Students who plan to attend college next year (and current college students who file for financial aid in 2016) will see two major changes to the Free Application for Federal Student Aid (FAFSA) beginning October 1, 2016.
- FAFSA forms will be available on-line beginning October 2016, rather than in January 2017 for the 2017/2018 school year.
- FAFSA data will be from a “prior, prior” year tax return (2015).
Benefits – Instead of parents and students scrambling to get tax returns done in January and rushing to meet priority financial aid deadlines that are typically in March, they can download IRS data from a tax return typically completed five months prior. These changes are encouraging and are intended to prompt families to apply for aid and meet deadlines instead of relying upon tax return estimates to meet February or March college deadlines,
Students will be able to estimate need-based aid more accurately to assess colleges are financially feasible. Also, students will be able to get need-based award letters months earlier, which will aid their college decisions. If students apply for “early decision” or “early action,” they should have their award information in time to make informed decisions. Currently many have to say ‘yes’ before knowing their actual aid award amounts.
The Fed’s changes will eliminate the need to update FAFSA for actual tax return data in cases where estimates had to be used because the tax return could not be completed in time.
Downsides – The tax return data will be for a year that is almost two years prior (e.g. 2015 for the 2017/2018 school year). A lot can happen to family finances in two years – job changes, lay-offs, financial reverses, promotions, bonuses, inheritances. The Feds may be sacrificing relevancy for accuracy and simplicity. More families who suffer reduced income and assets may need to file appeals of their award letters.
Implications – Tax year 2015 is going to be used for two FAFSA application cycles: 2016/2017 and 2017/2018. It is doubly important that you seek expert advice in maximizing your student financial aid if you have a junior or senior. Financial positioning of income and assets needs to take place in the next few months. We can help. Call me at 281-838-5875.
Many schools use the CSS Profile in addition to the FAFSA. CSS uses a different set of years for income and assets and has “special questions.” Not only is the college application process increasingly stressful, paying for college may be life’s largest financial expenditure.
Bright Futures Consulting can relieve the stress and help you qualify for more financial aid. We have many client families with six-figure incomes whose students end up qualifying for both merit and need-based financial aid.
Also, families may need help in filing appeals of award letters based on reduced income and asset situations since the base year tax return. We help with that too. Professional planning is even more essential, “the earlier the better.” We work with many families beginning when their child is in the 8th grade.
Raymond Van Buskirk, MBA
Bright Futures Consulting