There are brand-new changes to how students can apply for federal financial aid - here's how they may affect you
There are two:
1. The FAFSA will be made available in October of the year before a student begins school, instead of January the year of enrollment.
2. The FAFSA will use tax information from the last year all taxes have been filed (called the "prior-prior" year), not the current year.
These changes will take effect on October 1, 2016.
As the process stands now, the form is made available for students and their families in January of the school year students intend to enroll. It uses tax information from the accordant year. For instance, students entering school in autumn 2016 may fill out the FAFSA using the family's 2015 tax return.
The problem with this system is twofold.
First of all, the deadline to file 2015 taxes is April 2016, so many families may not have their documentation completed by the time students plan to apply for aid. NPR reports that about four million students apply for aid each year before their family's returns are filed, meaning the information used in the FAFSA might not be complete. Applicants also have access to a new tool that allows the IRS to automatically input data from filed tax returns into the FAFSA, saving time and frustration. However, students applying before their family's returns are filed aren't able to use this tool.
Second, because students may be accepted to a school as early as December of the year before they attend (in the case of early decision and early action), they may be in a situation where they've been accepted to school before they know how much aid they've been granted - a tricky place to be during the already stressful process of college admission.
With the new changes, students will be able to apply for aid using complete tax information and get an idea of how much aid they can expect earlier, making them better able to appropriately evaluate college acceptances.
The administration estimates that because of the current timeline, about two million current students who would be eligible for a Pell Grant - a grant from the government which, unlike a loan, doesn't need to be repaid - never applied for aid.
Ben Kaplan, founder of scholarship search site Scholaroo, tells Business Insider that the changes mean families will be best-served by starting to get organized and preparing to apply for aid even earlier - by January 1 of a student's sophomore of high school. That's the year of a family's income that will now be measured and will serve as a student's "base year."
"It's the precedent-setting year for all four years of financial aid," Kaplan says. "Even though you apply each year for financial aid, usually the award amount doesn't vary much from what was determined in the base year."
"Because there's a larger gap in time here between filing your tax return and actually enrolling in college," he says, "it will be even more important to apply for professional judgement review, because a lot more can happen from a prior-prior year return than a prior year return."
He adds that students and their families should take action early, including applying for scholarships in 2015, before the changes take effect. "You don't have to understand the whole thing," he says, referring to the complicated world of financial aid and paying for college. "Just take some action right away. Start to seek out scholarships and use online calculators to estimate how much aid you might get - don't be overwhelmed by the entire process."
According to Whitehouse.gov, colleges, universities, and scholarship organizations have already agreed to amend their own timelines to the new dates.
This change comes on the heels of the Obama administration's announcement of the online "College Scorecard" that allows prospective students and their families to compare institutions side by side.