The FAFSA Simplification Act represents a significant overhaul of the processes and systems used to award federal student aid starting with the 2024–25 award year. This includes the Free Application for Federal Student Aid (FAFSA®) form, need analysis, and many policies and procedures for schools that participate in federal student aid programs.
The law will also affect every state that uses FAFSA data to award state grant aid and every school that participates in the federal student aid programs.
Overview Of The Changes
Starting with the 2024-2025 school year (Fall 2024, Spring 2025, & Summer 2024), students and families will see a different measure of how their financial aid eligibility is calculated. The Student Aid Index (SAI) is a new formula that takes into account some new factors:
- Removes the number of family members in college from the calculation
- Allows a negative SAI which increases likelihood of more Federal/State funding
- Overhauls the criteria for Federal Pell Grant eligibility so that more students may qualify for it
Expect changes in how a student’s family size is determined aligning more with what was reported on the student/parents tax returns.
- The FAFSA Simplification Act will expand the Federal Pell Grant to more students and will link eligibility to family size and the Federal poverty level (Starting with the 2024–25 school year)
- Incarcerated students in Federal and State penal facilities will regain the ability to receive a Pell Grant (Starting with the 2023–24 award year)
- Pell Grant lifetime eligibility will be restored to students whose schools closed while they were enrolled or if the school is found to have misled the student (Starting with the 2023–24 award year)
Federal law mandates that data received directly from the Internal Revenue Service (IRS) be used to calculate Pell Grant eligibility and the SAI. This data exchange has been made possible by the Fostering Undergraduate Talent by Unlocking Resources for Education Act (FUTURE Act), which will be implemented alongside FAFSA simplification starting with the 2024–25 school year.
Furthermore, the FAFSA Simplification Act also removes questions about:
- Selective Service Registration
- Drug convictions
It also adds questions about applicants’ sex, race, and ethnicity, which have NO effect on federal student aid eligibility (Starting with the 2023–24 award year)
Main Terminology Changes To The FAFSA
Additional FAQs Regarding Changes
- 2024-2025 FAFSA completion date
- Normally the FAFSA becomes available October 1st each year, but the 2024-2025 FAFSA will be available by the end of December 2023. As a result, we have extended our priority filing deadline to April 2, 2024.
- Normally the FAFSA becomes available October 1st each year, but the 2024-2025 FAFSA will be available by the end of December 2023. As a result, we have extended our priority filing deadline to April 2, 2024.
- The FSA ID is more important than ever.
- To start the FAFSA, an FSA ID is required. Students and parents must have an FSA ID to fill out the form, including parents without a Social Security number.
- To start the FAFSA, an FSA ID is required. Students and parents must have an FSA ID to fill out the form, including parents without a Social Security number.
- The term “EFC” (expected family contribution) is changing
- With the 2024-2025 FAFSA, the term Expected Family Contribution (EFC) will be replaced with the Student Aid Index (SAI) – this is a new need analysis formula that we will use when awarding need-based grants and scholarships.
- With the 2024-2025 FAFSA, the term Expected Family Contribution (EFC) will be replaced with the Student Aid Index (SAI) – this is a new need analysis formula that we will use when awarding need-based grants and scholarships.
- Streamlined application
- Questions are being removed, added, and rearranged. You’ll notice fewer overall questions when completing the 2024-2025 FAFSA and an easier way to transfer tax information directly from the IRS.
- Questions are being removed, added, and rearranged. You’ll notice fewer overall questions when completing the 2024-2025 FAFSA and an easier way to transfer tax information directly from the IRS.
- The parent included on the FAFSA could change.
- For dependent students with separated or divorced parents, the parent providing the most financial support must be included on the new FAFSA. For many students, this will align with the previous requirement of including the custodial parent – the parent living with the student.
- For dependent students with separated or divorced parents, the parent providing the most financial support must be included on the new FAFSA. For many students, this will align with the previous requirement of including the custodial parent – the parent living with the student.
- New terminology
- You’ll notice a few new terms like contributor (anyone who is asked to provide information on the FAFSA, a parent or student spouse for example) and consent (each contributor will need to consent to their information being included on the FAFSA)
- The number of questions will be reduced and the application will maximize the use of previously collected data.
- Students will be able to list up to 20 schools on their FAFSA via the online application.
- The Student Aid Index (SAI) will replace the Expected Family Contribution (EFC).
- Anyone asked to provide information on the aid application—student, spouse, student’s parent(s) and/or stepparents(s)—is called a contributor to the application.
- There will be two-step verification and all FAFSA contributors must have an FSA ID to log into the online form. There will be a new process to get an FSA ID for parents and spouses without a Social Security number.
- Each contributor (student, student spouse, parent(s), and/or stepparent) will have to provide their consent to provide their Federal Tax Information (FTI) in the new Consent to Retrieve and Disclose Federal Tax Information section of the FAFSA.
- A Direct Data Exchange with the IRS will replace what is currently known as the IRS Data Retrieval Tool (DRT).
- If any contributor does not provide their consent the Student Aid Index (SAI) will not be calculated, and we will not be able to determine the student’s eligibility for financial aid.
- For students whose parents are divorced or separated, the Custodial Parent on your FAFSA will be the parent who provides you with the most financial support and will no longer be the parent with whom you lived with the most over the past 12 months.
- Applicants will be asked to report their sex, race, and ethnicity on the FAFSA itself, but students will be offered a choice of “Prefer Not to Answer.” Schools and state agencies won’t see responses to these questions on the FAFSA.
- Foster, homeless, and unaccompanied youth—as well as applicants who cannot provide parental information—will be able to complete the form with a provisional independent student determination and receive a calculated SAI.
Students and families will see a different measure of their ability to pay for college and they will experience a change in the methodology used to determine aid. With the change to SAI, some students may see a decrease in financial aid eligibility. The SAI formula does not account for siblings in college and requires the net worth of all businesses and farms to be reported as assets.
- The Student Aid Index (SAI) will replace the Expected Family Contribution (EFC).
- The Cost of Attendance (COA) will be the starting point for calculating the SAI. COA includes direct costs (charges for which the university bills you directly) and estimated indirect costs (living expenses) to fund educational expenses for a year.
- The formula for calculating the Student Aid Index (SAI) is: COA – SAI = financial need.
- The new need-analysis formula:
- removes the number of family members in college from the calculation,
- allows a minimum SAI of -$1,500,
- implements separate eligibility determination criteria for Federal Pell Grants based on federal poverty levels and family size.
- Child support received will be included in assets and not as untaxed income.
- Families who own a small business/farm that also serves as primary residence will now have assets of that business/farm considered in their need-analysis calculation.
- The Pell Grant will no longer be adjusted based on enrollment status (full-time, half-time, etc.). Instead a student's Pell Grant and disbursement amount will be calculated using the student's Enrollment Intensity - which is a percentage value based on the number of credits a student is enrolled for during the term.
Students and families will see a different measure of their ability to pay for college and experience a change in the methodology used to determine aid. The benefits of FAFSA simplification include:
- A more streamlined application process
- Expanded eligibility for federal student aid
- Expanded eligibility for the Federal Pell Grant.
- Reduced barriers for certain student populations
- A better user experience for the FAFSA form
- Enhanced data sharing with IRS to simplify the applicant’s experience