The FAFSA is Changing: Here’s What You Need to Know

In December 2020, Congress passed the FAFSA Simplification Act (as a part of the Consolidated Appropriations Act of 2021), which promised sweeping changes to the process of applying for federal aid. These changes are set to come into effect for the 2024-25 FAFSA and will have broad impacts on students as well as higher education professionals.

Federal Student Aid (FSA) is currently working on rolling out these changes, calling this updated version of the FAFSA the “Better FAFSA.” FSA claims that the changes being made to create the Better FAFSA will be positive for students and families, providing a simpler and more streamlined application experience, as well as increasing eligibility for and reducing barriers to accessing federal student aid. Here are six of the most important changes coming to the 2024-25 FAFSA.

1. New Release Date: While an official release date has not been specified yet, FSA stated in their 2024-2025 FAFSA Roadmap that the 2024-25 FAFSA would not be released until December 2023. This is a departure from previous years, when the FAFSA was released on Oct. 1 each year. The 2024-25 FAFSA Roadmap provides a timeline that college advisors, financial aid administrators, school counselors, and any other professionals who assist students with the FAFSA can review to stay up-to-date with delivery dates for informational resources, training sessions, and the Better FAFSA itself.
2. Form Simplification: Previous iterations of the FAFSA have had as many as over 100 questions to complete, which can be a daunting task for students and families as they complete the form. The Better FAFSA will have about 36 questions (depending on the specific financial situation of the applicant). This was made possible by improved information sharing between FSA and the IRS, as the FAFSA Simplification Act required that FSA use federal tax information received directly from the IRS to calculate eligibility for federal aid. This new tool, the FUTURE Act-Direct Data Exchange, will replace the current tool, the IRS Data Retrieval Tool, and allow for the simplification and reduction of questions on the FAFSA form. Additionally, students who are unhoused, orphaned, foster youth, and who have other circumstances that would qualify them as an independent student will also have a simplified set of questions to answer to determine this status. Some questions have been added to the form, including demographic questions (related to race, ethnicity, and gender) that will not impact a student’s aid eligibility.
3. FSA ID Changes: The FSA ID, the login credentials which students and parents use to log into StudentAid.gov to complete the FAFSA and access other FSA/U.S. Department of Education systems, has previously not been required to complete the FAFSA. However, many choose to create an FSA ID username/password combination because it makes it faster to access FAFSA information online, sign the form and get it processed quicker, and fill out the form with previously used information. Now, due to the aforementioned information sharing between FSA and the IRS, the FSA ID will be required for all individuals who will enter information on the FAFSA form. The FSA ID must be created and verified before the individual can access the FAFSA, potentially creating some delay in getting the form completed. Additionally, individuals without a social security number will, for the first time, be able to create an FSA ID to access the FAFSA and add their information. Finally, due to the sensitive nature of the information being shared between the IRS and FSA, multi-factor authentication will be required to log into the FAFSA using the FSA ID, creating an additional step to the log-in process for users.
4. Estimated Family Contribution Becomes Student Aid Index: One marked change between previous versions of the FAFSA and the Better FAFSA is that a different formula will be used to measure the ability of students and families to pay for college. A figure called the Student Aid Index (SAI) will replace the current measure, the Expected Family Contribution (EFC), and a new formula will replace the one currently used to calculate student need. Some of these changes in the new formula include removing the number of siblings/other family members enrolled in college from the need calculation, allowing for negative SAI figures (minimum of -1500, although negative SAI figures will not result in larger Pell Grants than zero SAIs and students still cannot receive more aid than the cost of attendance), and separate criteria for Pell Grant eligibility.
5. Pell Grant Eligibility Changes: In addition to the SAI, additional measures will be used to calculate eligibility for the federal Pell Grant. Eligibility for the Pell Grant will be linked to family size and the federal poverty level. This means that some students will be able to know their Pell eligibility before completing the form. Additionally, students who are incarcerated will regain Pell eligibility, and students who attended a school that closed while they were enrolled, were falsely certified for federal aid by their institution, had their identity stolen, or who were eligible for borrower defense will have their lifetime Pell eligibility restored. According to FSA, the new formula and additional funding will expand access to Pell Grants by almost 15%.
6. Family Matters: There are several changes related to the family members of students that will impact their financial aid awards. First, for students with parents who are divorced, separated, or were never married, students will report the income of the parent who provides the most financial support. Currently, students with divorced, separated, or unmarried parents report the custodial parent’s income, even if they do not provide the bulk of the student’s financial support. Additionally, the student’s family size will be determined based on the family’s tax return, as opposed to the current method, in which the criteria is determined by the Higher Education Act. One significant change that will impact families is that the student’s SAI will not be impacted by the number of family members the student has in college. Currently, the Estimated Family Contribution is divided by the number of dependents enrolled/enrolling in college. The student’s SAI will not be impacted by the amount of siblings/dependents enrolled in college. This means that, in some cases, students with family members in college who would be eligible for more federal aid under current formulas would receive less aid or no aid at all.

These updates to the FAFSA will have significant impacts on students, families, financial aid administrators, and other higher education professionals. To prepare for these changes, FSA has compiled a list of resources, which is continually being updated as the 2024-25 FAFSA release date approaches.

The list provided in this article is a non-exhaustive account of changes being made to create the Better FAFSA. For more information, visit the FSA website or review this full summary of the FAFSA Simplification Act.