FAFSA Changes Coming Next October

Chris McKern By | On October 29, 2015

An executive order signed in September by President Obama changed the rules for the Free Application for Federal Student Aid (FAFSA) beginning with the 2017-2018 school year. Families will have access to the forms earlier in the school year and will need to look back an additional year for income figures to report on the forms.

First, the forms currently are available to complete as of January 1 for the upcoming school year. For example, beginning January 1, 2016, families will be able to complete the FAFSA for the school year beginning in August 2016 through 2017. With the change in the 2017-18 school year, the forms will be available on October 1, 2016, so to give students and families additional time to complete the forms to be eligible for financial aid. It will also give colleges and universities additional time to help avoid the huge rush in the spring, as students finalize their college finances.

In order to effectively do this, the income reporting period also changes. Currently, families report their income from their prior year tax statements for the FAFSA. For example, students applying for aid for the upcoming 2016-17 school year will report income from their families 2015 tax returns, or from the “prior” year. For qualification for aid beginning in the 2017-18 school year, you will need to report “prior-prior” year income, or two years previous income amounts. So, for the 2017-18 FAFSA, you will use income reported on your 2015 income taxes. This change will allow more families to begin to complete the FAFSA immediately after receiving the forms on October 1, rather than having to rush to get their income taxes done to complete the forms.

It might also change how some people do their income planning in anticipation of applying for college aid. Parents of sophomores in high school will need to pay attention as their income for that current year will be the figure used on the FAFSA in the student’s first year of application. They may choose not to prepay mortgage or taxes in December or look to receive bonuses by December 31 rather than the following year. Grandparents will also want to be aware of the changes, as it will enable them to help with college expenses sooner in the student’s college career without increasing the student’s income for reporting on the FAFSA.

If you are interested in additional information, please go to the “FAFSA Changes Fact Sheet” posted by the U.S. Department of Education, September 2015.

 

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