SFS predicts marginal effects on Wellesley
Changes are in store for the Free Application For Federal Student Aid (FAFSA) in the upcoming school year. The Obama administration plans on implementing modifications in order to make access to federal financial aid easier for students and their families.
Wellesley College utilizes the FAFSA to determine whether students are eligible for federal financial aid that would be applied to their cumulative financial aid packages, including in the form of Pell Grants and Stafford loans. The FAFSA also determines the household’s estimated family contribution, which is simply the maximum calculated contribution a household can make to its dependents’ college education. It is additionally used by some states and organizations to evaluate a student’s need for aid.
In the past, the FAFSA has come out in January, limiting the amount of time students had to apply for financial aid and to learn how much aid they had received. As a result, many students learned the results of their college applications before they learned whether or not they could afford paying for the school. By August, students in some cases had committed to attending a certain school without knowing how much they were expected to contribute to their tuition.
In the way it stands currently, the FAFSA requires tax information input from the prior year, despite the fact that approximately four million students apply for financial aid before their families’ taxes are filed. Because yearly taxes do not have to be filed until April, families often fill out the FAFSA months after it is released. While the Internal Revenue Service (IRS) data retrieval tool has been in existence for several years, it is of no help to these families whose tax information is not inputted by the time the FAFSA is released. For the upcoming 2015-16 application cycle, tax information from 2014 was used
Beginning in October 2016, the FAFSA will intake tax information from the prior-prior year; for the 2017-18 application cycle, tax information from two years prior, 2015, will be used. Tax information is pulled directly from the IRS, thus, the data retrieval tool becomes relevant for a larger number of families seeking financial aid.
The IRS has created an automatic fill-in form to aid in completion of the FAFSA. The new data retrieval tool allows parents and students to log onto the IRS’ website via the FAFSA and have many parts of the form pre-filled.
“Because taxes are already filed for the prior-prior year, data will be imported directly from the IRS into the FAFSA. There is no more estimating, no more guessing; all information is pulled directly from the IRS database,” Scott Wallace-Juedes, Director of Student Financial Services and Financial Aid, said.
“This is something we have been talking about as a [financial] aid community for years. The national conversation about college affordability is great, and there is a big appetite for change,” Wallace-Juedes added.
“The idea behind the change is that it will give students and their families a better understanding of what the cost of an education is earlier on. More accessible, accurate data is being released. The goal is to have more students apply for federal financial aid. The changes in FAFSA come with the hope that college can become more affordable for students. Students from a wider array of socioeconomic backgrounds, not just strong college-going families, will understand that college is more affordable,” Wallace-Juedes said.
These changes are not anticipated to have great ramifications, if any, until the 2017-18 academic year. For the upcoming 2016-17 application cycle, the FAFSA will still be released on Jan. 1 and use tax information from the prior year, as has always been the case.
For certain populations, namely those with salaried incomes, not much is expected to change in regards to the earlier release of the FAFSA. However, for families with business and families in which an illness or death has recently occurred, the newer FAFSA and its use of prior-prior year tax information may cause changes in the amount of aid awarded, either positively or negatively.
In regards to its effects on Wellesley College, the change in the FAFSA is not expected to have a large impact, as the FAFSA is not the main tool used by Student Financial Services for assessing financial aid. Wellesley uses the College Scholarship Service (CSS) Profile which is distributed by College Board, to determine financial aid. The CSS Profile is used by almost 300 other institutions and scholarship programs to determine nonfederal financial aid awards. Additionally, Wellesley offers students and their family access My inTuition, which the Wellesley College Student Financial Services calls “Wellesley’s Quick College Cost Estimator.”
My inTuition, created by economics professor Phillip Levine and developed by Wellesley College, is a tool intended to help families get an idea of tuition costs based on their responses to six basic financial questions.
“The impetus behind My inTuition is that if students look at the sticker price of Wellesley, it would be easy to be scared off. With My inTuition, students can enter a few numbers and be given an approximate range of the aid they are likely to receive. This provides families with an estimate earlier with less information required to generate the result,” Wallace-Juedes explained.
The reactions to the change in the FAFSA have been divisive, both in the financial aid community and among students.
“One camp is saying that data from two years ago is old and may not lead to having the best [financial] awards [given]. The other camp is saying that the changes will allow families to fill in the FAFSA earlier, allowing more students to be involved and more students to apply for aid,” Wallace-Juedes said.
Some students, including Julie Barron ’16, believe that the changes implemented in the FAFSA will not have a great effect on the Wellesley community.
“Wellesley relies on the CSS Profile for the bulk of financial aid given to students that rely on it. Thus, changes in FAFSA do not greatly affect this portion of the student population who receive most of their financial aid from the college,” said Barron.
Barron believes that more of a focus should be placed on making the CSS Profile easier to complete and that an earlier release of the FAFSA is not necessarily beneficial to current college students.
“I have filled out all my paperwork since I was a junior in high school and I have found that the CSS profile is much lengthier and more confusing to fill out than the FAFSA. The FAFSA being released earlier will only help incoming students. However, it is not as accurate for returning students, which has the potential to hurt a student whose financial situation has changed drastically,” she added.
Dominique McKenzie ’17 agrees with Barron, stating that the FAFSA deadline isn’t the problem and that releasing the application earlier would only make financial awards inaccurate.
“I think FAFSA is released early enough as it is. I think the change is beneficial for those applying to college for the first time and for transfer students. However, for current students, it would not accurately reflect their financial situation,” said McKenzie.
The exact results of the change will be unknown until the 2016-17 financial aid cycle. However, it is inevitable that the change in the FAFSA will necessitate a change in Wellesley’s financial services.
“Wellesley will have to see if this change will change the financial aid process. There may be opportunities we can capitalize on, for example, having returning students apply for financial aid and then awarding aid to the incoming class, the opposite of what happens at the moment. The appeal that occurs when a family’s situation has changed may also be altered,” Wallace-Juedes commented.
The changes in the FAFSA bring about many possibilities for the future of college education in America, whether altering the makeup of the students that decide to pursue higher education, or necessitating changes in schools’ financial policies.
“I am excited by the developments but there is a lot to be answered,” he concluded.
