On Monday, September 14, President Obama announced some big changes to the 2017-2018 FAFSA. After the announcement, the Federal Student Aid office of the US Department of Education released some detailed information on the changes. We’ll walk through these with you.
First and foremost, let’s be clear on the date these changes go into effect: October 1, 2016. That means that these changes will not affect FAFSAs filed for the 2016-2017 school year. But hold on! Federal aid requires you to submit a FAFSA for every year that your student is in college. So even if your student is a senior applying for colleges right now, these changes will affect you next year.
Two principle changes have been announced:
- The 2017-2018 FAFSA will be released on October 1, 2016 instead of January 1, 2017.
- The 2017-2018 FAFSA will use 2015 tax information instead of 2016 tax information.
These changes are permanent, meaning that—so long as the Department of Education does not make any further changes—you can expect all future FAFSAs to release in October and to use the taxes from two years ago instead of the prior’s years taxes.
The reasons for these changes are twofold:
- Because the FAFSA will be available earlier in the year, financial aid decisions can come earlier.
- Because the FAFSA will use taxes from two years prior, you don’t need to estimate taxes or wait until after you’ve filed your tax returns.
If all goes well, you’ll know your student’s financial aid status sooner, allowing you and your student to make a better-informed and longer-meditated decision about which college to attend. You also will not need to be in any rush to file your taxes at the start of the year since the FAFSA now uses older tax records.
This does mean that your student’s financial aid package will be dependent on income earned two years ago. Make sure you are actively contributing to educational savings account—such as a 529 Plan, which is tax-free—so that you’re planning at least two years in advance.
To reiterate, these changes do not affect FAFSAs filed for the 2016-2017 school year. Your 2016-2017 FAFSA will still release in January, and it will use your 2015 tax information. However, the 2017-2018 FAFSA will be released in October and will also use your 2015 tax information. The 2018-2019 FAFSA will use your 2016 tax information, and so-on.