I was wondering about this question. so was happy to see this article in the WSJ last week (subscription). Our post last September described two of the major changes to the FAFSA. First, families could now complete the FAFSA starting October 1st (previous deadline was January 1st). Secondly, the financial information provided on the FAFSA now will come from prior prior (not a typo) year’s tax return. Let me explain. Those families completing the FAFSA in October 2016 for the 2017-18 school year, data from their 2015 tax year would be used.

The most dramatic impact is that students should expect to receive offer letters from colleges SOONER with about 50% of colleges expecting to send their need-based offers sooner. Here’s the data:

How should students respond to this? From Mark Kantrowitz (an NGPF podcast guest):

“The last thing you want to do is accept one school’s offer and then have buyer’s remorse four days later when you get another aid offer that’s much more generous,” says Mark Kantrowitz, the publisher of Cappex.com, a college and scholarship search site. It appears that at least some students are already accepting the earlier offers. Mr. Farrell says more families are sending in their deposits earlier than in the past at a broad array of schools working with EAB. But he adds that even a relatively small difference in financial-aid packages, say $1,000, can balloon over time if a student opts for the less generous package and is forced to assume $1,000 in debt.

Given that the tax data used in FAFSA is going back a few years, what to do if the family’s financial situation has changed?

If a family’s financial situation has changed considerably in the time between the filing of its tax data and its applying for financial aid—including the loss of a job or a divorce—the family should alert the colleges, which may be willing to create a better aid package.

It doesn’t appear that colleges are moving up the regular admissions Decision Date from May 1st so these changes appear to have their intended effect of giving students and their families more time to ponder their options.

______

Check out the NGPF Lesson on FAFSA: The Gateway to Financial Aid

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

More posts by Tim