Beginning for the 2017-2018 school year, the FAFSA will use prior-prior year tax information. This means that the FAFSA will be available earlier in the year (ex. October 2016) and families will be able to use their already filed 2015 tax information. This will help colleges to be able to get financial information out to students earlier so they can make more informed decisions on where to attend, and the FAFSA will be much easier to submit (as many families will not have to go back in to submit corrections using the Data Retrieval Tool since their taxes will already have been filed).
So does that mean the 2015 taxes will be used two years in a row for FAFSA?
If so…it would be ever so nice not to have to reapply at all that 2017-2018 year…since they will have the 2015 taxes and info from the previous filing!
This is great for processing purposes, for colleges and for students. I am wondering if institutional aid will follow suit.
Why does this cost the govt more? Because you presume wages go up each year? So some borderline low income people may not be squeezed out of Pell grants?
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For example, a student applying for aid for the 2017-2018 academic year currently must use their 2016 tax return. The new system will let them use their 2015 return.
Language says “will allow” you to use 2015 taxes as early as October 2016 - but is it required to use the 2015 tax return or “allowed” (i.e. choice of 2015 or 2016)?
I can’t figure out if colleges will follow suit, though. Will they switch to using the previous year, or still make us all scramble to file ASAP to get the returns to them after year end? As far as I can tell, they do not seem obligated to do so. If they do make this change, they will have a fair amount of procedure change and communications update (websites, FA rules documentation, etc).
If they don’t make the change, I don’t see that it buys anyone much of anything.
Yes it will be interesting to see what the colleges decide to do and whether the CSS Profile will change as well. I think the FAFSA change will make it a lot easier for many families.
I think it really won’t make it much easier. The families who had problems filing early were those with exotic returns (assets, home business, farms) and they won’t qualify for Pell, so just getting the Direct Loan in place. For CSS Profile it will help only if they also use prior year’s info.
Many lower income students have a hard time getting their parents to do their taxes in order for them to file FAFSA. With the previous year’s numbers being the norm, it will help them. Some low income families pay for someone else to prepare their taxes. Sometimes the hold up is financial. No low income business or farm owners? This Pell eligible family will be glad for the change. Agree with you on the CSS.
I’m not sure if anyone has posted this yet. I think it will be a big improvement.
"Beginning on October 1, 2016, students can apply for financial aid a few months after they and their parents file their 2015 tax returns with reliable information retrieved electronically from the IRS, rather than waiting until the next year’s tax season to finalize their FAFSAs and to learn about their financial aid. Giving students and families the ability to submit their FAFSAs earlier and to use earlier income data, commonly referred to as “prior-prior” year, will have several important benefits:
Earlier information: Students and families will get a reliable understanding of their aid eligibility as early as the fall – the same time many high school students are searching for, applying to, and even selecting colleges.
Simpler applications: More students and families will be able to complete their FAFSAs using information retrieved electronically directly from the IRS a few months after they and their parents file their 2015 tax returns, reducing the number of applicants who need to estimate income or taxes paid, only to correct their application later.
More students receiving Pell Grants and other aid: Over the next several years, the simpler FAFSA filing process could encourage hundreds of thousands of additional students to apply for and claim the aid they are eligible for – and enroll in college.
Reduced burden on colleges: In recent years, colleges and universities have spent as many as 3 million total hours each year verifying FAFSA information, including income and other tax return data. These colleges and universities will be able to avoid much of the burden of verifying tax return information when students apply using data retrieved directly from the IRS."
“Aspiring college students will be able to apply for federal financial aid three months earlier than now and submit a previous year’s tax return, changes aimed at helping more people pay for school, the White House said Sunday.” …
The point to using prior prior year income is to be able to file for federal aid in a timely manner. Students will know their Pell (assuming the feds can actually determine a final Pell schedule that early) and loan amounts earlier.
There is no guarantee that colleges can or will let students know their actual award packages earlier. Schools don’t know final FWS or FSEOG funding that early, so they will be hard-pressed to make those awards early. State grants may not be set that early. Institutional grants may not be set that early. Schools are still processing fall aid when the FAFSA filing date opens - they won’t be ready to tackle the next year’s issues that early. Lots of PJ requests (income adjustments, change in marital status, etc) can be expected. Because the DRT will be required for all FAFSA filers, there’s that mess (think newly married, divorced, filing separately, amended returns, address issues!, etc). Software will have to be updated really, really quickly. Aid offices will have to deal with a very daunting change in a very short amount of time.
I don’t see how else you could do it, thumper. However, I could easily see them requiring that you go through the entire FAFSA process rather than having a one-time “EASY” button.
I do wonder how many public institutions will move to using Profile or something similar. Several large Colorado public universities already do so for some very low income students, particularly those whose parents are divorced.
