Financial Aid Resolutions for 2016

What NASFAA Wants to Achieve and How It Impacts You

Mixed race mother and daughter using laptop together
Ariel Skelley/Getty Images

As 2016 inches closer on the calendar people, businesses and organizations everywhere start to think about resolutions for the coming year. The National Association of Student Financial Aid Administrators (NASFAA) is a group of industry professionals who pursue the objective of effectively administering financial aid in order to motivate more students to attend college. Some of the initiatives they are promoting to the Department of Education, the White House and Congress in 2015 and 2016 as they reauthorize the Higher Education Act include:

  • Use of prior-prior year income information: One thing that has always been difficult in the financial aid application process was completing tax returns in time to file the FAFSA. In January 2016, for example, the FAFSA for the 2016-17 academic year will be available. It requires information from the applicant’s 2015 federal tax return and may have deadlines as early as February. Many families have difficulty obtaining all of the information needed to complete their return, and it was felt that this conflict was preventing potential applicants from receiving the full amount of financial aid to which they were entitled.

This has finally been resolved by moving the FAFSA period to October and instituting a prior-prior year (PPY) income information policy. Instead of using the federal income tax period prior to the academic year, the application will now rely on the prior-prior year. Beginning October 1, 2016, applicants will be able to submit a FAFSA for the 2017-18 academic year.

Previously this would have required information from the 2016 tax year, but will now rely on information from the prior-prior year of 2015. It is hoped that PPY will make it easier for students and families to file their FAFSA and access the aid they need to complete their education.

  • One version of the FAFSA might not be right for everyone: Currently, everyone is required to complete all of the questions on the same FAFSA form. For some lower-income families, this can be both intimidating and unnecessary. NASFAA is pushing for the use of a tiered application that offers applicants a customized set of questions, rather than sticking with the current “one-size-fits-all” approach. Lowest-income students would only need to answer the bare minimum number of questions. Families with more complex financial circumstances would be able to utilize an expanded IRS Data Retrieval Tool (DRT) to import the large majority of their application information directly from their completed tax return based on the PPY income information principle.

  • Improve student loan servicing: It is believed that one factor contributing to the student loan problem is the difficulty in obtaining information from multiple loan servicers. This can cause confusion and frustration among student borrowers, leading to delinquency and even default. NASFAA is recommending the implementation of a single Department of Education student loan portal for all borrowers. The goal is to allow students to easily access their Direct Loan, Federal Family Education Loan Program (FFELP), and Perkins Loan portfolios in one central place so they could instantly find information about all of their loans, total indebtedness, and repayment status.

NASFAA is also trying to advance programs that are more in line with the educational and financial needs of today’s students. These programs, if successful, could have a huge impact on how you apply for and receive financial aid in the future. It is worth making yourself aware of the various proposals on the table. Study them and then contact your elected representatives to let them know your feelings about their implementation.