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Financial Planning > College Planning > Student Loan Debt

It’s FAFSA Time: Get Your Clients Ready

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In less than a week students and their families will be able to file the Free Application for Federal Student Aid (FAFSA), which serves as the basis for need-based aid dispensed by the federal government, the states and individual college campuses.

(Related: How American Families Pay for College: 2017)

Even students who don’t yet know what schools they will apply to for the 2018-2019 academic year or whether they’ll be accepted should file the FAFSA. So should students who don’t expect to qualify for financial aid because the financial circumstances of families can change during an academic year, and a FAFSA filing is required for parents — and graduate students — taking federal PLUS Loans.

(Related: Prepare Clients for the High Costs of College)

“We encourage everyone to file the FAFSA even those who don’t qualify for need-based aid because it’s also the application for non-need-based federal [PLUS] student loans for graduate students and federal parent loans,” says Karen McCarthy, director of policy analysis at the National Association of Student Financial Aid Administrators (NASFAA).

(Related: New Tool Helps Families Assess Effects of Budget Cuts on Student Aid)

“It’s also always a good idea to file as early as you can,” adds McCarthy. That reduces the chances of missing financial aid deadlines, which differ by state and individual school, explains McCarthy. The federal deadline for filing the FAFSA for the 2018-2019 academic year is June 30, 2019.

Early filing also increases the odds of receiving aid that is dispersed on a first-come, first-serve basis, including work study, which has fixed allocations per college, explains Mark Kantrowitz, publisher of, a web site focusing on college admissions and financial aid. “Further into the application period more money is used up and less money is available for aid.”

Up until two years ago, students and families had to wait until the previous year’s federal tax return was filed — or at least prepared — in order to file the FAFSA, which delayed filing until after Jan. 1. Beginning last year, the tax return from two years earlier — known as the “prior prior year” — became the required document and Oct. 1 the start of the FAFSA filing season.

That tax return can be automatically transferred into the FAFSA filing using the IRS Data Retrieval Tool. Its usage was temporarily suspended in March due to security concerns, but the IRS now says it will be available again on Oct. 1. This year, however, FAFSA filers won’t be able to view the return that transfers as they had before.

(Related: IRS Shuts Down Financial Aid Tool Over Security Concerns)

The IRS Retrieval Tool will only access an original tax return, not an amended one, so families with amended returns will have to send them to the financial office of the school the student is seriously considering or will be attending. Couples who have divorced since their joint tax return was filed will also need to provide updated financial information to schools, as will families whose financial circumstances have changed dramatically since the two-year-old tax return was filed.

“If you’ve had a change in circumstances and income has dropped significantly you can appeal to the school and they will consider a change in income,” says Kantrowitz. He offers these other suggestions for families and students filing the FAFSA for the next academic year:

  • Remember to get a separate FAFSA ID for the parent and for the student, with different passwords.
  • If you discover your ID already exists but you never filed for one, it may have been stolen as a result of the Equifax security breach. In that case, call the FAFSA phone line at 1-800-433-3243
  • If you have initiated a freeze on your credit file because of the Equifax breach, make sure to lift it temporarily if applying for federal PLUS loans
  • Consider avoiding selling investments on or after Jan. 1 of your student’s sophomore year in high school because that tax year will be the base year for the FAFSA filing for your student’s freshman year and it could impact financial aid eligibility
  • Similarly, grandparents should avoid contributing funds from their 529 fund to a student before Jan. 1 of a student’s sophomore year in college. Those funds will be considered a student’s assets when applying for financial aid given the two-year lag for financial information, and up to 50% of a student’s income is added to the Expected Family Contribution figure used to determine financial aid eligibility. That’s about nine times the weighting given to contributions from a parent’s 529 fund.

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