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Everything You Need to Know About the 2018-2019 FAFSA

By U.S. News & World Report

Families with a college student may notice a few differences on this year’s Free Application for Federal Student Aid.

The form, commonly called the FAFSA, is the key application to determine college financial aid. Similar to last year, the FAFSA became available on Oct. 1, but this year brings a few changes — most of which are related to new security measures.

In early March, the IRS shut down the online data retrieval tool on the FAFSA because of data-security concerns. The tool, known as DRT, is meant to streamline the application process by transferring income information from tax records to the FAFSA form.

According to financial aid administrators, DRT can save families time if they are selected for verification, since the IRS has already confirmed the tax information the tool provides.

[See key words used in financial aid awards.]

But due to fraudulent activity, the IRS shut down DRT for several months to implement new security measures between the FAFSA and IRS websites. Financial aid experts say these measures were deemed necessary, since completing the FAFSA form hinges on sensitive information, such as family income, tax data and assets.

For families filling out the FAFSA for the 2018-2019 school year, here are three key changes to the form.

1. You won’t see tax information transferred via DRT. “To enhance the security and privacy of the sensitive personal data transferred into the FAFSA form from the IRS, the new solution will encrypt the applicant’s or parent’s information and hide it from view on both the IRS DRT website and on the FAFSA web pages,” according to an announcement from the Department of Education.

With the new safeguarded tool, data is hidden from the parent’s or student’s view during all stages of the data transfer process, financial aid experts say.

“Only the school will be able to see the numbers,” says Brad Barnett, senior associate director of financial aid and scholarships at James Madison University in Virginia.

When using DRT, applicants won’t be able to amend or edit data entered into the FAFSA, says Stephen Dash, CEO and founder of Credible.com, a multilender marketplace focused on student loans.

But Dash says the numbers should be accurate because they’re from the IRS. “If you’re in a vanilla-type of situation where there’s not a lot of complexity, the tool should work fine since it’s pulling from the IRS.”

While applicants can’t see the tax information used from DRT, they will still know other information upon submission, such as their estimated family contribution, Pell-grant eligibility and whether they qualify for direct loans.

[Discover the colleges and universities that claim to meet full financial need.]

2. Some families won’t be able to use DRT. “Because IRS-transferred information will not be displayed, applicants and parents who filed a joint tax return will no longer be able to transfer their combined income earned from work into the FAFSA form from the IRS DRT website,” according to the Department of Education guideline.

For parents who are married but are filing separate tax returns, they can still use the IRS retrieval tool. But for those who file jointly, each parent will have to enter income earned from work manually, according to the new guidelines.

3. Applicants with IRA or pension rollovers should be cautious. If an applicant received a check with an untaxed distribution from rolling over an IRA into a new retirement account, those funds may be calculated as income.

In fact, there’s a new question on the FAFSA that asks an applicant whether that amount includes an IRA or retirement account rollover.

The guideline states: “If the applicant or parent answers ‘yes,’ he/she will be required to provide the amount of the rollover in a new entry field. Our system will then subtract the user-reported rollover amount from the amount of the IRA or pension distribution that was reported to the IRS.”

[Learn about using an IRA to pay for college tuition. ]

Barnett from JMU says families can always contact a financial aid office about a particular situation, such as an IRA rollover, that may have affected their estimated family contribution. But he says, “that’s getting into that professional judgment area.”

He advises families in this particular circumstance to submit a letter to their financial aid office.

Trying to fund your education? Get tips and more in the U.S. News Paying for College center.

More from U.S. News

Declare Yourself Independent for College Financial Aid

10 Shattered Myths About Financial Aid

Strategies for Students Too Rich for Financial Aid, Too Poor for College

Everything You Need to Know About the 2018-2019 FAFSA originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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