If you haven't heard the news, an executive order by President Obama this past fall has changed the timeline for college financial aid. This is the final year that families will file the federal form, the FAFSA, using last year's tax information. Both the FAFSA and the CSS Profile will open Oct. 1, 2016 and families will use their 2015 tax information.
This is important news for several reasons:
- Families will use 2015 tax information two years in a row. This may impact families who were planning to move some money around before filing for financial aid.
- Going forward, families will use prior-prior year tax records. This shifts the entire financial aid process, meaning family finances will matter starting in sophomore year of high school. It will be important for families to begin planning earlier.
- Finances won't matter after sophomore year of college (unless there are younger siblings).
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- Even though two year old tax records will be used, current assets will still need to be reported.
- The IRS Retrieval Tool will actually become a player in completing the FAFSA now that we will be reporting prior-prior year.
So, the good news is that this is making it easier to complete financial aid forms. The bad news is that this is rather sudden and will likely catch many families who thought they had "plenty of time" unaware. It will take some time to adjust to this new timeline.