With new federal financial aid changes in effect this year, colleges and universities are altering the way award letters are now handled.
The change for the 2017-2018 school year comes after the Obama administration switched the tax year needed for filling out the Free Application for Federal Student Aid, commonly called the FAFSA, the form that many schools use to determine financial aid awards. …
You were supposed to use the DRT to link the 2015 tax return for the 2016/17 FAFSA, same as 2017/18 FAFSA.
If the student initially filed FAFSA before tax return was done, they were supposed to update FAFSA and link tax return with DRT to verify the income. If they couldn’t then I thought they had to provide a tax transcript.
So is this article saying that some students got federal aid disbursements without income verification?
It says that if the income is different on last year’s and this year’s FAFSA, the school will have to find out why.
But the income should not be different, because the same year 2015 tax return is used.
Unless the student’s parents were married on the 2016/17 FAFSA and now separated, or vice versa.
Other reasons why EFC can change is different number of household members, number of students in college, different asset amounts for parents and students.
This is a huge challenge in the financial aid world, but at least it is only a one-year thing. Lots of students got disbursements in 16-17 without using the IRS DRT. If they weren’t selected for verification, there may not have been a need to question what was on their FAFSA. Then when they completed their 17-18 FAFSA with income information that did not match 16-17 income information, a code was generated to alert the financial aid office that there is conflicting information that MUST BE resolved. If one or the other (or both) years had incorrectly-reported income, it absolutely can result in aid being removed, and I do not believe that “most” schools are in a position to cover overawards with institutional grant money.
I am a little confused about Current Students who are already in College. Like sophomore or junior.
As per New FAFSA Rules a current student used his & parents 2015 W2/Tax return. to file 2017-2018 FAFSA
Are these Students need to update the FAFSA again once 2016 W2/Tax info is available by early Feb or not ?
Does same applies to CSS Profile also.?
No update with 2016 tax information is required or allowed.
Same with Profile – no update with 2016 tax information is required or allowed.
That will be good for me since My income increase by 12k in 2016. Due to an unexpected bigger Bonus.
You win some, you lose some. This is a win for you. Just remember, if your student is a college sophomore or below, your higher 2016 income will be used for the 2018-2019 academic year.
He will be a Senior coming Fall so I Win, but daughter be freshman this Fall so I loose. But both being in colleges next year my EFC got cut in Half… and he proceeding to Med School in 2018 so that should consider as College too.
Recently just got a whopping $8000 charge on my college account due to this change. I was granted the pell grant and many academic scholarships to help me pay for my tuition the last two years. They let me know i needed to submit new forms such as certain income verification forms and w-2’s from all the way back of 2014. By the time I was able to react and gather all these documents, 2017 rolled around and I was unable to turn in these new documents. I was also told i didnt have a deadline to submit these forms, which was clearly incorrect. I am now unable to turn in these forms to my FA office because, “Thats from 3 years ago, we cant do anything about it”. The pell grant and academic scholarships i obtained from Fall 2015, Spring 2016, and Summer 2016, were all taken away and now i owe the school $8000.
It sounds like you had $8,000 in grants and scholarships recouped not because of the change to prior-prior year reporting, but rather because you failed to submit necessary financial documents for verification in a timely manner.
Count for college on younger siblings financial aid? Not likely. Medical school students are independent for financial aid purposes. Your potential medical school kid will file his own FAFSA as a household of ONE…but beware…many…many medical schools will ask for YOUR parent financials on HIS form.
However for the younger sibling…this will be very school dependent. You would need to contact the younger kid’s undergrad school to see if they will continue to count the older brother as a student in college once he is in grad school. Brace yourself…at most places, the answer will be NO.
@kelsmom, thank you for your reply. I did not know that aid could be dispersed without income verification.
So if the student used estimated income in Jan '16, and indicated later that taxes had been filed but filled out numbers by hand and not use DRT, the schools didn’t have to verify the income?
Or do you mean the student could simply use estimated income numbers and never update the FAFSA to indicate that taxes were now done, and still get their aid disbursement?
The vast majority of schools do not verify income unless the student’s FAFSA was selected for verification. If your experience is with schools that have amazing aid, you may not have run into this … but few schools collect everyone’s tax info (if they do collect it, they do have to compare it with the FAFSA). There is a social contract involved in applying for aid: You are expected to tell the truth. The possibility of being selected for verification helps keep folks honest. At this moment in time, the DRT is only required if someone is selected for verification or has to do it for another reason (school requires it; they got flagged by the processor for inconsistent income information between last year’s FAFSA & this year’s FAFSA; the school discovered conflicting information that they must resolve & are requiring the DRT as part of the resolution).