FAFSA Simplifications & What Applicants Can Expect

What is FAFSA? It stands for Free Application for Federal Student Aid. It’s the first step in applying for federal help in paying for college and “the official form families must use to apply for federal financial aid to pay for college”.

What You Need to Know

• FAFSA is used by the federal government to determine a family’s eligibility for grants, work-study, and loans to pay for college.
• It covers loans, work-study programs, grants, and similar programs. 
• Every year it’s used by over 13 million students seeking more than $120 billion in federal funds. 
• It’s how many colleges decide who will get financial aid, and how much.

Sounds great, right? Well, it’s a tedious process. Mark Kantrowitz of Forbes reports the application form has 108 questions for students and their parents to answer. Yikes. I wonder how many family fights came out of that activity? Those 108 questions are just one part of the FAFSA. Yikes, again. Hopeful students and their parents also have to provide reams of financial and tax information. 

Changes Are Coming

Understandably, long-suffering families have been calling for changes to the FAFSA for years. On December 27, 2020, Congress passed the Consolidated Appropriations Act of 2021, which was a result of the Consolidated Appropriations Act (CAA) of 2021. 

While this is exciting news, the changes won’t go into effect until July 1, 2023 for the subsequent academic year. Why such a long wait? There are so many significant changes needed to the FAFSA, it’s going to take that long for the U.S. Department of Education to implement them.

What Are Those Changes?

Number of questions

The most obvious change in the FAFSA act is how many questions the new form will have. The number differs according to each family’s financial status, but it will never be more than 36, exactly one-third of the current 108. I see fewer family feuds. 

Elimination of disqualifying questions

Questions 22 and 23 on the current FAFSA have been problematic for some applicants and will be deleted. 

• No. 22 reads, “Most male students must register with the Selective Service System to receive federal aid. If you are a male, age 18-25 and not registered, fill in the circle and we will register you.”
• No. 23 asks, “Have you been convicted for the possession or sale of illegal drugs for an offense that occurred while you were receiving federal student aid?”

The Selective Service requirement is no longer in effect. Furthermore, students won’t be disqualified for financial aid solely because of drug convictions.

Disclosure of asset information

On the current FAFSA form, applicants are asked to report their assets (or their parents’) for a complete snapshot of their current finances. If they don’t, they’re shuttled to a form called the Simplified Needs Test. This is yet another series of questions about families’ taxable income that doesn’t take assets into account. Students and parents have been confused about what information they need to provide. I’m confused just writing about it. 

In the 2023 version of FAFSA, certain kinds of assets won’t need to be disclosed. Instead, the IRS will export the information directly to FAFSA. If the applicant is a non-tax-filer, they will have new benefits.

• They won’t have to disclose assets on the new FAFSA.
• They will be exempt if they receive benefits via assistance programs or if their adjusted gross income (or their parents’) is less than $60,000. 
• If they meet the qualifications for an automatic zero or negative on what will be called the Student Aid Index, they won’t have to report assets.

Goodbye EFC, hello SAI

There’s a component called the Student Aid Index (SAI) which will replace the Expected Family Contribution (EFC) beginning in July 2023. They’re just rebranding the EFC, so not something new to scare people. The idea is to simplify. 

The SAI will have the same function as the EFC. What function is that? 

• To determine how much financial aid a student will qualify for (except for Pell Grants). 
• The SAI, like the EFC, will determine a student’s needs by calculating their assets, their income, and their parents’ income. 
• Their need will be represented by an index number.

Many families found the term “Expected Family Contribution” confusing because it suggested that the number indicated how much money the family would pay for college or how much aid they would get. Calling it an “index” instead of a “contribution” reflects what it really is.

New factors for Cost of Attendance

Cost of Attendance (COA) is a data point colleges use to verify how much financial aid you’re eligible for. As the name implies, it’s an estimate of how much it will cost to attend college. It includes tuition, textbooks, supplies, housing, and other fees and expenses. No, it does not include beer. 

The FAFSA simplification adds a few conditions for factoring each college’s COA.

• Students who lived at home with their parents had their housing allowance automatically set to zero, which will no longer be the case.
• The COA must now include the price for professional licenses, certification, or credentials.
• The loan fee allowance will no longer include private student loans. 
• Food costs and meal plans will be calculated on the assumption that students get all three meals every day.

Pell grants will be easier to get

The FAFSA Simplification will make it easier for students to receive Pell Grants , awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor’s, graduate, or professional degree. These grants are crucial for families facing financial hardship. 

New conditions will take effect in 2023.

• Students will be eligible for maximum grants if their families’ income is short of the limit that requires them to file taxes. 
• They’ll get maximum grants if their adjusted gross income falls below certain percentages of the poverty line.
• Students will also be eligible for Pell Grants if their education was interrupted by school closure. 
• Students who were incarcerated at some point will have their Pell eligibility restored.

If students receive a Pell Grant, their SAI will automatically go to zero, which will make it easier for those in need to get financial aid.

The FAFSA will be available in more languages

Somewhat surprisingly, the FAFSA is only available in English and Spanish at the moment. Beginning in 2023, the FAFSA will be translated into at least 11 more languages. There’s no word yet on what these specific languages will be.

One should never be denied an education because they can’t afford it or can’t understand the application. The alternations of the FAFSA will make it easier to apply and take advantage of financial aid and loans. 

Hope You Enjoyed the Read!