How the New FAFSA Rules Will Change the Way You Apply for AidPosted October 16, 2015, 12:00 pm by
In September, the federal government changed the FAFSA rules in a way that allows students to apply earlier for financial aid.
Starting in the fall of 2016, students can submit the FAFSA using their parents’ income from two years earlier instead of having to wait until new tax returns are filed in January or use estimates. That means, high school seniors can apply for financial aid for their 2017-18 freshman year of college and submit the FAFSA in October 2016 using tax information from their parents 2015 income tax returns.
In the past students had to wait until Jan. 1 of their senior year to submit the FAFSA, often after applying for admission. They can now use the information from the return of the previous year on the financial aid form.
How will these changes affect college applicants?
The new changes will lighten pressure on students who need financial aid to attend college. It will give them more time to explore their financial aid options with the colleges offering admission, since both the FAFSA and the application can be submitted at the same time. This means that along with an offer of admission, colleges will be able to provide a financial aid package, instead of waiting for parents to file their income tax returns for the current year.
Students will be able to use the online IRS system to populate the FAFSA with information from the previous year’s tax return that has already been filed. This will streamline the financial aid process for families and their students.
How will these changes affect colleges?
Colleges and universities will need to adjust some of their financial aid practices in order to comply with the new FAFSA regulations. Most private universities set tuition in the spring for their upcoming fall applicants. They may have to move this process up to allow time for costs in the marketing materials, on their website, and eventually in the award packages.
With families submitting the FAFSA earlier, college aid offices will need to be prepared to award aid earlier to remain competitive with other college awards. This may also require colleges to estimate state and federal aid awards earlier. It can also affect how families make the final college choice. Colleges may be eliminated early in the process based on these new figures and the early financial aid packages that accompany early-admission and early-decision admissions offers.
Colleges may also be faced with more financial aid appeals and an earlier start on the appeal season. This means that colleges will have to make appeal decisions before they have a clear idea of how the freshman class is shaping up. Colleges could adapt to this change by either establishing a “first offer is the best offer” policy or by delaying appeal decisions until they have a better picture of the enrollment figures and incoming revenue.
This new option will benefit families in their search for the right financial fit. Families will be able to apply for aid using completed tax returns rather than estimates.
Colleges may need to adapt their financial aid award practices and budgeting practices as well, but can use these changes to recruit students by providing a more complete financial aid picture. It’s also important to keep in mind that the FAFSA changes do not currently affect private colleges that use the CSS Profile to determine aid eligibility, but many college experts think that timeline will change as well.
[Worried about saving for your teen's college education?]