The last Covid Relief Bill included big changes to the FAFSA (Free Application for Federal Student Aid).
While the FAFSA for the 2023-24 academic year opened on October 1st and incorporates some minor changes, the majority of key FAFSA changes will take effect next October (October 1, 2023) for the 2024-25 academic year.
Why next year? More than half of the colleges are not yet prepared for the FAFSA changes.
While we will still enjoy the FAFSA in its current version for the upcoming year, you should be aware of some of the major changes coming next year:
- A shorter version of the FAFSA.
Impact: The new format will cut the number of questions from 108 to 36 for most families.
- Student Aid Index (SAI) is replacing Expected Family Contribution (EFC)
Impact: The new financial aid calculation becomes Cost of Attendance (COA) – Student Aid Index (SAI). The impact is somewhat negligible – while the new calculation means two things – SAI can be negative or zero and students can look at tables to determine if they are eligible – it replaces one confusing term with another…
- Multiple Children in College
Impact: Under current FAFSA rules if you have multiple children attending college your EFC is split among them. Beginning in 2024, this will no longer be the case. This will reduce financial aid eligibility for many families.
- Generosity Penalty Eliminated
Impact: Under current FAFSA rules if grandparents, aunts/uncles, friends, or anyone outside the family helped pay for college the money was treated as untaxed income which was assessed at rates up to 50% on the proceeding FAFSA. This has been eliminated for 2024, meaning students will no longer be penalized for the generosity of others.
- Divorced or Separated Households
Impact: Currently the FAFSA is completed by the custodial parent, i.e., the parent a student lives with the majority of time. Next year, the parent who provides the most financial support is expect to file. If both parents provide equal support, then the expectation is the parent with the larger income will file the FAFSA. At this point, it is unclear how the rules will affect separated parents. This change will negatively impact many students who qualify for student aid because the custodial parent has a lower income
- More Students Will Qualify for Pell Grants
Impact: Currently about 34% of all undergraduates are eligible for a Pell Grant (and a corresponding State Grant). Changes in the federal Pell Grant eligibility formula (will become prior-prior year adjusted gross income (AGI) as a % of prior-prior year Federal Poverty Level (FPL). This will increase the number of students eligible for Pell Grants. Additionally, income allowance protection is changing – a larger % student and parent income will be shielded from what is expected to be used for college expenses.
As an educational consultant, Jeff uses his experience and insights to identify “good match” colleges to fit your families academic, social and financial needs and guide you through college graduation. Learn more by visiting www.goalisgraduation.com