The New FAFSA

In September of 2015, President Obama announced some significant changes to the FAFSA that will go into effect in the fall of 2016. If you’re new to the college admissions process, FAFSA is the Free Application for Federal Student Aid through which all financial aid is funneled. The change here relates to the timing of when the FAFSA needs to be filed.

In the past, the FAFSA was filed using a family’s financial information from the calendar year prior to a student’s high school graduation. So a student who graduated in 2016 would have used their family’s 2015 tax return to complete the FAFSA. This created a time crunch for many people. Colleges liked to see the FAFSA filed as early as possible, sometimes as early February, in order to process the information and turn it around into the financial aid packages they awarded their students. This meant that between January 1st when the prior year had ended and those early priority financial aid deadlines, families had just a few short weeks to collect all the required information required to complete their tax return and get it done.

The new FAFSA rules allow a family to use what they are calling the “prior prior” year’s financial information. Besides this confusing moniker, this is great news for families with high school seniors. It means that a 2017 graduate will be able to use their 2015 tax return to complete the FAFSA. No more sweating out it in January waiting to get all those little forms in the mail and from work so you can rush through your tax return in order to get the FAFSA filed.

The FAFSA now opens October 1st and you can use the information you should have finished up by last April.

I am still seeing a short window by the colleges to get the FAFSA filed. I’ve heard several colleges communicate that they would like the FAFSA filed by October 31, leaving just a month to get it all done. If there is a downside to this new rule, it’s that FAFSA now coincides with students working to complete their college admissions applications. I used to tell families that we would spend the fall of senior year filling out applications and getting students into college and we’d spend the spring working on the FAFSA and figuring out how to pay for college. I need to adjust my tune going forward.

There’s no doubt that the pros outweigh cons with this new rule though. An earlier FAFSA filing will translate into the colleges sending out financial aid packages to their accepted students earlier. That financial aid package can be a very important tool for a student to use as they select which college to attend. This will allow more time for them to deliberate over that decision. Of course, if a family’s finances have changed significantly between the prior prior year and the beginning of college due to circumstances like the loss of a job, a family can always pick up the phone and contact a school’s financial aid office to explain those special cases.