NAICU Washington Update

More Federal Advice to Institutions on Implementing Prior-Prior Year and Institutional Financial Aid Awards

August 18, 2016

While the 2017-18 Free Application for Federal Student Aid (FAFSA) will be available on October 1, 2016, Department of Education Under Secretary Ted Mitchell has urged institutions not to move priority institutional financial aid deadlines forward while also encouraging institutions to process financial aid awards, if only estimates, as soon as possible. 

In a letter sent to college presidents dated August 8, Mitchell offered new advice on how to handle the complicated situation of awarding student aid this fall, including:

  • Ensure students and prospective students are aware of the October 1 availability of the FAFSA application and encourage early filing.
  • Provide early awards, or at least estimated financial aid packages, to students, especially prospective students from low income families, as soon as possible.
  • Maintain priority financial aid deadlines consistent with recent years and not ahead of state student aid deadlines. 
  • Encourage students to obtain the required identification for filling out the FAFSA, their Federal Student Aid (FSA) ID, and to review other sources of institutional financial aid information such the net price calculator.

Mitchell noted that “it may be a challenge to balance the twin objectives of providing award packages earlier and not setting earlier priority deadlines.” He suggested further detail may be made available as schools finalize their financial aid calendars and procedures. 

Unfortunately, the new letter increases the confusion related to an already confounding situation. Colleges have been considering various ways to adjust to the changes made by the Education Department, including schedule changes in admissions decisions and providing estimated institutional awards.

In a March 2016 letter, the Education Department asked institutions to provide earlier award notifications to students “to maximize the benefits to students and their families consistent with the President’s early FAFSA initiative moving the availability of the AY 2017 -18 FAFSA from January 1, 2017 to October 1, 2016.” 

The letter aimed to provide additional guidance to colleges struggling to implement the changes the Education Department announced in September 2015 that awards for 2017-18 would be based on “prior, prior year” (PPY) tax data from 2015 rather than prior year data from 2016, and making the FAFSA available in October of 2016 rather than January 2017.  The change to PPY had long been advocated as a way to ease the processing of student aid and providing earlier, final aid information to students. PPY also makes better use of the data retrieval tool (DRT) to download tax data to the FAFSA. This change can be helpful for students, families and college administrators as well, even if minor award adjustments might have to be made to awards based on major changes to more recent, i.e., prior year, income information. 

Contrarily, the concomitant advancement of the FAFSA availability date to October, advocated by some, has caused new problems, re-introducing uncertainty and the requirement for re-estimation of financial awards. 

For many schools and states, the FAFSA date precedes the determination of state and institutional budgets for student aid. What colleges have to spend and what students may receive in state aid is necessary to determine financial aid packages. In addition, Pell Grant Award funding is usually not known until later in the year. 

The Education Department’s new concern about colleges revising their priority financial aid deadlines echoes the views expressed by a group of Congressional Democrats in a July letter to the six higher education associations about advancing the awarding of priority institutional scholarships. 

The letter argued that earlier dates could actually be harmful for lower income students who were more likely to apply for scholarships later in the school year, and thus after a process with an early deadline would be closed or funding for the scholarships had run out.

The recent advice from the Education Department, however, does not deal with the conflict between advising institutions to provide students “with financial aid packages as early as possible” and warning campuses “not to move any priority financial aid deadlines earlier than your deadlines in recent years.”

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