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EFC and SAI – What You Need to Know for Upcoming FAFSAs

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Just when you think you have everything figured out about financial aid, along comes the Department of Education with some pretty sweeping changes. For years, parents and students have struggled with the Free Application for Federal Student Aid, or FAFSA, and the resultant Expected Family Contribution, or EFC. They said the FAFSA was much too long, and the EFC too hard to understand.

Changes are finally coming, but not right away unfortunately. Although the law mandated implementation by a certain time, the reality is that there will probably be a more phased-in approach to getting everything done. Here is what they project will happen, based on current rollout capabilities:

The FAFSA that is currently available for the 2021-22 Academic Year

Although there is not much time left to submit this application, one change already in progress works towards removal of the Selective Service and drug conviction eligibility criteria. You will still see these questions on the current FAFSA, but failing to register with the Selective Service or having certain drug convictions will no longer impact your Title IV aid eligibility. If you already completed this FAFSA, and feel that your financial aid was negatively affected based on your responses to these questions, contact your college immediately to review your situation.

The FAFSA that comes online October 1, 2021 for the 2022-23 Academic Yea

Although FSA makes tweaks and updates every year, this FAFSA will probably still closely resemble those from recent years. After completing the FAFSA this year, you will still receive a Student Aid Report with an Expected Family Contribution. The lowest EFC is $0, and there is no cap. This is meant to be an eligibility index for federal student aid, but families find it confusing as they believe it represents the amount of money they will have to pay. Sometimes you will have to pay more, and sometimes you may even pay less.

      • Each college uses different formulas to takes financial information into consideration, and you may find that your actual financial aid offers vary greatly from one institution to the next.
      • Don’t get too worked up over the EFC; wait until you receive financial aid award packages from your colleges before making financial choices.
      • There can be differences in need-based awards from one institution to the next, and between public and private colleges. One big factor in these ranges is that there is a different Cost of Attendance for each college.
      • The EFC does not take merit-based awards into consideration. Your student may receive a larger award package from one college that wants to recruit students with certain capabilities.
      • Families of rising high school seniors can use the EFC Calculator to get an initial indicator of what their EFC might be, but remember that results will be based on the 2021-22 academic year.

Although the timeframes are not yet finalized, anticipated changes for the FAFSA that will come online October 1, 2022 for the 2023-24 Academic Year and beyond include:

      • Fewer FAFSA questions.
      • Higher predictability for Pell Grant eligibility.
      • Lower income students will have their federal student aid eligibility calculated without their assets (or their parents’, for dependent students) being taken into consideration. Eligibility to fill out a no-asset FAFSA will be calculated using filtering based on improved tax return information that comes directly from the IRS

Student Aid Index (SAI): Replacing the EFC with the SAI on the Student Aid Report at some point is the biggest anticipated FAFSA update. The SAI will represent eligibility for all types of Title IV student aid, except the maximum and minimum Pell Grant awards. Pell Grant awards in the middle ranges of eligibility, however, will be determined using the SAI.

Changes will also include the concept of a negative SAI, which should allow the very neediest students to receive aid in excess of the Cost of Attendance (COA) established by their school. The addition of a negative figure could prove helpful by further differentiating lower income students. This could allow states and institutions to more accurately target need-based aid, including the Federal Supplemental Educational Opportunity Grant (FSEOG).

These changes apply only to the FAFSA, and not the CSS Profile that is used by many colleges to determine financial aid eligibility. CFAA will continue to monitor these changes and update families as they are finalized. In the meantime, set up a CFAA new client free strategy session to learn more about financial aid and finding ways to pay for college. To get the latest financial aid information and college application to-do lists, look for my weekly JustAskJodi emails and check out my monthly CFAA e-newsletter.

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