3 Changes to the FAFSA for College Students to Understand
Students will see adjustments to when they can file the federal financial aid form and how their families’ assets are counted.
1. Older tax data will be accepted
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.
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.
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.
But even those filers affected by the change shouldn’t direct too much angst toward this adjustment, say experts.
3. Schools will lose a data point.
When students file the FAFSA, they can choose up to 10 colleges to get their financial details. In the past, when students sent their FAFSAs to multiple institutions, those schools could see the other colleges on the mailing list. Starting with the 2016-2017 application, universities will lose that insight.
That’s likely good news for students. Some experts worried that universities used the list to make financial aid decisions. For example, a school may have interpreted a student’s decision to list that institution first on the FAFSA as an indication the student would be more likely to attend and less likely to care about the financial aid package. School officials could have then used this as justification in awarding that smitten student fewer institutional dollars.
*Article source US News and World Report
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