From the desk of...
Robert Weinerman, Director of Training
An Early Look at Recently Enacted Changes to the Tax Code and How They May Impact Financial Aid
Congress passed and the President signed a reconciliation bill on July 4, 2025, which, as you know, made significant changes to student and parent borrowing and repayment, and technical changes to need analysis and Pell Grant eligibility. Less discussed among financial aid administrators (FAAs), but certainly impactful, are changes to the income tax code that are effective this calendar year (2025), which is the base year for the 2027-2028 academic year. Given all that is on every FAA’s plate right now, you might think it’s about a year too early to look at these tax changes. But these changes may impact the way you consider professional judgments (PJs) based on reduced income in 2025-2026 and 2026-2027, so please read on.
In situations where an applicant or contributor has less income in a post-base year than in the base year (for example, for 2025-2026 or 2026-2027, which use 2023 or 2024 as the base years respectively), many FAAs will use more current tax returns (i.e. 2025) as documentation of changes to the contributor’s income. In such cases...
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