Families will be able to use income data from two years before the student attends school on their federal financial aid forms, instead of data from the prior year.
Families should be able to estimate sooner how much they'll need to come up with to send students to college under a change President Barack Obama announced Monday.
The move will allow families to use income data from two years before the student attends school on their federal financial aid forms, instead of data from the prior year.
The forms themselves also will come out several months earlier, during October of the year before a student plans to head off to college, as opposed to the current release date of Jan. 1. Additionally, families will be able to download data right from the Internal Revenue Service into the aid application.
Those applying for financial aid for the 2017-18 school year will be the first to benefit from the changes Mr. Obama enacted through executive order. When the FAFSA form becomes available in October 2016, families will include income data from 2015.
The National Association of Student Financial Aid Administrators, which represents financial aid professionals at schools around the nation, has been campaigning for this change for several years, saying it will increase the accuracy of the information and allow families more time to figure out their out-of-pocket expenses.
"It is a single change that will create a ripple of positive implications for students," said Justin Draeger, chief executive of NASFAA.
By allowing prior-prior year financial data, the forms can be submitted earlier and thus colleges can award aid earlier, the association said.
Financial advisers recommend submitting financial aid forms as early as possible because college financial assistance is offered on a first-come, first-served basis.
But families will not be able to choose which year to include on the forms, and that could derail some financial planning strategies families may have put into place this first round, according to Troy Onink, chief executive officer of Stratagee, a college planning consulting firm.
"If you sold stocks to lock in gains this year, the resulting spike in income will be on your child's FAFSA next year, when you thought it would not," he said after participating in a White House conference call about the changes Monday.
Mr. Obama also used his executive order power in June to allow many more people to qualify for a student loan repayment program that restricts payments to 10% of the person's income and would throw out unpaid debt after 20 years.
Both moves come as the nation faces $1.2 trillion in outstanding student debt and the White House and others look for ways to help families pay higher education costs.
