Early FAFSA Application Changes Could Help Neediest Students
Posted By Amy Rebecca on July 29, 2016 at 8:56 am
New changes to the Free Application for Federal Student Aid will allow students and their parents to get a head start on filing this crucial financial document. The current system requires that students and their parents submit their FAFSA as early as possible after the first of January, usually before they have had a chance to file their taxes for the previous year.
The problem, according to David White of College Confidential, is that this forces many families to estimate their tax data, resulting in inaccurate information that later has to be corrected. Starting with the 2017-2018 FAFSA, students will have the option to file this document much sooner. Students can now file the 2017-2018 FAFSA as early as October 2016 by using their 2015 tax data. Students should be aware of the new changes to FAFSA and how it will affect both themselves and their families financially.
Benefits of an early FAFSA application
One of the primary benefits of allowing students to apply for the FAFSA early is that those with the most need may have a greater chance of receiving aid. Many states offer student aid on a first-come, first-served basis, which means that many students who wait to file until they get tax data from the previous year wind up at the bottom of the list. Low-income students in particular tend to apply for aid later than wealthier students, according to Mark Kantrowitz, publisher and vice president of Strategy at Cappex.com, a college decision resource,
The late applications are due to a combination of factors, including understandable confusion on how to properly complete the document and the arduous process of having to prove that they and their families are truly in need of aid. Giving students the opportunity to file their FAFSA in October using the previous-previous year’s taxes will allow them to make use of the IRS data retrieval tool to pre-fill their application, making the form much simpler to complete.
Kantrowitz also asserts unmodified data that is transferred using this tool will not be subject to verification, which creates delays in the filing process. Those delays might once have caused students not to receive the aid they required.
More benefits of an early FAFSA application
In addition to providing students and their families with a more time-conscious and streamlined application process, this new system will also help protect the privacy of students who are applying to multiple schools. Students have the option of sending their FAFSA information to up to 10 schools.
While casting a wide net is a smart choice, sharing financial information with multiple institutions can create a privacy issue—each institution could see all the other schools for which the student is applying, according to an article in U.S. News & World Report. This created unnecessary competition between schools because they could infer information, such as how much the student was willing to spend on an education and whether a school was a primary contender or simply a backup school. Under the new system, these schools will no longer be able to see what other institutions are on the mailing list.
This information can no longer be used against students, but the report does warn that this information will still be visible to state agencies, so students may have a better chance of receiving state aid if they list a state school on their application first.
Ramifications of the early FAFSA application
The changes to the FAFSA timeline may give low-income students and their families more time to make an educated decision about the financial requirements of college. However, there are drawbacks to the new system that may have an impact on prospective students.
One of the biggest concerns is that FAFSA season will not overlap with application season. Joseph Orsolini of College Aid Planners Inc. believes that this overlap may cause schools to accept students based on their ability to pay for college. Orsolini fears that could make it even more difficult for low-income students to receive a college education.
Middle- and high-income families may also see unexpected ramifications because of these new changes. The new changes to the FAFSA filing process will cause a decline in asset protection that may affect the amount of financial aid that middle and high income families receive. According to edvisors.com, “The asset protection allowance has been decreasing at a fast rate since it peaked in 2009-2010, and may disappear entirely by 2018-2019.”
Under the old system, certain assets were withheld from the amount of money parents were expected to contribute to the student’s education. However, such assets will not be protected under the new system, which may cause middle-income students to lose thousands of dollars of financial aid.
Be First on the List
Awareness of the new FAFSA changes can make the filing process much less stressful for fledgling college students. Although many schools have different deadlines for grants and scholarships, early submission can mean that students end up first on the list for state aid. While there are certainly drawbacks to the new system, financial aid experts say students and their families can now get a head start on planning for their financial future.