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FAFSA is Changing — Don’t Miss Out on Free Money for College

September 16, 2016
Loans, Student Loans
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Ch-ch-changes are coming to the FAFSA — and soon. Oct. 1 is the new open date for the Free Application for Federal Student Aid, giving students the chance to qualify for financial aid three months earlier than usual.

The FAFSA is required to determine if you’re eligible for federal loans, grants or work-study. Colleges also use the form to determine their own aid packages, including scholarships.

Not submitting an application is the biggest mistake a student can make when it comes to education financing. In 2014, students missed out on $2.7 billion in free federal grant money due to incomplete or unsubmitted FAFSA applications, according to a NerdWallet analysis from January. Of the 1,445,732 high school graduates who failed to fill out a FAFSA application, more than half would have been eligible for a Pell Grant — free money given to undergraduates who qualify based on financial aid. Not all of those students chose to go on to college, but those who did missed out on free money that could have gone toward their tuition bill. The average amount left on the table per eligible high school graduate was $1,861, NerdWallet estimated.

The most recent data from the U.S. Department of Education shows that in the 2014-2015 application cycle, the majority of applicants were eligible for Pell Grants: Nearly 11.6 million applicants were Pell eligible, compared with 8.9 million applicants who weren’t Pell eligible.

Even if you think you won’t qualify for aid, you should still try. Here’s what you need to know about the changes and a few tips for filling out the FAFSA.

FAFSA changes

Oct. 1 is the new OPEN date, but not the deadline

You can submit your FAFSA for the 2017-2018 school year beginning Oct. 1, 2016. Previously, students had to wait until Jan. 1 to apply for financial aid, but the new open date gives applicants the chance to receive financial aid award notification earlier. The October start date is a permanent change, according to the Department of Education.

June 30 of the school year for which you need aid — so June 30, 2018 for the 2017-18 school year — is the federal deadline to submit your FAFSA. But applying as close to Oct. 1, 2016, as possible ensures that you won’t miss financial aid opportunities, since states and colleges have their own much earlier FAFSA deadlines and aid is first come, first served.

You might wonder why anyone would wait until June 30 of the school year in which they need aid to apply. Even though most aid for a school year has already been awarded by then, you can still qualify for federal grants and loans. And you can receive these grants and loans retroactively to cover what you’ve already paid for the spring and fall semester. Or, depending on your school, you may be able to apply the funds to summer school.

If you’re a returning student, remember you’ll need to fill out a renewal FAFSA each year.

Use 2015 tax returns on your form

The biggest impact to moving the deadline earlier is on tax information. For the first time, students and families can use “prior-prior year” taxes — in this case 2015 tax information — to complete the form for the 2017-2018 school year.

In previous years, students could use only the most recent income and tax information. Families filled out estimates and then made updates later when taxes were finished. The new change means you won’t need to submit 2016 tax information until the 2018-2019 school year application season begins on Oct. 1, 2017.

You’ll be able to use the IRS Data Retrieval Tool right away to automatically transfer tax information directly to your FAFSA with your parents’ or your 2015 tax information, which has already been completed. If your family’s financial situation has changed drastically from 2015 to 2016, the Department of Education recommends contacting your school’s financial aid office.

FAFSA tips

Pick up to 10 schools you might want to apply to

On the FAFSA you can enter school codes for up to 10 colleges and universities you plan to apply to. Don’t worry if you change your mind later — you can update your FAFSA form any time before the final deadline. If you’re applying to multiple schools, take note of each one’s FAFSA deadline so you don’t miss the chance to maximize your aid package.

If you want to apply to more than 10 schools, you’ll be able to share your financial aid information with the additional colleges by making a correction to your form after you receive your Student Aid Report.

You can find school codes by searching in the form for the city, state and name of each school. The Department of Education also has a Federal School Code Search available on its website to find schools you’re interested in. If you’re unsure of a school’s code, you should also be able to access it on the college’s website or by contacting the school directly.

You can always modify your information

Mistakes are easy to make on the FAFSA, but don’t sweat it if you realize you made an error or two. After filing, if you need to make corrections, go through the My FAFSA page of FAFSA.gov and log in using your Federal Student Aid ID. Or, you can contact the financial aid office of the school you plan to attend.

For more information on applying for federal aid, use NerdWallet’s FAFSA Guide and learn more about the changes to this year’s FAFSA.

Anna Helhoski is a staff writer at NerdWallet, a personal finance website. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.