College application season is in high gear and parents and students preparing to go to college for the first time are gearing up for financial aid applications. Those not graduating this spring need to prepare for next year's applications. Going to college is an expensive venture. From tuition and textbooks to stocking up a dorm room with all the essentials your child will need, most college students could use all the financial assistance that the government could possibly offer.

Whether you are sending your child to college for the first time, or you are a seasoned veteran, you are bound to face some changes when it comes to financial aid in the year ahead. The first step in getting this aid is to fill out the Free Application for Federal Student Aid (FAFSA), which becomes available in early January each year.

Here is a look at the current requirements for FAFSA and other federal student aid programs in 2015-2016 and how they will affect what you can get.

Federal Student Aid for 2015-2016

You can apply for aid between Jan. 1, 2015 and June 30, 2016; next year's deadlines should be similar. Click here to check. That's why it makes sense to complete the FAFSA as soon as possible each year after it becomes available in early January.

Pell Grants Increased Amount
Pell grants are a federally funded grant that are rewarded to students who are at-need, and meet financial requirements. Pell grants are intended to help lower the out-of-pocket costs of college tuition for financially struggling families in the United States. The maximum Pell Grant amount is $5,775, which is a $45 increase over last year's reward amount. Please note that you may not receive the total reward amount; this is simply the maximum allowed for the 2015-2016 calendar year.

Higher Allowance for Student Earnings
The student earnings allowance – the amount a student can earn before his/her earnings are considered as part of available income for their family contribution – rose to $6,310 per year, from $6260.

Qualification For Automatic Zero EFC
The qualifications for Automatic Zero EFC, or Expected Family Contribution is unchanged from recent years. A student can receive an automatic Zero Expected Family Contribution when his or her family's income is $24,000 or less annually.

IRS Data Retrieval
The FAFSA filing process has changed, and it is recommended that all students use the IRS Data Retrieval tool to obtain their or their parents' federal tax return. Using this tool will eradicate common errors on FAFSA forms, and keep your application for student financial aid running smoothly. Tax information is available through the tool approximately 2-3 weeks after tax return submission, and by now all data should be in and finalized. Also keep in mind that Federal 1040 tax returns are no longer an acceptable form of verification for the FAFSA.

Fees for Federal Direct Loans Slightly Lower
The loan fee for direct educational loans from both subsidized and unsubsidized organizations dropped from 1.073% to 1.068%. If you are a borrower of a Direct PLUS loan, you should be aware that the loan fee also fell slightly, from 4.292% to 4.272%.

The Bottom Line

Similar to other years, 2015-2016 has seen some changes in how to file and receive financial aid. Keep in mind that loan rates, grant rewards and financial requirements regularly change, so it is important that you know the exact requirements prior to filing your FAFSA forms. Also remember that there are updates to the FAFSA website as well, and there are plenty of helpful resources on the FAFSA website such as the FAFSA/IRS Outreach, FAFSA Webinar and more. Prior to filing for financial aid, be sure that you fully understand all the changes and how they can affect your filing status. For more information, see An Introduction to Student Loans and the FAFSA and 5 Ways to Get Maximum Student Financial Aid.

Related Articles
  1. Credit & Loans

    An Introduction to Student Loans and the FAFSA

    Learn how to fill out the FAFSA form so that it is easier for you to fund your education.
  2. Credit & Loans

    Federal Direct Loan Limits

    How much you can borrow depends on your grade level in college, whether you're an undergraduate or grad student, and other factors.
  3. Credit & Loans

    Federal Direct Loans: Subsidized vs. Unsubsidized

    Before you take out federal student aid, learn the difference between these two types of Direct Federal Loan. It could save you a chunk of money.
  4. Credit & Loans

    An Introduction to Federal Direct Loans

    Federal Direct Loans provide student funding that a majority of people can easily access. Find out if you qualify.
  5. Credit & Loans

    A Quick Guide to How FAFSA Loans Work

    If you’re headed to college and want to know how to apply for financial aid, this is where you need to start.
  6. Credit & Loans

    An Introduction To Perkins Loans

    Check out the eligibility and repayment options, and how you can get this loan forgiven.
  7. Savings

    5 Ways To Get Maximum Student Financial Aid

    Getting the best possible package for a college fund depends on minimizing assets and maximizing the energy you use to find possible funding sources.
  8. Personal Finance

    Is An Ivy League Degree Worth It?

    In 600 B.C. Aesop determined that a bird in the hand was worth two in the bush. Warren Buffett claims that this axiom can be used to determine the most valuable uses of capital. In this article ...
  9. Credit & Loans

    Best 3 Online Auto Loan Calculators that Include Tax

    Learn where you can find the best auto loan calculators online that include sales tax, and understand the different features these calculators offer.
  10. Entrepreneurship

    5 Things to Do Before Submitting a Loan Request for Your Startup

    Learn the five key steps to securing a small business startup loan, what documents to present, what personal finance items to check and where to apply.
  1. Are secured personal loans better than unsecured loans?

    Secured loans are better for the borrower than unsecured loans because the loan terms are more agreeable. Often, the interest ... Read Full Answer >>
  2. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  3. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  4. What exactly is the Wall Street Journal prime rate?

    As globalization continues to force businesses to streamline their operations to ensure their long-term competitive positions, ... Read Full Answer >>
  5. Who is eligible for student loan forgiveness?

    Your eligibility for student loan forgiveness depends on the type of student loan in question. If you have a federal loan, ... Read Full Answer >>
  6. What’s the difference between the two federal student loan programs (FFEL and Direct)?

    The short answer is that one loan program still exists (Federal Direct Loans) and one was ended by the Health Care and Education ... Read Full Answer >>
Trading Center