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When Applying for Student Aid, Timing Matters

Every year, high school guidance counselors and college financial aid administrators perform a song and dance to encourage students to file the FAFSA (Free Application for Federal Student Aid) as soon as possible on or after January 1, but not before January 1. Don’t wait to file the FAFSA, they say. Don’t wait until you file your federal income tax returns or you are admitted to a college. It’s OK to use estimated income and tax information. You will be required to update this information after you file your federal income tax returns, and there’s a nifty IRS Data Retrieval Tool that makes transferring data from federal income tax returns to the FAFSA easy.

Why does this matter?

The simple answer is: More money for college.

In a new student aid policy analysis paper, Leaving Money on the Table, Edvisors reports that millions of students would have received a Federal Pell Grant if they had only filed the FAFSA. Edvisors also reports that some students who do file the FAFSA would have qualified for more federal, state and institutional grants if they had only filed the FAFSA sooner. Millions of students are missing out on billions of dollars of free money for college because they don’t file the FAFSA or because they don’t file early enough.

Edvisors analysis shows that 2 million students who did not file the FAFSA in 2011-12 would have qualified for about $9.5 billion in Federal Pell Grant funding, or an average $4,700 per student. Of these, 1.3 million would have qualified for the maximum Federal Pell Grant. Additionally, if these students had submitted a FAFSA, they might have received an additional $2.9 billion in state and college grants, averaging about $1,400 per student.

So, why didn’t these students file the FAFSA so they could be considered for financial aid? The paper lists several reasons students gave for not filing applying for aid:

  • They thought they were ineligible
  • They thought they had no demonstrated need
  • They did not want to take on debt
  • They had (little or no) information on how to apply for financial aid
  • They believed the financial aid applications were too much work

In addition to comparing the demographic and enrollment trends of students who do and do not file the FAFSA, Edvisors also analyzes the impact of filing the FAFSA earlier on the amount of financial aid received by the applicant.

Students who file the FAFSA in January, February or March receive more than twice as much grant funding, on average, as students who file the FAFSA later in the aid application cycle.

Among the recommendations Edvisors proposes are to increase student and parent awareness of the importance of filing the FAFSA and of filing the FAFSA early. Edvisors further suggests that all U.S. citizens and permanent resident students should be required to file the FAFSA as prerequisite for college admission or that the U.S. Department of Education provide incentives to get all eligible students to file the FAFSA. By publicizing the potential impact of increased grant funding by filing the FAFSA early in the aid application cycle, one would anticipate an increase in the overall number of college applicants and, hopefully, college graduates.