New Changes to Ease the Filing of Financial Aid Forms
September, 2015 Financial experts have had their hands full recently observing all the changes that have gone into the forms necessary for filing for federal student aid. As a common theme, they have all encountered the same standard piece of advice that parents need to push up college planning. Millions of families across the U.S. will eventually face off with filling out the Free Application for Federal Student Aid, known as FAFSA, for their children aspiring to attend and graduate from college. The FAFSA gathers detailed information from families in order to assess a family’s ability to pay for college expenses, and then uses that information to determine the loan and grant amount to bridge the financial gap.
In September 2015, the Obama Administration (http://www.nasfaa.org/uploads/documents/ppy_factsheet.pdf) revealed two new changes that aim to not only ease the process of applying for federal student aid, but also to allow for more timely communication of household financial information. For the first change, beginning in 2016, students will have access to FAFSA as early as October of the year before a student would embark for college, moving back three months from January, giving students a greater window to relieve deadline pressure. For the second change, the FAFSA will use tax information based on the last time a family had filed taxes instead of the current tax year, since current information can change and require revisions on official forms. These changes will allow students to apply for federal aid with fixed tax information to give financial aid administrators a better use of financial aid management and an understanding of how much aid to award. These changes will start on October 1, 2016 for students applying for the 2017-2018 academic year.
Despite the FAFSA feeling like an arduous task, these changes may have a profound effect on how many students start to file for federal student aid by encouraging students to finally apply and claim financial aid. According to data from EdVisors.com, up to two million students did not file a FAFSA in the 2011-2012 academic year, despite clearly possessing the eligibility for aid. Mark Kantrowitz, publisher of EdVisors, said parents need to assess the pros and cons of “artificially increasing” their annual income by identifying capital gains, taking distributions through retirement plans, and other steps during the base tax year used for determining financial aid. In FAFSA terms, higher income translates to a higher expected family contribution. While Kantrowitz has also advised that, he says that “now it has to be pushed up by a year.” Under the new changes, the FAFSA tax year will run from January 1 of a student’s high school sophomore year to December 31 of the junior year.
Financial aid writer, author, and consultant Ben Kaplan recommends that families start getting familiar with scholarship applications and college admission forms by September of senior year. “Families will need to measure their time more efficiently during the September rush period,” Kaplan said. However, Kal Chany, co-author of the Princeton Review’s annual “Paying for College Without Going Broke,” believes that many institutions will base their awards with earlier FAFSA submissions. Chany also does not believe that institutions will push up admission acceptance letters. When inquired about the FAFSA changes, Chany stated they might also create “unintended consequences of students turning in the forms early and being discouraged” by the financial numbers from going to college.