Changes to the FAFSA
Whether you’re an incoming first-year student or already have a few years of college behind you, the Free Application for Federal Student Aid (FAFSA) is the best way to see if you qualify for need-based financial aid. Most years, the FAFSA becomes available on October 1. While the FAFSA for 2024-25 was originally planned to be on schedule, it won’t be available until December 2023. (The exact date hasn’t yet been announced.) The new FAFSA will include some significant changes.
Ultimately, the purpose behind these changes is to encourage more students to apply and to provide better access to financial aid for people of all backgrounds. Keeping up with recent updates is one key to a smooth application process. Here’s what’s different this year:
Its length. The application will be much shorter and will rely almost entirely on parents’ tax returns from two years prior. This means a more straightforward financial aid application overall.
Previously, student eligibility was determined using the Expected Family Contribution (EFC), an estimate of how much a student and their family can afford to pay for college. This number is calculated based on several factors, including family size, income, taxes, and assets. Starting this year, the EFC will become the Student Aid Index (SAI). The SAI will largely be calculated in the same way as the EFC, but the shift in terminology communicates that this number doesn’t necessarily reflect the amount the family is expected to contribute. Where the minimum amount under the EFC model was $0, the SAI model will allow for a negative amount of $1,500. This may help students qualify for more assistance and better identify those with greater need.
Eligibility will change for families who have multiple students in college or who run family businesses or farms that generate income.
Qualification for the federal Pell Grant will now largely be based on family size and income with fewer influencing factors. This means families may be able to get an idea of how much they qualify for before even filing for financial aid.
There will be a higher income threshold to consider assets for families receiving means-tested benefits, like federal and state welfare programs. In short, more students will have the opportunity to qualify for the Pell Grant (including those who are already in college).
New regulations dictate which parent’s income will be included on the FAFSA application in families where parents are divorced or separated. Under the FAFSA 2023-25 changes, the custodial parent (i.e., the parent who has guardianship for the majority of the year) should fill out the FAFSA. In cases where parents share equal custody, the responsibility will default to the parent or household with the highest adjusted gross income (AGI).
In previous years, families were required to report any financial gifts provided to students for college expenses. So, if a relative provided financial support for a student’s education, it impacted their family’s income—and in turn, their EFC. Under the FAFSA 2023-25 changes, this is no longer a requirement. This means students who receive outside support to pay for college don’t have to worry about jeopardizing their financial aid eligibility.
For more information about how to fill out the FAFSA, how to estimate costs at a particular college, how to interpret college financial aid offers, and how to pay for college, use the contact form on my website to schedule a free one-hour consultation.
