There are several changes students can expect. While some may not be as apparent, some will be obviously different. It’s important to note while this is a summary of what is expected, we won’t know the true changes until they are implemented in the new FAFSA. In other words, this is an informational piece and shouldn’t be used as legal advice or guidance.
FAFSA Simplification Act
In 2021, Congress passed the FAFSA Simplification Act. This one act will overhaul the FAFSA as we know it and even change common terminology for those who have completed the FAFSA in the past. The overhaul is expected to simplify the FAFSA process for students and their families. The Act asked that the U.S. Department of Education overhaul the application for the 2023-24 application cycles; however, they were granted an extension to release the simplified version of the application for the 2024-25 application cycle.
FAFSA Release
Most students prepare to begin completing their FAFSA application each October for the following fall term start. However, due to the changes of the application, the U.S. Department of Education has said that the 2024-25 FAFSA Application will be released in December— a delay of at least two months.
2024-25 FAFSA Deadlines
Because the FAFSA will be delayed at least two months, you can expect that state and school deadlines will also shift. Along with the federal government, many states and schools rely on the information provided by the FAFSA to award financial aid to their students. They typically will tie their FAFSA deadlines to the release of the FAFSA application for that upcoming year. Many states have a first-come, first-served financial aid awarding method, and they ask that a student complete their FAFSA as soon as possible after it is released.
If you need to file a 2024-25 FAFSA, it is recommended that you keep an eye on the shifting deadlines! While you’ll have more time to prepare, you don’t want to allow it to slip your mind and miss out on financial aid!
Changing EFC to SAI: Expected Family Contribution to Student Aid Index
The Expected Family Contribution (EFC), the number calculated based on the information input into the FAFSA application, will now be known as the Student Aid Index, or SAI. Unlike the EFC which was a number that would only go to zero, the SAI can be a negative number. Why? Well, the lower a student’s EFC, the more financial need they are determined to have. Since the EFC would stop at 0, it would be difficult for schools to compare the financial situation of all students with a 0 EFC. Now an SAI can go negative (down to -1500) and a financial aid office can use that information to determine which students have the most demonstrated financial need.
The change to the SAI will also expand eligibility for need-based aid, like the Federal Pell Grant. The SAI will update the need-based formula, which has been widely criticized for years. The EFC formula has long been criticized for not being reflective of the financial situations of current day students.
Reduction in FAFSA Questions
One large obstacle for families, the burdensome questions. The FAFSA will now remove two-thirds of its questions asked of the applicant. While students will still be asked their demographic information, income, and assets, the questions which remain should be easier to understand.
Many students may not see the full effect of the question removal if they are already used to completing the FAFSA online. The online application uses skip logic, which already skips questions based on previous answers that allows the application to make certain assumptions.
Determining your FAFSA Parent
For students whose parents are not married and do not live together, determining which parent information to provide will change. In the past, students would provide the information of the parent with which they lived with the most in the previous twelve months. Now the student will provide the information of the parent who provided the most financial support, regardless of where the student lived.
Consent for IRS Information Transfer
You may have heard of or experienced the IRS Data Retrieval Tool (IRS DRT) which required you to log in and give permission for your IRS tax information to be input into your FAFSA. The information in the IRS DRT was imported after logging into the site and granting permission—it wasn’t a direct input. The new method for the use of Federal Tax Information (FTI) is that once consent is given, it will be provided by the IRS and not by the student and their parent(s).
Exempt from Reporting Assets
There have always been rules that allowed some students, based on their income information, to be exempt from reporting assets. In the past the income information provided on the FAFSA would determine if the student’s EFC would be calculated using the Simplified Needs Test. Now these students will be classified as Exempt from Reporting Assets—far easier to understand. In the past, along with meeting all the criteria, students with income under a $50,000 threshold would be eligible for the Simplified Needs Test and would be allowed to skip the asset questions. Now that number is being pushed up to $60,000.
New FAFSA Income Protection Allowance
Many families who try to maximize their financial aid eligibility have been curious about the income protection allowance. The income protection allowance essentially shields a certain amount of income from being assessed for a student’s EFC. Now when it comes to the SAI, the income protection allowance will increase for both parents and dependent students. While this may help lower a student’s SAI, other factors may come into play, like reporting the amount of family members who will be in college at the same time as the student.
Help to Student’s Who Cannot Provide Parent Information
When it comes to the thousands of students who complete the FAFSA each year, there are thousands of family situations that arise. One in particular is students who are under the age of 24, unmarried, and considered dependent students for FAFSA purposes, who do not rely on support for their parents and have special circumstances that should be considered. There will be a way for these students to complete the FAFSA and essentially be considered “provisionally” independent students.
Financial aid administrators will still need to work with students in this situation. However, in the past, technically the student’s FAFSA would be 'rejected' and they would need to work with their financial aid administrator. Now they will be able to submit the application and then work with their financial aid administrator.
Reporting Small Business and Farms
If this applies to you, you want to make sure you understand what the FAFSA will be asking and not assume that you continue to answer this question as you did in the past. In the past, small businesses had to meet certain requirements, like having the equivalent of 100 full-time. The new FAFSA will be asking for the small business valuation, and an assessment of that valuation will be taken into consideration when calculating your SAI.
What Will Remain the Same
If you have previously completed the FAFSA, you may notice it still feels the same. While questions may be rephrased or changed, you may not have memorized exactly what you reported in the past. If you are planning on filing the FAFSA online (which is recommended!) you will still need an FSA ID. If your parents will need to provide their information on the FAFSA, they will still need an FSA ID.
If possible, it is recommended that you complete the FAFSA online because the application uses skip logic, which essentially makes assumptions based on past answers to ‘skip’ questions that would be unnecessary for you to complete.
In addition, the FAFSA will remain an annual application for students who intend on going to college the following year. Even though there will be a delay this year, you should still plan to complete the FAFSA to ensure you don’t miss out on any financial aid funds!