New Rules: What will go into effect this year?


If you are the parent of a prospective or current college student, completing the FAFSA form should be a high priority task on your October to-do list.  The Free Application for Federal Student Aid (FAFSA) must be submitted for students to qualify for college financial aid and for some scholarships. Whether your child is a high school senior preparing to enter college after graduation, or a currently enrolled college student who will return next year, filing this application in a timely manner is important. 

The FAFSA is a free online application that opens on October 1st of the year prior to entering (or continuing) college.  Using 2020 tax information, students and parents complete the FAFSA for the 2022-2023 year of college.  This is used to calculate a student’s access to financial aid and is also used by many schools to determine eligibility for certain scholarships and work study.  You should make every effort to complete it as soon as possible as several schools determine aid on a first-come, first-served basis and deadlines can vary.

Change is Coming – But Not Quite Yet

At the end of 2020, Congress signed the Consolidated Appropriations Act of 2021 which included changes to the FAFSA.  These changes will be phased in over the next few years.  The new rules will eventually simplify the application process, but aside from a visual refresh, this year’s FAFSA will be similar to the form from previous years. 

There are two changes of note that go into effect with this year’s application.

  • Drug convictions no longer affect student aid eligibility.  While the questions regarding drug convictions still appear on this year’s form, the answers will not impact a student’s financial aid eligibility.  However, it is important that students answer this question honestly, as signing the FAFSA is stating that all answers given in the application are truthful. 
  • Federal law requires men ages 18 to 25 to register with Selective Service in case of a military draft, and they may still do so through the FAFSA form, but status will no longer impact students’ eligibility to receive federal student aid. 

New FAFSA Rules

The new FAFSA rules will take several years to implement, with the phase-in expected to be completed by the 2024-2025 school year.  Updates include:

  • a simplified form that drops from the current 108 questions down to 36,
  • answers to income questions will be transferred directly from the family’s tax returns,
  • changes to the Federal Pell Grant criteria that will broaden eligibility,
  • new rules for divorced parents,
  • replacing the Expected Family Contribution with a Student Aid Index,
  • distributions from a grandparent-owned 529 no longer counting as income for the student, and
  • elimination of the consideration parents currently receive for having multiple children in college. 

The journey of selecting a college, getting admitted and paying for it can be overwhelming.  Adding in significant changes to the FAFSA can make even experienced college parents unsure of what can be expected.  Thankfully, there are professionals who are skilled in navigating the entire process.  It can be helpful to speak with your school’s finance offices, your accountant, or a college planning specialist so that they can review your specific situation and provide guidance on how the new FAFSA rules may impact you.  Please contact us if we may provide further information.