Currently, college applicants must wait to apply for federal financial aid until the second semester of their senior year in high school. That's because the application requires income data from the prior calendar year. The result is that millions of college applicants don't know how much they will have to pay until just before they have to make their decision about which school to attend.
But what if students could apply for financial aid in the beginning of their senior year — using their family's tax information from one calendar year earlier? This would allow applicants — particularly those who plan to attend a public college or university — to learn much more about their financial-aid packages far sooner than they currently do.
The proposed change has peppered legislation throughout the Capitol, as members of Congress prepare a slew of higher-education bills. And lawmakers think it could make a big difference in encouraging low-income students to attend college.
Right now, January is the earliest that students can fill out their Free Application for Federal Student Aid — and that's assuming their parents have filed their taxes early for the year just ended. Often, families file later. This means that some students don't receive their financial-aid packages until just a few weeks before the enrollment deadlines for most colleges. That's too late for many students, says Megan McClean, director of policy and federal relations for the National Association of Student Financial Aid Administrators. "A lot of times, our low-income students are first-generation, and they're the first ones to go to college," she says. "It's better to have more time for the process."
(J Heroun)Filing the FAFSA in the fall would allow applicants to know, before they even apply to college, how much federal aid they are likely to receive. And since most public colleges rely on the FAFSA to determine their aid packages, students could learn of their potential state and school grants at the same time.
For the poorest students, that knowledge could mean the difference between going to college and not. If low-income students know before applying that they have $5,000 available in federal grant money, they might see postsecondary schooling as a viable option. "By junior year [of high school], they can tell you exactly what you can get," says Republican Sen. Lamar Alexander of Tennessee, a cosponsor of one of the bills that would change the income question on the FAFSA to the "prior prior year" — that is, the tax year two years before the student enters college.
This idea has bipartisan support. It is part of another, broader bill sponsored by Democratic Sen. Tom Harkin of Iowa, who chairs the Health, Education, Labor, and Pensions Committee, which will consider all financial-aid proposals in the Senate. House Republicans also included the proposal in legislation designed to make the entire financial-aid application process less daunting.
Last year, McClean's group conducted an in-depth review of 160,000 FAFSA applications. It found that about 70 percent of grantees would see no change in their awards if they used the "prior prior" year's income on their applications. About 20 percent of grantees would see a change of more than $1,000, up or down, in their federal grants. Everyone else would see smaller changes.
All told, the researchers said that 3 million grantees could see their federal financial aid affected if the tax year is pushed back. That must be taken into consideration, McClean acknowledges. But she notes that financial-aid administrators could change awards on a case-by-case basis if, for example, an applicant's parent loses his or her job between the two tax years.
And for everyone else? Figuring out how to pay for college — an incredibly stressful and daunting process for many low-income students — could end up being easier.