05 Jan 2016 is a New Year in Financial Aid
Happy New Year! Usually when we say that to one another we are hoping that the coming year will indeed be better, or at least different in some measurable way. Nowhere is that sentiment more evident than in the world of college financial aid. For many years, parents and students have struggled with the timeframe of completing the FAFSA in January, receiving their financial aid award letters, and trying to make a college selection by May. It was felt that there really wasn’t enough time to fully consider this decision, and the crossover with the income tax return deadlines was too onerous. Well, big changes are ahead for 2016 which have been implemented to help alleviate these concerns. Some of the things you can look forward to in this new year are:
• New FAFSA Deadlines: Although most families are already up to their eyelids in completing the Free Application for Federal Student Aid for the 2016-17 academic year, a major change will come about this fall. For the first time, the FAFSA will be available beginning in October. Anyone seeking to secure financial aid for the 2017-18 academic year will need to be prepared much earlier to complete this application. It will also cause a groundswell of change in the way colleges and states administer their financial aid programs.
• Use Earlier Income Information: Families found it almost next to impossible to complete their federal income tax returns and file their FAFSA in the same timeframe. The FAFSA relies heavily on information from the federal return, but many families were forced to estimate instead of being able to access the IRS Data Retrieval Tool (DRT). This would cause delays in approval because colleges would request additional documentation, and families would have to go back and re-enter updated information when returns were completed. They will now be able to rely on a principle known as prior-prior year which will allow them to use information from a tax year that has probably already been completed. For the 2017-18 FAFSA, for example, students and parents will use information from their 2015 tax returns. In most cases these returns should already be completed, enabling use of the DRT and thereby speeding up the entire process.
• Improved Decision-Making Process: By moving the FAFSA to October, it is believed that colleges will be able to prepare their financial aid offers sooner in the application timeline. This allows parents and students to make more informed comparisons among all colleges, and reduces pressure to make a decision within a strict timeframe.
The anticipated result of these changes is that more students will be motivated to participate in the college application process, and that more families will be able to qualify for financial aid and Pell Grants to help pay for this advanced education opportunity. Although things will probably be a little more chaotic this year as everyone adjusts to the new schedule, the long-term results should be well worth the effort.