Watch CBSN Live

​How Obama is rewriting the college game's rules

Applying for college can seem like a game of strategy, and a student's financial aid package often figures as the most important piece of the puzzle.

But for low- and middle-income families, the federal application for financial aid could play out like a penalty because the form historically wasn't available until January, long after many students had already applied to colleges. That's doubly the case when it comes to applying for early admissions, which favors wealthy families because colleges send out early acceptances in December, well before students would even apply for aid.

In this "Eye on Money" series, Jill Schlesing... 03:37

That's all about to change. The Obama administration said it will release the Free Application for Federal Student Aid (FAFSA) in October, when many students are applying for colleges, instead of January. Millions of families will benefit from the switch because it will provide them with more time to make decisions about what may be a young person's biggest financial choice. The change also may encourage more low- and middle-income students to apply for early decision, which historically offers a better chance of admission but has been dominated by wealthy families.

"We have high-achieving low- and middle-income students who had discounted themselves from applying from selective universities" because the financial aid application fell outside of the early-decision process, said Justin Draeger, the president of the National Association of Student Financial Aid Administrators. "More students will think about applying for college earlier."

Draeger said the change was supported by higher education administrators because it will provide them and their prospective students with more time to evaluate offers and make their decisions.

More colleges dropping SAT score requirements... 02:14

About 2 million students who are enrolled in college and who would qualify for a Pell Grant failed to apply for federal aid, the Obama administration said in announcing the changes. Some weren't aware that aid was available, while others were thwarted by timing issues, such as the fact that the FAFSA form required families to have already filed their taxes.

The Obama administration is also tweaking the tax filing requirement, allowing families to use their tax information from the earlier year. That will also streamline the process and allow students to find out their federal financial aid options in time for early decision or as they're researching colleges in the fall and deciding which schools to apply to. It will also help students applying on the regular timeline, given they'll have a sense of their federal financial aid while they're researching and applying.

"The timeline had been a stumbling block for everyone, but especially lower-income families," said Lauren Asher, the president of The Institute for College Access & Success. "It helps level the playing field."

Top colleges like Northeastern and Duke typically give away a significant number of seats in an incoming class to students who apply for early decision. In January, those two universities had already given away about half their spots for the incoming fall class, leaving fewer openings for other applicants. About 460 colleges now offer early admissions, up from about 100 in the 1990s.

Wealthy families who aren't concerned about financial aid have had an edge in early admissions, which offers a better chance of acceptance. Yale and Stanford admitted about 14 percent of early applicants in the 2009-10 school year, or twice the rate for the general pool of applicants.

All students, regardless of whether they opt for early decision or not, will benefit, said Draeger. "It will ultimately mean schools will have more time to counsel and work with students," he said. "Students can have more time to make a decision that make sense for them."

View CBS News In
CBS News App Open
Chrome Safari Continue