NEW YORK (MainStreet) — When students file FAFSAs, the Free Application for Federal Student Aid, it includes a list of the schools to which students are applying. That list is made available to colleges and universities.

Next year it will become privileged information. The Department of Education (ED) plans to end the practice of providing colleges with this veritable cheat sheet that allows schools to see who they are competing against on a student-by-student basis.

The higher ed cognoscenti, from enrollment management consultants to admissions officers, have found that information to be valuable. It can be used against a student's interest when it affects the aid being offered. Schools at the top of a student’s wish list may be incentivized to offer less money on the theory that money will not be an object for people who really want to attend.

The FAFSA is used not only to apply for federal student aid, but also state aid and financial aid from most colleges and universities, said Mark Kantrowitz, senior vice president and publisher of "To apply for aid from the colleges, students must list the colleges to which they are applying for admission,” Kantrowitz said. “Those colleges previously received all of the information submitted on the FAFSA, including the list of colleges."

Most students, Kantrowitz said, were listing the colleges in the order of preference. "It was an open secret that some colleges used this information to influence their college admissions decisions," he said. For example, if a good student is unlikely to enroll in a school that isn’t listed in his or her top three, there’s little reason for a low-ranked school to offer that student admission. “Some colleges would deny admission to the student in order to try to improve their yield,” he said, increasing that school’s appearance of selectivity.

"No college has admitted to doing this sort of manipulation," he said. "But it is not uncommon for a student to get into an Ivy League school but be rejected by lower-ranked institutions."

A study entitled The Strategic Use of FAFSA List Information by Colleges by Stephen R. Porter of North Carolina State University’s Department of Leadership, Policy, and Higher Education, found that some colleges that tend to be selective will reduce financial aid to students when those schools end up high on an applicant’s FAFSA wish list.

In the past, students were given no notice that ED was sending out the list of colleges they are interested in. Last year ED informed students that their colleges choices were being disclosed. The current form does not explicitly say that colleges get to see the order in which students list schools.

A 60 day public comment period began on the FAFSA changes. Once it ends, the White House Office of Management and Budget is expected to give final approval to the revised form.