While the new school year just started, there are important changes to the FAFSA process that both current and aspiring college students and their parents should know.
Important FAFSA Changes
We’ll break down the details surrounding the FAFSA changes below, but here’s a summary of what you need to know:
1. Students can complete the FAFSA for the 2017-2018 school year starting on October 1, 2016.
2. Students will report income from 2015 for the 2017-2018 FAFSA.
Students Can Submit the FAFSA Earlier
Students can now complete and submit the FAFSA three months earlier than in previous years. Instead of the traditional January 1st open date, applications for the 2017-2018 school year will be accepted as early as October 1, 2016.
This is important to know because the earlier you file, the better opportunity you have to receive the maximum aid. No fewer than ten states award student grants on a first-come, first-served basis. Students who file the FAFSA in the first three months of it becoming available have historically received more than twice the grant aid of those who file later. (See more tips to maximize your eligibility)
In some cases, you may even receive your financial aid offer from a college earlier if you’re in the front of the line, but it’s not a guarantee. It’s all based on how individual schools go about their business.
Be sure to stay on top of federal and state deadlines for student aid, and check with the colleges you’re applying to regarding their student aid deadlines.
Just remember, when the FAFSA opens on October 1st, don’t wait to submit it.
Reporting Income Information from an Earlier Tax Year
In the past, the FAFSA required students (and parents if necessary) to report income information from the previous year’s taxes. Due to the FAFSA opening on January 1st, completed tax information was not available yet for those filing early. As a result, this info needed to first be estimated and then corrected later.
With the latest updates, families are required to use completed tax information from the “prior, prior year.” In other words, if you’re applying for financial aid for the 2017-2018 college school year, you will report income information from the 2015 tax year (1/1/15 – 12/31/15).
Below is a table that breaks down what tax information to report on the FAFSA for the next two years and how that compares to the last two years. Take note, due to the changes, income information from 2015 taxes will be used twice.
One advantage of using an earlier tax year is convenience – something rarely associated with taxes and financial information. Instead of estimating information only to correct it later like in previous years, you can use the IRS Data Retrieval Tool and import completed tax information directly to the FAFSA. Because you’re importing tax information that’s already been filed, you should save yourself a ton of time.
Now that you’re aware of this year’s changes to the FAFSA, check out the 10 Common FAFSA Errors to Avoid and our Simple Guide to Completing the FAFSA – they’re both packed with great tips to get you through the process unscathed.
For more information on the FAFSA, check out “What’s the FAFSA and why is it important?”
When taking out a student loan...Continue Reading