Kids & Money

New rules allow for applying now for college financial aid

Attention, prospective college students: The U.S. Department of Education used to open the door for FAFSA aid filing on Jan. 1. But the release date was changed starting this year to Oct. 1, with major implications for families.
Attention, prospective college students: The U.S. Department of Education used to open the door for FAFSA aid filing on Jan. 1. But the release date was changed starting this year to Oct. 1, with major implications for families. The Associated Press

It’s one of the few freebies of a college education.

But the Free (yes, underlined and with a capital F) Application for Federal Student Aid ranks a bit higher on the priority scale than another T-shirt, koozie, or a soft drink and slice of pizza.

The FAFSA, as it’s called, is the main form that the federal government, states and most colleges use to determine loans, grants, scholarships and other aid for prospective and current college students.

The U.S. Department of Education used to open the door for FAFSA filing on Jan. 1, That’s when the application became available on the Education Department’s website at www.fafsa.ed.gov.

But the release date was changed starting this year to Oct. 1, with major implications for families. Not only does it mean students and parents now have an extra three months to complete the application, it also means colleges and universities should get the financial information they need to make student aid decisions earlier in the process.

One of the goals of the earlier filing date is to help students and parents compare offers from different schools and make more informed financial decisions.

The other major change this year with FAFSA allows parents and students to use an earlier tax return to report income and assets that factor into financial aid awards. Generally speaking, no more will you need to submit estimated data from tax returns not yet filed and then later have to adjust with actual numbers.

For the coming 2017-2018 school year, you will report your 2015 tax information, rather than 2016 information. Even if you filed for an extension on your 2015 return, you should have the final return in hand or see it shortly.

One thing hasn’t changed —the need to submit the FAFSA as early as possible since aid is often doled out on a first-come, first-serve basis. At least 10 states follow that format in awarding student grants. Moreover, several states’ deadlines have changed from awarding funds “as soon as possible after Jan. 1” to “as soon as possible after Oct. 1,” the Education Department said.

It also pays to file early because studies show that students who do so tend to get more than twice as much in scholarships and grants as students who file later, said financial aid expert Mark Kantrowitz of Cappex.com.

But keep in mind that despite the new filing starting date, many schools still will not make financial aid offers earlier. An early offer might only be an estimated offer — so read the award letters from schools carefully before making final decisions.

If your financial circumstances have changed since 2015, financial aid experts recommend submtting the FAFSA — then contact the financial aid office once your student is accepted at the school to report your new situation and ask for a review.

Aid experts also said that going forward, some families may want to tweak the way they manage investments and other income that has an impact on financial aid.

For example, if you are contemplating realizing any capital gains on stocks and bonds you’ll want to do so before January 1 of your student’s sophomore year of high school to avoid having the income count on the FAFSA, said Mark Kantrowitz, a college financial aid expert. That’s a year earlier than the old timeline.

Finally, remember that FAFSA means free. Don’t pay for a service that help you fill out the forms.

  Comments