Upcoming FAFSA Changes
Changes to the FAFSA are coming soon!
The Free Application for Federal Student Aid (FAFSA) is getting a make-over! The newly simplified version of the form, effective for the 2024-2025 school year and beyond, is expected to be shorter and easier to complete for most students and families. The new FAFSA will be available in December 2023.
The new FAFSA will:
- Change the Expected Family Contribution (EFC) measurement to the Student Aid Index (SAI). A student's SAI can be as low as negative $1,500, which can increase the amount of financial aid some students will qualify for the formula uses less factors than the EFC, requiring fewer FAFSA questions.
- Require that all parties providing information (such as the student and parents) must create a Federal Student Aid account (FSA ID) and authorize the IRS to provide tax and related information to be used on the FAFSA. This step is mandatory, no longer voluntary. If a person does not give consent to the transfer of tax-related information, this will result in an inability to access federal and state financial aid.
- Qualify students for financial aid based on Adjusted Gross Income (AGI), so some students automatically qualify to receive a Pell grant. The AGI threshold is either 175% or 225% of federal poverty guidelines, depending on the student’s dependency status and marital status.
- Replace “Room and Board” with “Food and Housing” calculation in a student’s annual college Cost of Attendance (COA) calculation, which includes the cost of 21 meals per week. A family’s COA minus SAI will equal their financial need.
- Introduce changes to family size determination, asset calculation, income protection allowances, and excludable income:
- Eliminates the provision that divides the expected contribution by the number of family members enrolled in college.
- Requires more small businesses/family farms to report as assets (previously businesses/family farms with less than 100 employees were excluded).
- Uses tax forms to determine household size.
- Eliminates the prohibitions on eligibility for incarcerated students and students with drug-related offenses or who fail to register for Selective Service.
- Pell Grant amount will be reduced proportional to actual enrollment if less than full time.
The Nitty Gritty
All in all, this is good news for most students! The new FAFSA will not only make eligibility for financial aid more predictable for students and families, it will result in:
- Larger average Pell Grant awards.
- An increased number of students eligible for Pell Grants.
- The establishment of the minimum Pell award.
The number of Pell-eligible students is expected to increase by half a million, totaling 7.4 million students. Wondering if you will be affected? Use this simulator tool (designed for dependent students enrolled in college full-time) to estimate your future eligibility for financial aid.
A Few Considerations to Keep an Eye On:
- A student with divorced or separated parents will report information on “the parent who provides the greater portion of the student’s financial support.” This parent should be either the one the student lived with more during the past 12 months or, if the student lived with both equally, the one who provided the most financial support in the past 12 months, which is the one with higher income. If the parent is remarried, the stepparent must also provide tax information, unless the married couple filed a joint tax return.
- For students who do not come from a two-parent household, all parties providing information must create a Federal Student Aid account (FSA ID) and authorize the IRS to provide tax and related information to be used on the FAFSA. This step is mandatory, no longer voluntary. If a person does not give consent to the transfer of tax-related information, this will result in an inability to access federal and state financial aid.
- As part of the introduced changes, families with farms and small businesses should be prepared to provide the estimated worth of these assets.
- Remember, the final version of the upcoming FAFSA has not yet been published, so some guidance may change or more information may become available closer to the launch of the new FAFSA.
Other Fast Facts
- The new FAFSA, along with resources and translation services, will be available in the (11) most commonly spoken languages in the United States.
- Students can select up to 20 colleges to share their FAFSA with, up from the previous 10 colleges limit.
- Once a student begins the FAFSA, their parent will have 45 days to complete their portion.
Ready, Set, FAFSA! Webinar Series
Although the FAFSA launch date is delayed until December 2023, the Ready, Set, FAFSA October Webinar series will be held on Tuesdays in October 2023. Click here to learn more and register.