I’m looking forward to college students being able to submit the Free Application for Federal Student Aid (FAFSA) three months earlier next year. Instead of being able to submit starting January 1 for the 2017-18 academic year, students will be able to submit beginning October 1—giving students an additional three months to complete the form thanks to using ‘prior prior year’ (PPY) income and asset data. This means that students can get an estimate of their eligibility for federal grants and loans as soon as late fall, which has the potential to help inform the college choice process.
But there is no guarantee that students will get their final financial aid package from the college any earlier as a result of prior prior year. Recognizing this, Undersecretary of Education Ted Mitchell recently sent a letter to college presidents asking colleges to send out their aid packages earlier in order for students to fully benefit from PPY. Will colleges follow suit? I expect that some will, but the colleges with the greatest ability to offer institutional grant aid probably won’t. Below, I explain why.
The types of colleges that can easily respond to PPY by getting aid packages out earlier are those institutions with rolling admissions deadlines. (Essentially, it’s first-come, first-served among students who meet whatever admissions criteria are present—less-selective four-year and virtually all two-year colleges operate in this manner.) Some of these colleges already offer their own grant aid upon admission, but these colleges tend to have less grant aid to offer on account of relatively low sticker prices and fewer institutional resources. Additionally, these colleges often take applications well into the spring and summer—after students can already file the FAFSA under current rules.
It is less likely that the relatively small number of highly-selective colleges that get a disproportionate amount of media coverage will respond to PPY by getting financial aid offers out any earlier. For example, the Ivy League institutions didn’t even release their admissions notifications for students applying through the regular route until the last day of March, which gives students plenty of time to complete the FAFSA under current rules. Moving up the notification date to January is definitely feasible under PPY, but it requires students to apply earlier—and thus take tests like the ACT or SAT earlier. All students are supposed to commit to one college by May 1, giving students one month under current rules to compare aid packages and make a decision. Colleges may oppose extending this decision period as students have more time to compare offers and potentially request more money from colleges.
I suspect the Department of Education sent their letter to colleges in an effort to get the admissions notification dates at selective colleges moved up, but this goes against the incentives in place at some colleges to reduce the comparison shopping period. Prior prior year still allows students to get their federal aid eligibility earlier, which is a good thing. But for quite a few students, they won’t get their complete financial aid package any earlier.