FAFSA is getting simpler, or is it? In this post, we'll share insights about the 2020 FAFSA Simplification Act, how it changes the 2024-2025 FAFSA application, and what that means for for families.
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Now, on to our discussion!
For students who are US citizens, Green Card holders, or certain types of asylum-seekers, the FAFSA (Free Application for Federal Student Aid) is the starting point for accessing federal and often, financial aid. Typically, for students applying to college in the fall, the form would go live on 1 October, however this year the release is going to be a couple of months later, toward the end of December 2023, due to the 2020 FAFSA Simplification Act.
The FAFSA Simplification Act laid out a set of changes that were to be implemented beginning in the 2021-2022 academic year going through 1 July 2024, with this coming year’s FAFSA being the version that contains all the proposed changes that the US Congress and the Department of Education wanted to implement. Congress’s stated goal was to remove barriers to access for traditionally underrepresented groups by reshaping and simplifying the FAFSA.
If you’d like to read more about this in detail, this link will take you to a great slide deck which was done by the state of Pennsylvania, titled Understanding FAFSA Simplification.
Since the application year timeline for students applying early decision and early action runs from October through about mid-December, the delayed release of the FAFSA will cause a time-crunch for students, and for financial aid administrators who will need to hustle to ensure all of those FAFSAs are processed in a timely manner. It’s still unclear how universities will be handling this, and Collegewise Counselors don’t yet know whether admission or financial aid deadlines will be adjusted to accommodate this, but as soon as we do we’ll let you know!
But Mo, you ask, why simplify the FAFSA anyway? What needs to change?
Let’s dive into some older history for a minute that might help you understand a little better.
In case you’re not aware, and honestly most people who don’t work in financial aid or admission probably aren’t, the FAFSA didn’t used to be 100+ questions! It evolved to that point due to large changes in the cost of education, and consequently, the number of programs created by the federal government to help folks manage those costs.
Initially, the FAFSA was created as part of the 1965 Higher Education Act to determine eligibility for the Pell Grant, which is the foundation for all federal need-based financial aid. When the Pell Grant was first issued to students in 1973, the maximum award amount was $1400/yr, which covered over 92% of a student’s cost of attendance at a public 4-year college, and fully covered the cost at a 4-year private college. However, as Dr. Sara Goldrick-Rab notes in her book on college costs, short-titled decided that college was essential, states began spending less on public higher education and the price of college rose. [Simultaneously], the financial aid system, long intended to make college affordable, failed to keep up with growing student and family need. Student loans became the stop-gap … and nearly 80% of the public’s family income declined.”
So if you take the exponentially rising costs of college and combine that phenomenon with a mostly stagnant average family income due to the 2008 recession, plus little change in the maximum Pell Grant amount to match these conditions, the result is a form that must account for all of that. Unfortunately, that means students must complete a long and kind of intimidating form, which has gotten much less user-friendly over the years. So, in response to their constituents’ complaints, Congress decided to implement some changes they thought would be helpful. Perhaps the most obvious way to make the FAFSA seem less intimidating is to reduce the
The problem is, the simpler and/or shorter the FAFSA appears on the surface, the more complexities and hidden tripwires there are, which can catch students & parents unaware, resulting in mistakes that could have a negative impact on their federal and state financial aid eligibility.
For example, one of the most common mistakes I have seen since I began working as a financial aid professional is in the section on parent assets. Below, you can see the image of what I’m referencing, which I pulled from the paper PDF version of the 2023-2024 FAFSA:
In case you can’t read that teeny font, it says in bold print, "Don't include the home in which your parents live. See Notes page 9."
If you do as instructed and head to page 9, you’ll see that the notes tell you exactly what types of investments must be included and exactly which types you should leave out. However, what happens in most cases is that parents are doing the online version, trying to get it done quickly, and just assume (understandably!) that “real estate” includes their family home. What an incorrect answer does in this section is it artificially inflates your family’s ability to pay and lowers the student’s eligibility for need-based financial aid; in some cases, it is lowered a lot, especially during the last few years where inflation has caused home values to skyrocket.
So now that I’ve highlighted that issue with previous versions of the FAFSA, let’s talk about some significant changes for the 2024-2025 FAFSA, which will mostly affect middle and low-income families, especially those with multiple children in undergraduate school.
As with any change, it doesn't always mean it's a positive change for everyone. This section will highlight the good, the bad, and the ugly that families can expect to see for the 2024-2025 FAFSA.
Starting 1 July 2023, the maximum Pell Grant amount will be raised to $7,395/year. Families completing the FAFSA who receive an SAI of 0 will automatically qualify for the maximum Pell Grant amount.
If you would like to read about all of the changes financial aid professionals know as of 19 May 2023, those can be found here, courtesy of the California Student Aid Commission (CSAC). One of our partner organizations, College Aid Pro, also wrote a great article last November on some of the major changes.
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