Significant changes to the Free Application for Federal Student Aid (FAFSA) are upon us, and the time to apply for financial aid for the 2016-17 school year is now.
On September 14, 2015, President Obama announced changes to the FAFSA that greatly impact the financial aid process. Starting this year, students will be able to:
- Submit a FAFSA Earlier: While there is no change to the 2016-17 schedule (FAFSA was made available January 1), students will be able to file a 2017–18 FAFSA as early as Oct. 1, 2016, rather having to wait until next January (2017) as previously mandated. The earlier submission date will be a permanent change, enabling students to complete and submit a FAFSA as early as October 1 every year.
- Use Earlier Income Information: Beginning with the 2017–18 FAFSA, students will report income information from an earlier tax year. For example, on the 2017–18 FAFSA, students (and parents, as appropriate) will report their 2015 income information, rather than their 2016 income information.
Filing the FAFSA is a headache, but it’s essential to receiving financial aid from all sources -- the federal government, your home state, and most colleges. It’s a free form that covers only one school year at a time, based on income, number of children in college, and other factors.
In addition to the changes mentioned above, here are 5 additional tips to help you through the process.
1. File early.
The forms are available now. Do not wait. Your taxes aren’t done yet and your kid hasn’t been accepted to college. We get it. Still file now. Awards at both the federal and state levels are made until funds are depleted, so being first in line is a huge advantage.
2. Don’t exaggerate.
One of the biggest mistakes people make when filing the FAFSA is listing money in retirement plans and the equity in their primary residence as assets, thereby inflating their wealth and reducing their children’s chances for financial aid. When it comes to FAFSA, these things don’t count. Taxable income, such as unemployment benefits and distributions from retirement plans, as well as equity in vacation or rental property, do count, and should be listed as assets.
3. Proceed with caution
Read the instructions carefully and do not guess on figures or leave anything blank. Small errors can lead to reduced aid or outright rejection of your form. Online help is available.
4. Consider family dynamics.
Divorced? You’ll have to determine which parent to list on FAFSA. The parent with whom the child has spent the most time in the past year should be the “FAFSA parent”. If time was split evenly, the parent for FAFSA would be the one who provided the most financial support.
In cases of legal adoption, the adoptive parents/grandparents complete the FAFSA. However, if the student only lives with guardians, even grandparents, but has not been legally adopted, the guardians are not considered parents when filing the FAFSA. Any financial assistance received by the guardians would have to be reported as untaxed income to the student on the FAFSA.
If your situation is complicated, you may want to consider professional advice. Again, big bucks are on the line.
5. Double your fun! Be prepared to file FAFSA twice this year.
Because of the deadline changes, parents and students face the prospect of filing two FAFSAs this year, one now for the 2016-17 school year, and one in October for the 2017-2018 school year. That’s a one-time thing that should happen only this year, so don’t be too dismayed.