WHAT YOU NEED TO KNOW
The Free Application for Federal Student Aid (FAFSA) is an online application that every parent of a current or prospective college student must be aware of. High school seniors preparing to enter college and currently enrolled college students file this form each school year to qualify for financial aid and for some scholarships.
Last year, changes to the FAFSA were introduced as part of the FAFSA Simplification Act (FSA), which became law through the Consolidated Appropriations Act of 2021. The new application aimed to simplify the financial aid process, but the transition came with difficulties. While the FAFSA typically opens on October 1st, last year’s release was delayed by several months and, when the form became available, many applicants encountered frustration due to widespread technical issues with the new submission system.
The 2025-26 FAFSA form will not be changing from last year’s major revision, but the U.S. Department of Education is working to “significantly improve” the FAFSA experience. Starting October 1st, this year’s form will be released for testing with a limited group of students and institutions. After monitoring the testing phase and resolving any software issues, the application will be available to all students by December 1st. Currently you can access the 2025-26 FAFSA prototype on the Federal Student Aid website. This is not the application to file, but it is a limited prototype that offers an advance opportunity to gain “a deeper understanding of the 2025-26 FAFSA form user experience ahead of its release.”
There were many updates to the FAFSA form for the 2024-25 school year and those changes remain in effect. Here are things you should keep in mind as you prepare for this year’s FAFSA:
- The FAFSA form will be available to a select test group of students and institutions beginning October 1st and will be available to all students by December 1, 2024. Students who plan to attend college or career/trade school between July 1, 2025, and June 30, 2026, should file this application.
- The number of questions on the application has been reduced from 108 down to 36.
- Both students and parents must create Student Aid Accounts using a username and password and get an FSA ID to complete the application.
- Tax information is accessed as part of the FAFSA application. Under the new changes, the Social Security Administration will require verification of FSA IDs before tax information will be accessible, so you should allow for at least three days to process your application.
- The old formula provided a benefit if the family has more than one student enrolled in college at the same time. That is no longer the case.
- Of note, some schools and scholarship programs use an online application called the CSS profile to award non-federal institutional aid. CSS schools still provide a discount if more than one student in a family is enrolled in college at once. Depending on how tuition and financial aid packages work out, it can be a huge benefit for attending a CSS school.
- The old formula excluded the value of small businesses and family farms. Now they will be included.
- For applicants with divorced or separated parents, the old rules stated that it was the parent who the student lived with most was the one who completed the FAFSA. Now, it’s the parent who provides the most financial support in the prior calendar year who completes the application.
- What income is reported? The term used is “prior-prior.” High school seniors graduating in 2025 will use the 2023 income tax information to apply for aid for the 2025-2026 school year.
- The old formula required parents to add back the amount of retirement plan contributions, such as 401(k) contributions. The new formula no longer requires this, which can be a benefit to parents.
- The term Expected Family Contribution (EFC) is being replaced with Student Aid Index (SAI). This is an index number used to determine a family’s financial need relative to other applicants.
- Pell Grant eligibility will now be determined using the adjusted gross income (AGI) and the Student Aid Index (SAI). In addition, the FAFSA changes include a reduction in Pell Grant amount for students who are not enrolled full time. Students enrolled less than half time will not be eligible for the grant.
- Previously, if a student received financial help from a friend or family member outside of the immediate family it had to be reported as the student’s untaxed income. In turn, this increased their total income and could impact their eligibility to qualify for need-based financial aid. For example, if a grandparent were to contribute $10,000 from their 529 plan to be used for college expenses, under the old rules that would have been included in the student’s income. Under the new rules, this type of untaxed income will no longer be considered in the Student Aid Index (SAI).
- Students and parents have an income protection allowance, which is an amount of income that FAFSA excludes from the financial aid eligibility formula. Basic living expenses used within the formula vary based on household size. For instance, a family of seven has more expenses than a family of four. Under the new changes, the income protection allowance amount has increased.
Many schools and private organizations require a completed FAFSA to review a student’s application. Therefore, regardless of your income level, it’s important to submit one. It’s best to complete your FAFSA as early as possible since schools may have their own deadlines, and you don’t want to miss out on any first-come, first-served financial aid opportunities. If you have questions about specific school policies, be sure to contact them directly. Feel free to reach out to us for any additional information.
