I know that students and families are frustrated every year by how difficult it seems to file the FAFSA. This one document could be the key to unlocking necessary financial aid to help the student pay for college, yet every year it seems to confound those trying to complete it. Some don’t even make the attempt, thinking that it is just not worth the effort.
Attempts have been made to simplify the process, yet it somehow feels like it just gets even more complicated…until now. There might just be a ray of hope. Buried deep in the pages of the COVID-19 relief legislation are important changes which could affect Federal Student Aid and the FAFSA. Now don’t get all excited thinking that the FAFSA you will complete in October 2021 will be easier. All things having to do with the government take time, you know. Although there might be a few revisions earlier, here are the most important changes families can look forward to, beginning with the FAFSA that will come out in October 2022 for students who will attend college in the fall of 2023:
- Questions: The number of questions will be reduced to around three dozen primary areas, with follow-up subsets depending on the answers given. More information will be directly input from the appropriate federal tax return using the IRS Data Retrieval Tool.
- EFC: The Expected Family Contribution will be changed to the Student Aid Index (SAI).
- Pell Grants: More students will be eligible to receive maximum or partial federal Pell grants. A “lookup table” will help give consumers a better sense of where they stand. Legislators hope these changes will allow 1.7 million more students to qualify for the maximum Pell Grant each year, and allow hundreds of thousands more to receive partial awards.
- Form Completion: For students with divorced or separated parents, the parent who provides the greater portion of a student’s financial support will be the one who is responsible for completing the FAFSA.
- COA: Changes are being made to the definition of Cost of Attendance. Colleges will be required to provide more specific cost details on their websites. Some students with extremely low income may be able to qualify for financial aid which exceeds the cost of attendance.
- Untaxed Income: Changes will be implemented to streamline the definition of untaxed income and benefits. This could be important as untaxed income and benefits will no longer include such items as child support, worker’s compensation, veterans’ education benefits, and certain other forms of income and benefits. Child support, however, will now be included in the definition of assets, which is treated differently from income.
- Income Protection: Important changes will be made to the income protection allowance (IPA) for parents and students, which shelters a portion of income based on a basic living expense standard. The Asset Protection Allowance (APA), however, remains unchanged.
- Multiple Students: Families with multiple members attending college will no longer need to divide the parent assessment among that number, which could in effect reduce the amount of aid available for middle- and high-income families.
- Simplified Needs: The Simplified Needs Test will be changed to Applicants Exempt from Asset Reporting, which will help clarify those applicants who are exempt from reporting assets on their FAFSA.
- Formula and Appeals: Other changes will be made to the formula used for determining financial aid. There will also be changes to the financial aid appeals process.
The hope, of course, is that all these changes will motivate more families to file a FAFSA and qualify for federal financial aid. The information collected also forms the basis for aid decisions made by state governments, colleges and some private scholarships. The proof will be in the pudding as Federal Student Aid works to implement the changes which have been mandated by the new law.
While there are still some areas that are of concern, it is at last a good start. Stay tuned for more information as these long-awaited changes become reality. For 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.