One upcoming modification will give college applicants earlier access to
the FAFSA and potentially decrease the need for corrections and
verification.
Some important changes are coming to the Free Application for Federal Student Aid next year, but Joseph Orsolini, a college financial aid adviser in the Chicago area, hasn't fielded many questions from parents.
"It's still so new and fresh that people don't realize these changes are going forward," says Orsolini, who runs College Aid Planners, advising 250 to 300 families each year and conducting financial aid nights at local schools and libraries.
The changes, which will be implemented over the course of 2016, will significantly affect the process of filing for federal financial aid and, for some families, the amount of aid they'll receive. As Megan McClean, the National Association of Student Financial Aid Administrators' managing director of policy and federal relations, puts it: "There are some biggies this year."
For families of current and prospective college students, here are the changes to be aware of – and how to manage them.
[Test your knowledge of the FAFSA filing process.]
1. Older tax data will be accepted. The current FAFSA filing system requires students and parents to complete the federal form as soon as possible after Jan. 1 – typically before they've filed the previous year's taxes, which aren't due until April. Families often have to estimate their income and other data and then update their information later.
A new policy, announced by President Barack Obama in September, aims to rework that fraught process.
The fresh timeline will take effect beginning with those who apply for financial aid for the 2017-2018 school year. Applicants and their families will be able to start the FAFSA in October 2016, using the same data they reported on their 2015 tax returns. The use of older data means families can start the process earlier and most won't have to rely on estimates.
The aim is to reduce inaccuracies and the need for verification, give institutions more time to review documents and potentially allow them to mail award letters earlier in the application cycle. "I think it's a really positive change for students and families and the application process in general," says McClean.
When the new process debuts, students may endure some rough patches as universities work out the details. "I'm afraid it may be a bit bumpy," says Eileen O'Leary, assistant vice president of student financial assistance at Massachusetts' Stonehill College, who, despite that concern, is an advocate for the change.
[Know how to avoid these common FAFSA mistakes.]
2. Asset protection will plunge. When parents report their financial information on the FAFSA, a portion of their assets – certain savings and investment funds – are not counted by the federal government toward the amount of money they are expected to contribute to their child's education. That can mean a higher federal financial aid award than their student would otherwise qualify for. However, that protected portion will plummet next year, continuing a downward trend.
The sheltered asset amount varies, depending on the age and marital status of the student's parents, among other factors. For the married parents of a dependent student, where the eldest parent is 48, that asset protection amount is $30,300 in 2015-2016, says Mark Kantrowitz, senior vice president and publisher at Edvisors, a higher education resource site. The next academic year will see their allowance nearly halved, to $18,700.
That change could hit families in the pocketbook. Kantrowitz estimates that every $10,000 decrease in asset protection cuts a student's financial aid eligibility by up to $564. "It's on the order, for most families, of a few hundred dollars from one year to the next," he says.
Some important changes are coming to the Free Application for Federal Student Aid next year, but Joseph Orsolini, a college financial aid adviser in the Chicago area, hasn't fielded many questions from parents.
"It's still so new and fresh that people don't realize these changes are going forward," says Orsolini, who runs College Aid Planners, advising 250 to 300 families each year and conducting financial aid nights at local schools and libraries.
The changes, which will be implemented over the course of 2016, will significantly affect the process of filing for federal financial aid and, for some families, the amount of aid they'll receive. As Megan McClean, the National Association of Student Financial Aid Administrators' managing director of policy and federal relations, puts it: "There are some biggies this year."
For families of current and prospective college students, here are the changes to be aware of – and how to manage them.
[Test your knowledge of the FAFSA filing process.]
1. Older tax data will be accepted. The current FAFSA filing system requires students and parents to complete the federal form as soon as possible after Jan. 1 – typically before they've filed the previous year's taxes, which aren't due until April. Families often have to estimate their income and other data and then update their information later.
A new policy, announced by President Barack Obama in September, aims to rework that fraught process.
The fresh timeline will take effect beginning with those who apply for financial aid for the 2017-2018 school year. Applicants and their families will be able to start the FAFSA in October 2016, using the same data they reported on their 2015 tax returns. The use of older data means families can start the process earlier and most won't have to rely on estimates.
The aim is to reduce inaccuracies and the need for verification, give institutions more time to review documents and potentially allow them to mail award letters earlier in the application cycle. "I think it's a really positive change for students and families and the application process in general," says McClean.
When the new process debuts, students may endure some rough patches as universities work out the details. "I'm afraid it may be a bit bumpy," says Eileen O'Leary, assistant vice president of student financial assistance at Massachusetts' Stonehill College, who, despite that concern, is an advocate for the change.
[Know how to avoid these common FAFSA mistakes.]
2. Asset protection will plunge. When parents report their financial information on the FAFSA, a portion of their assets – certain savings and investment funds – are not counted by the federal government toward the amount of money they are expected to contribute to their child's education. That can mean a higher federal financial aid award than their student would otherwise qualify for. However, that protected portion will plummet next year, continuing a downward trend.
The sheltered asset amount varies, depending on the age and marital status of the student's parents, among other factors. For the married parents of a dependent student, where the eldest parent is 48, that asset protection amount is $30,300 in 2015-2016, says Mark Kantrowitz, senior vice president and publisher at Edvisors, a higher education resource site. The next academic year will see their allowance nearly halved, to $18,700.
That change could hit families in the pocketbook. Kantrowitz estimates that every $10,000 decrease in asset protection cuts a student's financial aid eligibility by up to $564. "It's on the order, for most families, of a few hundred dollars from one year to the next," he says.
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