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In this blog post, we discuss the eight significant changes coming to the FAFSA. The majority of these modifications won't take effect until the FAFSA for the 2023–24 academic year becomes accessible on October 1, 2022.
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The 2021 appropriations bill, which President Donald Trump signed and passed into law late last year, included a number of significant federal financial aid reforms.
A long-awaited, contested Covid-19 relief bill that was also signed into law the same day shared the spotlight with the bill, which funded the government through September 2021. But it was also important for college students because it made the Free Application for Federal Student Aid, or FAFSA, easier to complete and increased eligibility for Pell Grants.
Many of the policy updates, which higher education advocates would remove unnecessary complexity from the financial aid application process. The majority of these modifications won't take effect until the FAFSA for the 2023–24 academic year becomes accessible on October 1, 2022.
The number of questions on the form is significantly reduced by the appropriations bill. The maximum number of questions needed will now be 36. The specific questions a family must respond to depend on its unique financial situation.
The most significant changes? Direct import of a family's income data from their tax returns into the FAFSA (currently, families must access the data themselves using the IRS Data Retrieval Tool). Families will have to answer fewer questions when reporting their own income as a result. Additionally, students will no longer be asked if they have ever been convicted of a drug-related crime, meaning drug offenses will no longer prevent students from receiving federal financial aid.
'Expected Family Contribution’ renamed the ‘Student Aid Index’. The expected family contribution, or EFC, is a figure derived from the need-based financial aid formula that takes into account your income and assets to ascertain how much the government estimates you can contribute to a year's worth of college expenses.
In order to make it more clear that the figure presented is not the sum of money a family is needed to spend for college, the EFC has been renamed the "Student Aid Index" (SAI) in the bill.
The term Expected Family Contribution is a bit deceptive, which is the main problem here. Some families believe they must pay this amount at each school, which is incorrect. That is not the situation. Instead, the figure represents to each institution your so-called "paying capability" and aids them in determining your aid package. A college will find it simpler to identify the students who have the greatest financial need now that the bill also permits a student's SAI to be negative.
Read more on the Student Aid Index here.
Undergraduate students in need of financial assistance may qualify for federal direct subsidized loans. During specific times, such as when a student is enrolled in school, is in the post-graduation grace period, or is eligible for deferment, the government pays the interest on subsidized loans.
Currently, a student's lifetime eligibility for subsidized loans is limited to 150% of the program's length, as determined by the school. Therefore, a student who enrolls in a four-year program can only receive direct subsidized loans for a total of six years. This restriction is removed by the appropriations bill, allowing students to take out subsidized loans for however long it takes them to finish their education.
The bill expands who is eligible for the federal Pell Grant, which is a significant win for students. The Pell Grant is a type of financial aid that is available to undergraduate students in need and does not require repayment. The maximum Pell Grant contribution is $6,345 per student for the 2020–21 academic year; in 2021–2022, it will be $6,495 per student.
In general, Pell Grant eligibility will be streamlined, enabling students to learn more quickly whether they qualify and how much Pell funding they will receive. The size of the student family and adjusted gross income in comparison to the federal poverty level, rather than the anticipated family contribution after submitting the FAFSA, will determine Pell eligibility under the new regulations. According to legislators, this change could result in a 500,000+ increase in the number of students eligible for Pell grants.
Additionally, in 2023–2024, these student groups will now be eligible for a Pell Grant:
The law permits financial aid administrators to adjust a student's, parent's, or spouse's income when determining the student's eligibility for aid during times of a national emergency. If a student can demonstrate that they are receiving unemployment benefits, their income will be reduced to zero. For example, this could assist a student without a job in receiving a Pell Grant.
The "income protection allowance" for parents and students is modified under the bill. When the federal government calculates how much a student and/or family may be able to contribute toward paying for college, the income protection allowance hides a portion of the student's and/or parent's income from being "counted." The plan safeguards a larger portion of earned income, which might lead to increased financial help for working families and students.
Wherever a college lists tuition and fees, it must also disclose all other components of the cost of attendance on its website. In the past, colleges were only required to disclose a portion of the costs associated with attending.
Quick tip: You automatically become eligible for financial aid from your state and sometimes also from your school when you fill out the FAFSA. Thus, applying for financial aid is the only way that you can know for sure whether or not you are eligible.
For students whose parents are divorced or separated but have not remarried, there will be a shift in which parents must submit the FAFSA. Despite what their legal agreement specifies, the FAFSA currently labels the custodial parent as the one the student lives with most of the time.
In other words, the parent who gives the student the most financial support will now be the one who must complete the FASFA, not the parent with whom the student resides. If both parents contribute equally to the student's expenses, it is expected that the parent with the higher income will be in charge of filling out the FAFSA.
The FAFSA can be completed by either parent using information about the household's income and assets for students who have married parents or unmarried parents who live together.
Complete the FAFSA on the federal student aid website. If you submitted a FAFSA application last year, log in with your FSA ID and select FAFSA Renewal from the menu. You'll be taken to a form that has been partially filled out, where you can add new financial data.
For the school year for which you are filing, that is the 2021–2022, you have until June 30 to finish your application. However, the FAFSA deadlines at your school or in your state are typically much earlier. Find your state deadline on the FAFSA website.
Yes. You must submit the Free Application for Federal Student Aid (FAFSA®) form for each award year in which you are or anticipate being a student because federal student aid eligibility does not carry over from one award year to the next.
Your family's financial situation and the number of family members enrolled in college can both affect your eligibility for federal student aid on an annual basis.
As soon as the federal government releases additional information, we'll update this post with new information and our thoughts on the FAFSA changes.
For more blog updates, kindly check our website frequently. As always, if you have concerns about how to pay for college in your particular situation, please reach out to our team, we would be happy to answer any questions you may have.
Reminder: Don’t stop thinking about financial aid after you file the FAFSA. This is the perfect time to look for state, college, or private scholarships and grants that could offer additional funds to help you pay for college.
For Money Saving FAFSA tips, click here.
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