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Business and Policy Areas
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FAFSA Changes to Impact Students, Schools

September 18, 2015

On September 14, President Obama announced several changes to streamline the filing process for the Free Application for Federal Student Aid (FAFSA). Set to take effect in time for the 2017-18 academic year, the changes will make the process easier and earlier for families, the administration says, and are likely to impact many institutional timelines as well.

The FAFSA for 2017-18 will become available on October 1, 2016, rather than January 1, 2017. Families will be able to use income tax data from two years prior—now known as prior-prior year or PPY—which they will be able to automatically import using the IRS Data Retrieval Tool.

The changes will impact current timelines in several major ways. By offering the FAFSA three months earlier, families theoretically will receive financial aid information sooner and will have more time to evaluate true college costs and their avenues to pay. 

In addition, using PPY income tax information will ensure families have accurate information at the time they file the FAFSA and won't have to duplicate the process after tax season. An estimated 4 million students currently submit the FAFSA before their families file tax returns, according to ED.

ED has the authority to implement PPY under the current Higher Education Act (HEA), and Congress has signaled plans to include the policy change in reauthorization of the HEA as well. ED estimates the change to cost $400 million a year-since more eligible students likely will apply for aid. Sen. Lamar Alexander (R-TN), chair of the Senate Health, Education, Labor and Pensions committee, recently said a "bipartisan group of senators ... intend to include [PPY] in the reauthorization of the Higher Education Act this year, including a way to pay for it," according to Inside Higher Ed.

The policy change has been supported by many higher education associations and largely championed by the National Association of Student Financial Aid Administrators (NASFAA), which has produced several studies on the impacts and implications of PPY over the past several years. NASFAA research shows many low-income students do not see a discernible difference in their Pell Grant awards when PPY data is used instead of information from one year prior, and the group argued benefits of the change outweigh potential side effects.

For higher education institutions, the timeline shift is likely to impact many internal processes, including when tuition is set and when financial aid decisions are made. NACUBO is tracking discussions and analysis and will offer guidance as more information becomes available.

Contact

Anne Gross
Vice President, Regulatory Affairs
202.861.2544
E-mail