College is an enormous investment. It's an investment in time and energy, and it's a huge emotional commitment. In addition, for families like mine, it's also the biggest financial investment they have ever made.
Complicating the process, most students and families historically did not know the actual cost of attendance until well after receiving acceptance letters. In addition, it was difficult to compare the real costs at different colleges, as the difference between grant and loan money was obscured in the offers. Fortunately, changes are afoot.
The first major change is that the Free Application for Federal Student Aid (FAFSA) may be filed on October 1 this year. Because many financial aid packages are dependent on information contained in government tax returns, the FAFSA has historically opened in January of the application season. By opening the FAFSA in the Fall, we all hope that financial aid packages will begin to arrive earlier (maybe even WITH the acceptance letters), and allow students and families to make well-informed decisions about this very big investment.
To allow the FAFSA to open earlier, in October this season, financial aid packages for the school year 2017-2018 will be based on tax returns from 2015. You have probably heard the term “PRIOR PRIOR” tossed around when it comes to financial aid, or perhaps seen it in an article. While packages used to be based on the prior year’s tax return, going forward they will be based on the return from 2 years prior to the start of the school year. The term “PRIOR PRIOR” is meant to explain the new system. What’s important to YOU right now, however, is that you will be able to complete your FAFSA this Fall, starting October 1, using your tax return from 2015. While the colleges are still adjusting to the new system, we hope this means that you will have more information earlier about the financial aid award package.
For families who will have 2 students in college next Fall, you will be filling out the FAFSA using the same information that you used for this year’s FAFSA. This may seem confusing this year, but it’s the transition year; going forward you will always use the prior prior tax year.
Another big step forward in the world of financial aid is the autofill. Gone are the days of pulling out endless tax returns and estimating next year’s income. With the prior prior year system, the IRS will autofill much of the information in your FAFSA. I am as excited as all of you to simplify this process.
If you want to start on your FAFSA, please be sure to use this government website and NOT any of the other sites which are trying to charge you for something that is free.
A wonderful article that I have read on the FAFSA, the prior prior, and college financial planning is from Forbes. While it is a bit dense, it's worth the time to understand the financial aid system. Troy Onink's Forbes article on this issue can be found here:
In addition, if you have special or complex financial circumstances and need advice on the financial side of college planning, I recommend that you contact a specialist in this area. While I am happy to help you with the basics, I am not a financial planner or an accountant and cannot offer legal advice on the complexities within this field.
Last, efforts are being made to clarify financial aid award offers. Colleges should clearly differentiate loans from grants, and educated families should do their own math to compare offers. College Admission Navigation is happy to help you compare offers next Spring and understand the true net price of your education. To learn more on this topic, read these tips on understanding your offer from the Wall Street Journal here:
Cheers to an exciting application season!