Using Older Tax Data To Give Students Earlier Aid Awards

"What would happen if financial-aid eligibility were based on two-year-old tax data rather than the year-old data used now? It seems like a dry, technical question. But advocates of the practice think using older data would let students apply for and receive notice of their aid much earlier, setting the stage for a more student-friendly aid system. And new research released by the National Association of Student Financial Aid Administrators at its annual meeting here on Monday suggests that the practice could be put into effect without much change in which students qualified for Pell Grants," The Chronicle of Higher Education reports. "Prospective students are currently encouraged to file the Free Application for Federal Student Aid as quickly as possible after it becomes available, on January 1. But even if they do, they won’t find out until March or April what they will have to pay at each college that has admitted them. By then, the deadline for choosing a college is right around the corner. That compressed timeline has long struck many who work with students as problematic. Applying for aid with older tax data, the thinking goes, would give students more time to make an informed decision. It could also make the filing process simpler, by allowing students to depend more heavily on the Internal Revenue Service’s data-retrieval tool. The association, known as Nasfaa, wanted to build on previous research that looked into how much accuracy would be lost if two-year-old data were used. For its study, supported by a grant from the Bill & Melinda Gates Foundation, the association hired Robert J. Kelchen, now an assistant professor at Seton Hall University, to examine records for 70,000 students enrolled at eight colleges from 2007-8 to 2011-12 to see how older tax data would change their Pell Grant eligibility. In short, switching years didn’t make a big difference, Mr. Kelchen found. Most students in the sample either qualified for Pell Grants under both calculations or under neither. Students whose eligibility did change tended to be on the edge of qualifying for a Pell Grant and to be independent students without their own dependents. The association expects to release a full report of its findings next month."

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