For many families, one of the most stressful aspects of the college application process is filling out financial aid forms. Recent changes to both the Free Application for Federal Student Aid (FAFSA) and CSS Profile should make the process somewhat easier starting October 2016, but if your student is a current high school senior, college freshman or college sophomore, there are some things to consider before the end of 2015.
Currently, the CSS Profile becomes available on October 1 and the FAFSA goes live on January 1. Parents must complete these online forms using prior year financial data. (So, for students beginning college in the 2016-2017 academic year, this would be 2015 data.) This has meant that parents of college applicants have had to estimate tax income information in order to meet the financial aid application deadlines.
This autumn, changes were announced for both the FAFSA and CSS Profile. Beginning in 2016 for aid applications for the 2017-2018 award year, families will use the prior prior year (PPY) income and tax return information, and both forms will be available on October 1, 2016. This means that parents of students who will be in college in the fall of 2017, for example, will use their 2015 federal tax return to complete the FAFSA and CSS Profile.
This will make the financial aid application process easier for the following reasons:
- PPY will allow students to file their FAFSA and CSS Profile much earlier and align more closely with traditional application process deadlines.
- PPY will allow most American families to use the IRS Data Retrieval Tool within the FAFSA, thereby eliminating the need for parents to estimate income and tax information and decreasing the need for additional documentation. Information from the parents’ PPY tax return (already submitted to the IRS) would be downloaded and automatically populate the FAFSA.
- PPY may enable families to receive notification of financial aid packages earlier, which will provide more time for students and families to assess and compare packages and determine how they will pay their Expected Family Contribution (EFC).
So why is this change important now, when it doesn’t take effect until October 2016?
Because of the timing of the change, parents with current high school seniors, college freshmen, and college sophomores will complete the FAFSA and CSS Profile using 2015 financial data TWO YEARS IN A ROW. This means now is the time to look at your 2015 data carefully and see what steps you can take to lower your expected family contribution by reducing parental income and/or assets or deferring decisions that would inflate your income and/or assets. Consider the timing of a bonus, distributions from your retirement plans, realization of capital gains from selling assets, and purchase of large item for which you have been accumulating funds.
Here are some articles to read for further information: