For anyone who has ever filled out the Federal Application for Financial Aid (FAFSA) and come away wondering why applying for financial aid has to be so complicated, we have excellent news. It doesn't, and soon, thanks to the passage of the recent FAFSA Simplification Act, it won't be.
Just not quite yet.
Why is the FAFSA so complicated?
For the 45% of undergraduate students who qualify for federal financial aid to alleviate the rising cost of college, the FAFSA is both their ticket — and the most significant obstacle — to obtaining it. It serves as a kind of bureaucratic baptism by fire and presents a dilemma.
Because the students who are most likely to need and benefit from Pell Grants, unsubsidized loans, and state- or college-specific financial aid are also the most likely to have to fill out the FAFSA alone — and struggle to do it.
These changes are long overdue, and they could mean the difference between a student choosing to enroll in a two- or four-year postsecondary program and putting those plans off indefinitely. Here's what to expect from the new FAFSA process:
Some parts of the FAFSA Simplification Act have already kicked in
The FAFSA Simplification Act was rolled into the 2021 Consolidation Act and passed in April 2021. Still, it was recently announced that most of the changes outlined in the legislation won't kick in until the 2023-2024 school year. That's not great, but rising seniors and recent graduates can still take advantage of the first phase of the law's provisions, including some major milestones.
Students who filed the FAFSA for the 2021-2022 school year are already benefiting from three big changes to the FAFSA, even if they don't know it. According to the Federal Student Aid (FSA) office, it's "too late in the development cycle" to change the language of the sections these changes apply to for this year and the next, so students still see these questions and should still answer them. They likely already have. To bridge the gap between the old and new FAFSA, the FSA has provided guidance to states and schools to ensure that students who are newly eligible for aid will get it.
Students will no longer need to be registered for the Selective Service to be eligible. So for 2021 filers who couldn't check that box because they didn't register in time for the deadline, there's no need to panic — they're officially eligible despite that.
The same is true for students who answered "yes" to question 23, which asks whether students have been convicted of a drug offense. Both questions will remain on the application for the 2022-2023 school year, but neither will be used to determine eligibility for students. Both questions will be phased out by the time students file or renew their FAFSA for the 2023-2024 school year.
The new FAFSA have 36 questions instead of 108
Most of the questions on the current FAFSA only serve to introduce opportunities for inaccuracy into the process for many undergraduate students. The 2023-2024 FAFSA will drastically reduce those opportunities by narrowing the full list to just 36 questions. Some will be multi-part questions, but overall the new, shorter list will make for a much more streamlined application process.
There will be a new, streamlined process for determining whether to include assets
By 2023, students will be automatically exempt from including asset information on the simplified FAFSA if they fall into any of the following categories:
Students who were not required to file taxes
Dependent students whose parents have an adjusted gross income (AGI) of $60,000 or less (or students themselves, if they're independent)
Students who received a means-tested benefit, like SNAP
Students who qualify for the full Pell Grant amount with a student aid index of zero — more on this in a second
What's more, the information used to determine whether students are exempt can be automatically imported into the FAFSA when students file online or through the FSA app, using the IRS data retrieval tool (DRT), eliminating the need to slog through ancillary worksheets.
The Expected Family Contribution (EFC) will be replaced by the Student Aid Index (SAI)
You can't blame students and their families for assuming that the "expected family contribution" is the amount that they're, well, expected to contribute to the cost of attending a postsecondary institution. I
t's not. Instead, the EFC is used to calculate a student's needs relative to other applications. In other words, it's an index. This name change will soon make that much clearer.
Above, we referenced the possibility for a student to have an SAI of zero. These are the students who qualify for the maximum Pell Grant Amount because they or their parents have an AGI that is 225% below the poverty line for married couples or 175% below the poverty line in the case of single filers. For students and families that were not required to file a federal income tax return, the SAI will actually be less than zero. These applicants are considered to have the greatest financial need, with a $-1,500 SAI.
A new calculation will add up the factors of the 'cost of attendance' more realistically
To calculate a student's cost of attendance, the simplified FAFSA will now consider more expenses. As a result, the COA will look a lot more like the bill students and their families end up with and include:
An allowance for living expenses, which will now have to consider (among other things) the cost of three meals a day
Housing costs that are based on where a student is living and can no longer be set to zero if a student is living off-campus
An allowance to cover loan fees for students who receive a Federal student loan
The costs associated with obtaining professional licensure or certification
This is hardly a complete list of the changes that are coming to the 2023-2024 FAFSA, all of them designed to increase the FAFSA completion rate by simplifying the process overall. The application will be translated into at least 11 languages, and a new "provisional independence" status will be rolled out for students in unusual home situations that make it difficult to obtain information from their parents.
All of this is welcome news for students who would otherwise put off or skip filling a FAFSA out entirely because of its complexity, stringency, or confusing language. As the new changes are phased in over this school year and the next, FSA will continue to update the public on their website, so keep an eye on their announcements page to take a deeper dive into the law.