FAFSA Changes: What You Need To Know

There Are Major Changes for Students Entering College in 2017

FAFSA Website
FAFSA Website. Image from FAFSA.gov

The Free Application for Federal Student Aid (FAFSA), one of the most important ways of figuring out how much college will cost, is about to change. The new “prior prior year” policy will change how and when students apply for financial aid, and what information they will use. Here’s what you need to know to about the new policy and how to submit the FAFSA beginning with students who will enter college in the 2017-18 school year...

How the FAFSA Worked Before

Anyone who has filed the FAFSA in the past has dealt with the weird January opening date. Students starting school in the fall would complete the FAFSA starting January 1st, and they would be asked for income information for the previous year. The problem with this date was that a lot of people wouldn’t have access to their prior year tax information in January, so they would have to estimate and then correct the data later.

This made calculating an accurate expected family contribution (EFC) and subsequent financial aid award difficult. It also meant that students and their families couldn’t see the real final EFC, financial aid award and net price until after everything else had already been figured out, including any changes made to the FAFSA after getting tax info corrected. For example, students who completed the 2016-17 FAFSA were asked about 2015 income data.  If they applied early, they used estimated income data that was subject to change.  If they waited to complete the FAFSA until after their taxes were complete, they may have missed school deadlines.     

What Is Changing with the FAFSA

Starting with students entering college in the fall of 2017, the FAFSA will collect “prior prior year” income data instead of “prior year.”

So the current 2018-19 FAFSA will ask about income from the 2016 tax year, which should already have been submitted to the IRS.  There should be no need for students or parents to correct or update any income information.  This also means that students will be able to submit the FAFSA earlier than before. So students applying for financial aid for the 2018-19 year will be able to use their 2016 financial information, and apply as early as October of 2017. With this, financial aid decisions should be much faster and easier to make. So what does this mean for you?

Pros of the New FAFSA Policies

  • Most people should have their tax information for the “prior prior year” finalized before completing the FAFSA, so there won’t be a need to estimate anything. Families and schools can get an accurate EFC from the initial FAFSA filing, so financial aid awards can be made sooner and with less hassle.
  • With accurate financial aid award letters earlier, it will be easier to determine how much colleges will cost, so students can be more informed while looking at schools.

Cons of the New FAFSA Policies

  • Students will be able to more accurately tell which colleges they can afford, so they may apply to fewer schools depending on which ones are in their price range. That means some colleges may face smaller applicant pools than they’re used to.
  • Students and families unaware of these policy changes may wait to apply, sending in their applications in January when everyone else has already submitted in October.
  • If a student’s family’s “prior prior year” income is significantly more than their “prior year” income, they will have the hassle of appealing to the school to look at their “prior year” income to base the student’s award on that.  Schools are expecting more of these kinds of appeals because of the change to “prior prior year”.   

In general, the new policies are largely positive for students, and most of the headaches and adjustments are going to be on the college side of the financial aid process.

So What Do You Need to Do?

If you or your family member is going to apply to colleges to enroll in the 2017-18 academic year or later, then the FAFSA changes affect you. But the new FAFSA should make things easier for applying students, and keep them more informed. All you really need to know about the prior prior policy is that you’ll use your tax and financial information for the “prior prior” year--that is, the year before the prior year. So when you apply for the 2018 school year, you can use your 2016 information. This will help make sure you won’t have to estimate, so all your FAFSA information will be more accurate.

You will also be able to apply for financial aid in October instead of January. This should help students to get their financial aid packages faster, so they’ll be able to determine how much college will actually cost and what kind of aid they can get. These changes should help you stay informed, get financial aid packages sooner, and altogether have an easier time with the FAFSA.

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