There are significant financial aid changes taking effect later this year thanks to bills passed by Congress. Some of the changes will start fall 2022 for the 2023-2024 academic year, while others have been delayed until 2024-2025.
What do these changes mean? Your costs for college could change.
1. Down by over half
The revised Free Application for Federal Student Aid (FAFSA) will have a maximum of 36 questions, down from 108. Expect to see a shorter FAFSA beginning October 1, 2022, for the 2023-2024 academic year.
2. Name change
To simplify the financial aid process, the Expected Family Contribution (EFC) will be renamed the Student Aid Index (SAI).
The name change will clear up the misunderstanding that the EFC (soon to be SAI) is how much money a family needs to pay out of pocket for college. It’s actually the amount of income and assets a college uses to calculate a family’s financial need.
The SAI can also be as low as -$1,500 for families with significant financial need (compared to $0 with the EFC).
3. Greater protection
A certain amount of reported income is protected (or excluded) in the financial aid formula. Changes will increase this protection by roughly 35%. This will help offset the fact that the revised FAFSA will no longer take into consideration the number of students a family has in college.
4. Expanded eligibility
Federal Pell Grants are a significant funding source for many families paying for college. How these grants are calculated will be simplified using two primary factors: family size and adjusted gross income. This means more families will be eligible for grants, and they’ll know if they’re qualified before completing the FAFSA.
5. New asset
Currently, the financial aid formula treats child support received as untaxed income. Starting with the 2024-2025 academic year, child support will be considered an asset on the revised FAFSA, which will lower its impact on the financial aid formula because assets are counted less than income.
6. A little tweak goes a long way
Professional judgment (PJ) is the authority given to colleges by the federal government to adjust certain data on the FAFSA to get a more accurate picture of a family’s ability to pay. New legislation means new changes:
- Institutions are prohibited from keeping a policy denying all PJ requests.
- Financial aid administrators, under certain conditions, can offer a dependent student a Direct Unsubsidized Loan without requiring parents to complete the FAFSA.
- Financial aid administrators, during a time of qualifying emergency and with documentation, can zero out income earned from work.
All of these changes mean more financial support for students and families, especially those facing unforeseen hardships after initially completing the FAFSA.
7. Streamlined reporting
With the revised FAFSA, more applicants will be eligible to have their taxed and untaxed income automatically transferred from their tax return directly to the FAFSA. This process, sometimes referred to as the IRS data retrieval, helps eliminate user errors and makes it simpler for families to complete the process.
Sources
National College Access Network (NCAN). Bipartisan Support for FAFSA Simplification Eases Path to Accessing Financial Aid. https://www.ncan.org/news/543813/Bipartisan-Support-for-FAFSA-Simplification-Eases-Path-to-Accessing-Financial-Aid.htm
The Chronicle of Higher Education. Big Changes in the Federal Student Aid System Are Coming. Here’s Why They Matter. https://www.chronicle.com/article/big-changes-in-the-federal-student-aid-system-are-coming-heres-why-they-matter
College Aid Pro. Big Changes Are Coming to Federal Student Aid. https://collegeaidpro.com/new-fafsa-rules/
Forbes. 5 Big FAFSA Changes Are Coming. https://www.forbes.com/advisor/student-loans/fafsa-changes/
National Association of Student Financial Aid Administrators (NASFAA). NASFAA Deep Dive: Changes to Federal Methodology, Other Student Aid Changes From Spending Bill. January 7, 2021. https://www.nasfaa.org/news-item/24269/NASFAA_Deep Dive_Changes_to_Federal_Methodology_Other_Student_Aid_Changes_From_Spending_Bill
StudentAid.gov. What is professional judgment? https://studentaid.gov/help-center/answers/article/what-is-professional-judgment
