Higher-education industry insiders have been speculating about what the new Free Application for Federal Student Aid rules will mean for families and also the colleges themselves. What seems clear is that families should be the big winners.
A Look at the Changes
Here is a rundown on what you need to know:
Parents can now file for financial aid three months earlier than in the past. Traditionally, families couldn’t access the FAFSA until January 1 each year, but the federal government has now begun releasing the FAFSA on Oct. 1.
The earlier release date wouldn’t be all that remarkable except for the other major development. For the first time ever, FAFSA filers will be completing their applications using two-year-old tax returns. This change is being referred to as prior-prior year or PPY.
Using two-year-old tax returns means that for students heading to college for the 2017-2018 school year and for returning college students, parents will use 2015 tax returns. Under the old system, parents would have used 2016 (one-year-old) returns.
The CSS/Financial Aid PROFILE, the second most popular financial aid application, has followed lockstep with the FAFSA and will also require the use of two-year-old tax returns and offer the earlier application start date of Oct. 1.
The earlier availability of the FAFSA and PROFILE, along with the use of two-year-old tax returns, is designed to make filing for financial aid easier, less stressful and reduce errors.
And here’s why: The financial aid cycle and the IRS tax-year cycle have always been too much in sync. Right after the Christmas holidays, parents were traditionally faced with having to deal with their taxes for the previous calendar year and applying for financial aid. Making this double burden more difficult was that the deadlines for some state financial aid programs and colleges were early in the year, which forced parents to rush to do their taxes.
When parents couldn’t get their taxes done promptly, they were always free to estimate the taxes to complete the aid forms, but that was problematic. If the estimated tax returns were wrong, a school’s financial aid package would be based on faulty figures. In some cases, a school could withdraw an aid offer or lower it weeks or months later.
The FAFSA and PROFILE changes will also help families by giving them more advance notice in the college admission process. With parents now able to file for financial aid nearly a year before their children head off to college, it’s expected that schools will provide admission and financial aid verdicts sooner. An industry survey earlier this year suggested that 90 percent of families would like their award letters earlier.
With speedier notification, families will have much longer to decide which college to pick and fully understand the cost and financial ramifications of the choice. Under the old system, families sometimes didn’t receive their aid packages until a few weeks before they had to make a final decision.
An industry survey of nearly 550 college professionals released in the spring revealed that 69 percent of schools said they would be releasing financial aid verdicts earlier beginning with the current admission cycle or next year’s.
The same survey revealed that 80 percent of administrators believed that schools that did not shift their admission cycles earlier would be at a competitive disadvantage. Nearly a third of schools said they were exploring adding the additional application choices of early decision and/or early action.
With the admission cycle pushed up, schools anticipate reaching out to students sooner. At the start of every school year, admission representatives have fanned out across the country to make a final push to reach high school seniors. Now, it’s anticipated that schools will be making much more of an effort to reach out to juniors in the spring.
With the new admissions calendar, students and their families will need to start thinking about their college choices earlier. This means that they shouldn’t wait until the fall of senior year to generate a college list.
In this time of transition, it’s critical that families apply for financial aid as close to Oct. 1 as possible. Some schools offer aid on a first-come, first-served basis and the funds may be depleted at some schools if families wait until next year.
It’s also important for families to check what the admission and financial aid deadlines are for schools. In a letter sent to thousands of college presidents in August, the U.S. Department of Education urged colleges not to alter their admission and financial aid deadlines this year due to the FAFSA changes. It also asked the schools to make a push to notify families about the aid changes.