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. However, those who are familiar with the old application can expect to see some changes.
The FAFSA Simplification Act (FSA) was introduced in an effort to streamline and improve the financial aid process. It became law as part of the Consolidated Appropriations Act of 2021, and with it comes new rules. The changes were slated to start for the 2023-24 school year, but most will now take effect for the 2024-2025 school year. While the FAFSA application is typically available in the beginning of October, this year the opening date has been pushed back to December. It’s expected to revert back to October 1, 2024, for the following financial aid year.
Here are things you should keep in mind as you prepare for this year’s FAFSA:
- The FAFSA form will be available in December 2023. Students who plan to attend college or career/trade school between July 1, 2024, and June 30, 2025, 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 2024 will use the 2022 income tax information to apply for aid for the 2024-2025 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 is 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 even consider a student’s application, so regardless of your income level, you should plan on submitting one. With all the changes coming to the FAFSA, and the later-than-usual filing date in December, it’s a good idea to process yours as soon as possible. Schools may have their own deadlines and with the shortened window of time, you don’t want to lose out on any first-come first-served opportunities for financial aid. Be sure to check with schools directly if you have any questions regarding their policies, and feel free to reach out to us if you would like any further information.