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FINANCIAL CORNER JESSE RIGLER WATCH FOR CHANGES TO
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406-752-6212 or 1-800-955-2208
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406-862-2101 or 1-888-564-3008
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D.A. Davidson & Co. is not a tax advisor. Before investing, you should always consult your tax/legal advisor about the speci c tax consequences and advantages of your situation.
THE FAFSA
IF YOU HAVE A CHILD IN COLLEGE, you’re probably familiar with the Free Application for Federal Student Aid (FAFSA), which must be completed to help ensure that students don’t miss out on federal and state grants, work-study jobs and loans. But you might not know that some important changes will be coming to the FAFSA during 2016 – and these changes can a ect both the process of ling for aid, and, possibly, the amount of aid your child will receive.
Here are three key changes to watch for:
• Earlier availability of the FAFSA
– Currently, you need to complete the FAFSA as soon as possible after Jan. 1 – which means you’re probably lling out the form even before you’ve led your taxes, which aren’t due until April. As a result, you may have to estimate your income and update the information later. However, beginning with the 2017–2018 school year, you can complete the FAFSA starting on Oct. 1 of the previous calen- dar year, rather than wait until Janu- ary. At that point, you will already have led your 2015 taxes, so in lling out the FAFSA, you won’t have to rely on esti- mates of your income.
• For 2016 only, this change pres- ents something of an anomaly – Spe- ci cally, you should ll out the FAFSA as soon as possible for the 2016–2017 school year, using an estimate of your 2015 income, and then complete the FAFSA again in October for the 2017–2018 school year, using your actual 2015 income. In future years, you’ll only have to com- plete the FAFSA once, with applications accepted beginning each Oct.1.
• Lower “asset protection” allow- ance – When you report your nancial information on the FAFSA, some of your assets – such as your IRA and 401(k) – are not counted toward the resources
you’re expected to contribute to your child’s education. Some other assets are considered available, but a percentage of these assets can be sheltered, with the exact amount depending largely on your age and marital status. For the 2016–17 school year, this sheltered asset amount has been reduced signi cantly. However, while this reduction could have some e ect on your student’s aid package, it shouldn’t be too severe because income, more than assets, is a bigger factor in the federal nancial aid formula.
• No more shared mailing list – When ling the FAFSA, students can choose up to 10 colleges to receive their nancial information. Previously, when students sent their FAFSAs to multiple colleges and universities, these schools could see the other institutions on the mailing list. But starting with the 2016– 2017 application, schools will no lon- ger have this information. This could actually bene t your child. Previously, if a school saw it was listed rst on the FAFSA, it might have assumed it was the student’s rst choice and, as a result, may not have felt the need to be exible in awarding nancial aid. Now, though, without a list of its competitors, a school might be more open to negotiating a more favorable aid package for your child.
It’s a good idea to stay current on the changes connected to the FAFSA because it helps determine nancial aid eligibility – and nancial aid is a key component of your strategy to pay for your child’s (or grandchild’s) education.
This information is o ered for broad, informational purposes only. Edward Jones does not employ nancial aid experts or give nancial aid advice. This is a highly specialized eld, and speci c questions should be directed to a quali ed nancial aid o cer.
Jesse Rigler is a nancial advisor at Edward Jones in Kalispell.
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