Obama’s New Federal Financial Aid Rules Allow Earlier Applications

edPresident Obama and Education Secretary Arne Duncan recently rolled out a new plan to make the FAFSA (the federal tax form needed to apply for federal student aid for college) quicker, easier, and more accessible to more students. Following is a brief outline, from the White House website, of some of the major changes:

Earlier, Easier Process for Federal Financial Aid: Beginning a year from now, 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.

Speaking about the change, Duncan said, “This shift in the time frame may not seem like a big deal, but it’s a huge deal,” he said. It will “open the door to a new world of opportunity” for many students and families “who historically have been locked out.”

President Obama, speaking about the new rules, said, “Students like many of you who want to take that next step, have big dreams. We want you to know we’re here to help you achieve those dreams.”

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