The cost of higher education in this country is notoriously high and student loans are a hot topic for parents, students and pretty much everyone else. Federal financial aid has helped many of those that otherwise couldn’t afford it, go to college. Now it should become even more accessible. The upcoming school year will see changes to the FAFSA, or Free Application for Federal Student Aid. Check out the details of this change and how it could impact you.
The new FAFSA becomes available in October of the year before you intend to enroll in school, meaning you can work on this application simultaneously with your college applications. This can give students and parents a clearer idea of college costs and which schools they can actually afford. The new form also lets parents use IRS records from the prior year to report their income. This method is referred to as “prior-prior” because aid eligibility will now be based off of income from two years prior instead of one year (as the rule has been until now). This eliminates the college’s need to verify income and the parents’ need to update the FAFSA every year after filing their tax returns. This will likely save significant time (and money!) from the old FAFSA system for all parties.
Pros & Cons
This transition period could be a huge benefit to many families as they can use the salary and tax information for 2015 for two years in a row. The new rules also mean that award letters will be sent out around the same time of acceptance letters, meaning you no longer need to wait until March of the following year to know what schools you can afford — so long as colleges adjust their FAFSA submission deadlines. Another advantage is that families will no longer have to estimate the numbers on their FAFSA as the IRS Retrieval Tool will complete a large part of the form for them. On the other hand, families will have to start the college planning process much earlier than before, which is not great for those with a tendency to procrastinate.
These changes go into effect in October 2016, but President Barack Obama has called on Congress to implement even further simplifications to the FAFSA. If you are a college-bound student or the parent of one, it’s important to keep these changes in mind. Filling out your FAFSA correctly can be one the first step to qualifying for more financial aid. Even though states and colleges have different deadlines, it’s a good idea to fill out the new FAFSA as soon as you can in October of the year before you are requesting aid. Be sure you are honest, remember your PIN number, and try to be patient. Then stay up to date on the changes so you can qualify for the aid you need. If you aren’t able to qualify for as much aid as you need in order to attend the school of your dreams, you can always take out private student loans, which will likely require a co-signer (your parents, often) if you have no credit history. You can see where your credit scores stand for free on Credit.com before you apply.
More on Student Loans:
- How Student Loans Can Impact Your Credit
- Can You Get Your Student Loans Forgiven?
- Strategies for Paying Off Student Loan Debt