For the first time in 40 years, students will see a completely revamped Free Application for Federal Student Aid (FAFSA). These changes are part of the\u00a0FAFSA Simplification Act\u00a0and should benefit most families, but some households could see their eligible aid decrease significantly, experts say.<\/p>\n
\u201cOverall, I think there are a lot more winners,\u201d says MorraLee Keller, senior director of strategic programming at the National College Attainment Network, a nonprofit organization supporting college affordability. On the other hand, Keller says she doesn\u2019t want to underestimate the negative impact those changes may have on some families.<\/p>\n
The FAFSA Simplification Act aims to streamline the application process, remove barriers for key student populations and expand federal aid eligibility. Notable changes to the FAFSA include:<\/p>\n
The long-awaited changes will launch in December 2023.<\/p>\n
Plus:<\/strong> Run, don\u2019t walk to apply for college grants: Student loan interest rates are highest in 10 years<\/p>\n Changes that will impact most students<\/strong><\/p>\n The Department of Education is changing how a family\u2019s need-based aid is calculated. As a result, more households could receive more aid.<\/p>\n Before FAFSA simplification:<\/strong>\u00a0A family\u2019s need was calculated using the Expected Family Contribution (EFC). The EFC incorporated income and assets, family size and the number of children currently enrolled in college. Typically, the lower the EFC, the more aid you\u2019d be eligible for.<\/p>\n After the FAFSA simplification:<\/strong>\u00a0The EFC is being replaced by the\u00a0Student Aid Index\u00a0(SAI). And similar to the EFC, the lower the SAI, the more aid you\u2019ll be eligible for. But the new formula increases the income protection allowance \u2014 allowing for more of a student\u2019s or family\u2019s income to be excluded from the calculation.<\/p>\n For example, using the EFC, the parent income protection allowance for a family of four for the 2023-24 academic year is $32,610. For the 2024-25 school year, the same family can exclude $35,870 \u2014 protecting an additional $3,260 from their income calculation and lowering the student\u2019s SAI.<\/p>\n Read<\/strong>: How college admissions will change in America after the Supreme Court knocked down affirmative action<\/p>\n Changes that will impact low-income students<\/strong><\/p>\n Moving away from the EFC to the SAI, it will be easier for some households to show the magnitude of their financial need.<\/p>\n Before FAFSA simplification:<\/strong>\u00a0Students from a household with limited income and assets could, at the lowest limit, receive an EFC of zero. If your EFC was zero, you were automatically eligible for the maximum amount of federal student aid.<\/p>\n How it works:<\/p>\n Cost of attendance \u2013 EFC = Financial need<\/p>\n For example, if your school\u2019s cost of attendance is $20,000 and your EFC is zero, you would be eligible for $20,000 in need-based aid.<\/p>\n After FAFSA simplification:<\/strong>\u00a0Unlike the EFC, the new SAI calculation can drop below zero. The SAI can be as low as negative $1,500. A family with significantly fewer financial resources could receive more aid in the 2024-25 academic year than they were eligible to receive in the 2023-24 school year.<\/p>\n How it works:<\/p>\n Cost of attendance \u2013 SAI = Financial need<\/p>\n Using the example above, having a $20,000 cost of attendance and an SAI of negative $1,500, you could be eligible for $21,500 in need-based aid \u2014 an increase of $1,500.<\/p>\n The SAI calculation also makes it easier to qualify for the Pell Grant:<\/p>\n Changes that will impact students with siblings in college<\/strong><\/p>\n Families with more than one child in college at the same time will no longer receive a sibling discount.<\/p>\n Before FAFSA simplification:<\/strong>\u00a0The contribution for parents with multiple children in college was divided by the number of children enrolled. This was based on the idea that a parent\u2019s ability to pay for college doesn\u2019t increase as they have more children enrolled, according to the Department of Education.<\/p>\n Using an example from the Department of Education, a parent with one dependent in college full time could have an EFC of $10,000. When their second child enrolls, that child\u2019s EFC would be $5,000. If they have three children enrolled, the third child would have an EFC of $3,333, and so on.<\/p>\nHow the FAFSA changes will impact your aid<\/strong><\/h2>\n
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