President Obama wants to make it easier for students to fill out the Free Application for Federal Student Aid. (AP Photo/Susan Walsh)

College-bound students will be able to get earlier estimates of their eligibility for federal grants and loans next fall as the White House moves to simplify the way the government determines financial aid.

Instead of students waiting until January to fill out the Free Application for Federal Student Aid, long after many have applied to college, they will be able to complete the form three months earlier. Students will also be able to electronically retrieve and use tax information from two years earlier, rather than wait until tax season to complete the form known as the FAFSA.

[How your family finances factor into financial aid calculations]

On Monday, President Obama will announce the changes at a town hall in Des Moines as part of a broader initiative to help families make more informed decisions about where to send their children to school. The changes to FAFSA arrive days after the White House redesigned an interactive Web site called College Scorecard to help families compare graduation rates, financial aid and alumni earnings. Taken together, the new scorecard and streamlined FAFSA are meant to give students a fuller picture of the costs and benefits of a college education.

[How much do alumni from a college earn? The feds give answers.]

For millions of students, receiving financial aid makes all the difference in paying for college. The government and colleges use the FAFSA to determine need-based and some merit-based aid. The sooner students turn in the form the better their chances of qualifying for more money since some states award aid on a first-come, first-served basis.

But the application process can be cumbersome as students have to wait for their parents’ prior-year tax returns to complete the form, leading some to delay submission, which could ultimately cost them money.

“Getting the form filled out earlier will make a real difference for students who think they can’t afford college,” Education Secretary Arne Duncan told reporters Monday. “You have high-caliber students who don’t apply to elite colleges because they think they can’t afford them. Many elite colleges have larger endowments and can offer more financial aid…we think some of that under-matching will go away.”

Starting October 2016, students seeking federal financial aid for the 2017-2018 school year will be able to submit a FAFSA using their parents’ 2015 tax returns, instead of waiting for 2016 tax documents. They will no longer have to estimate family income to answer up to 20 questions on the form. Since the information will come directly from the Internal Revenue Service, there will be no need for schools to spend hours verifying the data.


Not only will the changes reduce “paperwork burdens for students and costs for colleges,” but it “also means students can apply for aid when or even before they apply to college,” said Lauren Asher, president of the Institute for College Access & Success (TICAS), an education nonprofit.

Advocacy groups like TICAS have for years pressed Congress and the White House to let families use older tax data to complete the FAFSA, but they’ve been met with resistance because of the expense. Making the process easier could encourage more students to apply for money and increase the overall cost of programs like the Pell Grant, money set aside for the neediest college students.

While the administration does not anticipate spending money to update the FAFSA, officials said Pell Grant costs could increase in 2017 by 1 percent, or $400 million, as more students apply for aid.

“This small step could have a huge impact,” Duncan said. “We estimate that over the next several years hundreds of students will gain access to critical student aid each year because more will find it easier to apply.”

Over the years, the administration has revamped the online FAFSA form so families can skip questions that are irrelevant to them and complete the application in an average of 20 minutes, as opposed to an hour.

“When I was CEO of Chicago public schools, the FAFSA was so complicated that you almost had to have a degree in accounting to complete it,” Duncan said. “It was deeply troubling that so many hardworking, academically qualified students didn’t apply to college because they thought they couldn’t afford it…which is why we’ve worked to revamp the FAFSA.”

Millions of students still fail to fill out the form. Based on data from the Education Department, 2 million low-income students would have qualified for billions of dollars in Pell Grants had they filled out the FAFSA for the 2011-2012 academic year.

For more than a year, first lady Michelle Obama has done public service announcements and taken to Twitter to encourage students to complete the FAFSA. Still, President Obama and education groups say Congress needs to remove at least 30 questions from the form to further simplify the application process.

Letting students use family income from two years earlier could push the reform movement in the right direction, said Justin Draeger, president of the National Association of Student Aid Administrators.

“Moving the tax year back one extra year is really the launching off point for any viable application simplification,” he said. “It gives the IRS time to index more elements from the tax return families can import into their financial aid forms. That means we can ultimately eliminate questions but still have a high amount of integrity in the data we’re collecting.”

Want to read more on paying for college? Check out these stories:

How to negotiate a better financial aid package

How your family finances factor into financial aid calculations

How to read a financial aid award letter