FAFSA Updates

By Coach James   The FAFSA is going through some major changes this year, and our coaches at CAA wanted to make sure our clients have the most up-to-date details.   What is the FAFSA?   FAFSA stands for the Free Application for Federal Student Aid. This is the main application for federal aid for college students. Federal Aid is all need-based, so the FAFSA asks about students’ and their family’s finances in order to determine what aid the student may qualify for, including federal grants, student loans, and work-study opportunities.   What’s changed?   In previous years, the FAFSA did not become available until January 1st for the same aid year. So for students entering college in 2016, the FAFSA became available January 1st, 2016. Starting this year, the FAFSA will now be available three months earlier, on October 1st. This gives a student more time to fill out the form!   Another big change is the information that will be needed on the form. In previous years, the FAFSA asked for tax information from the prior tax year. So students entering college in 2016 were asked for their family’s tax information from 2015. This resulted in families having to make updates to the FAFSA, since most families did not have their taxes filed at the beginning of January. This is no longer the case.   Starting this year, the FAFSA will ask for tax information from 2 years ago, so a student entering college in 2017 will be asked for 2015 tax information. This makes the process much smoother, as most families will already have their taxes filed (if they file taxes), and you can even import your tax information directly from the IRS!   What do I need to do?   If you are a senior or a parent of a senior this year, you’re probably wondering what this means for you. First, it means you should keep your 2015 tax records on hand when filing the FAFSA. Next, we recommend you file the FAFSA within the month of October so you can be first in line for federal aid at your prospective schools. Keep in mind that just because the FAFSA is opening earlier, that doesn’t necessarily mean colleges will be sending you their aid packages any sooner. Some colleges have already indicated that students should still expect aid packages around mid-March to mid-April.   One of the drawbacks of evaluating your need-based on a year further removed is that there is a higher risk that your taxes will not accurately reflect your family’s current financial situation. If you know your family’s finances have drastically changed since filing 2015 taxes, we recommend relaying this information to your prospective colleges after being admitted, even if you have yet to receive your aid packages. You want to give your colleges the maximum opportunity to offer you an appropriate aid package.   For families of juniors and lower-classmen, you will now want to consider your finances a year further removed from their senior year. Financial decisions you make during your student’s sophomore year now may influence financial aid packages when they start college. Our clients should check out the article titled “Understanding and Calculating Your EFC” in the LaunchPad Library for more information on how to limit increases to your Expected Family Contribution. And of course, our CAA clients are always welcome to contact our coaching team if they have questions.