By Susan Schwartz, CFP ®
There are significant changes to college financial aid applications this year. First, the 2017-2018 FAFSA and CSS Profile will be available to students and parents as of October 1, 2016. This is a three month change from the traditional January 1st release date. The goal is to allow families more time to receive and compare financial aid offers from different colleges.
The second major change is that the 2017-2018 FAFSA will be submitted using the family’s 2015 tax return. Colleges are referring to this as “prior prior year returns”. This is a practical and welcome relief to everyone that scrambled to get returns completed by the financial aid deadlines early in the year.
Grandparents that want to help pay for college also benefit from this change. Any money paid towards college costs that comes from a grandparent counts as income to the student in the following year’s financial aid application. Most grandparents were encouraged to wait to contribute until the student’s junior year when the last FAFSA was submitted. With prior prior year reporting, grandparents can contribute a year earlier without impacting financial aid calculations.
One final bit of big news. Tucked away in a 123 page economic development bill, Massachusetts signed into law a tax deduction for 529 plan contributions. It only applies to MA 529 plans and provides a $1,000 state tax deduction for single filers and $2,000 for married.