected to verification, but expectations are that the number to dip significantly with the data retrieval tool.
Some families gave up on their FAFSA if it was subjected to the verification process, leaving state and institutional aid on the table either not awarded or provided to other students.
- If your financial situation has changed since 2015, students can ask a college for a financial review.
Some families are concerned about using prior-prior tax information because it may not reflect current financial situations. If a student’s circumstance or income has changed, submit the FAFSA and then contact colleges the student has applied and once the student has been accepted, report your 2016 updates and ask for a professional judgment review.
- Students may hear about financial aid awards earlier.
The new timeline is partly intended to help colleges notify accepted students about financial aid awards sooner and buy families some decision-making time. Admissions and financial aid experts have long recognized that receiving award letters in April and deciding on a college by May 1 is a tight turnaround.
However, this year will be a transition year. Some colleges may provide award letters earlier, and others may operate on the same timeline as previous years. If students are confused about when they might receive a financial aid package from a particular institution, students are encouraged to reach out to the school.
- Students can now submit the FAFSA while they are still completing college applications.
Schools will be pushing FAFSA awareness during the back-to-school timeframe. The early availability of the form benefits students, particularly low-income and some first-generation kids, because it lengthens the filing period for most colleges and gives counselors more time to help students apply.
- Students should complete the FAFSA even if your child isn’t sure about going to college.
If students have any plan of attending school beyond high school, they should complete the FAFSA. If students decide to take a gap year or time off to work, their aid eligibility won’t be affected if they fill out the FAFSA and don’t enroll anywhere.
Ambivalent students can list colleges of interest on their FAFSA. Then the form will be given to those colleges and the students can update the list later when they apply.
Keep in mind that colleges can’t create a financial aid package until a student applies and is accepted. The FAFSA submits your income data to the federal government for federal student aid and students will learn of their estimated family contribution. But to activate that aid, as well as institutional aid from the college itself, students must apply and be accepted.
Undecided students are encouraged to submit the FAFSA early but also to contact colleges’ financial aid offices if they have questions. Schools’ financial aid offices want to help. Everybody wants this change to work in the way it’s intended — which is to benefit families.
Colleges’ priority financial aid deadlines help them develop a picture of their applicants’ need and institutional aid they might need to award, and many will hold funds for late-filing students. Students receive more aid, on average, by filing in the first three months, because states, colleges, and scholarship programs use the FAFSA to determine eligibility for state and institutional aid, including some merit awards, and these deadlines typically fall earlier than federal deadlines.