Upcoming changes to the FAFSA are likely to affect family finances, in a few different ways. If you have a family member who is in college or heading to university soon, read on to understand more about the revised FAFSA.
What Is the FAFSA?
The Free Application for Federal Student Aid, also known as the FAFSA, is a form which students fill out every year in order to access financial aid. The details provided in the FAFSA give the federal government key information about a student’s financial situation, which is used to determine what aid and how much the student is eligible to receive. FAFSA forms also help a college financial aid office to manage the aid process and offer its own financial aid packages.
In 2022, the FAFSA Simplification Act was passed. This act aims to make significant changes to the financial aid process and the FAFSA; making the process more predictable for low-income students adjusting eligibility requirements so that more kinds of students can qualify for financial aid. The revised FAFSA is expected to go live as of December 2023, for students who will be in school during the 23-24 academic year.
Introducing the Student Aid Index
One of the biggest changes for families is that the Expected Family Contribution (EFC) measurement will now be removed from the FAFSA. Instead, there is a new Student Aid Index (SAI). The Student Aid Index is calculated based on fewer factors than the EFC, with more information being imported from federal tax records—ultimately simplifying the aid application process for students and their families. What’s more, because the Student Aid Index can be $0 or below, some students may qualify for more financial aid than before.
No More “Sibling Discount”
While the upcoming changes are largely expected to expand aid and eligibility for college students, families with multiple children in college at the same time will no longer receive the “sibling discount”: a previous provision of the FAFSA process that divided expected family contribution by the number of family members enrolled in school. Experts say that the removal of the sibling discount is likely to have the greatest effect on middle- and high-income families.
Changes for Divorced Parents
Previously, students with divorced or separated parents were asked to report the income of the parent with whom the student lived for the majority of the time. Now, students filling out the FAFSA will instead report income information for the parent who provides the greatest portion of financial support, regardless of living situation. Stepparents may also be required to provide tax and income information.
Along with overall changes to make the financial aid process more straightforward, the FAFSA will also be available in more languages, so that families who don’t speak English at home will have an easier time understanding the process and completing the necessary forms. Previously, the FAFSA was only available in English and Spanish.
Other Options for Families
Families who receive a financial aid package that doesn’t feel sufficient should remember that the financial aid numbers calculated within the FAFSA are not set in stone. College financial aid offices can make various adjustments based on their professional judgement; so if you’re unhappy with your FAFSA results, reach out to the aid office to talk about other options.
If federal aid isn’t sufficient, consider a federal loan or a private student loan instead. Head to the HUECU blog for more information about student loans, including the PLUS loan which is specifically designed for parents of college students. This may also be a good time to discuss finances as a family, particularly the subject of smart borrowing practices. College is a time when many young people take out a loan or get a credit card for the first time, so it pays to chat about the importance of paying bills on time, how to use automated payment systems to keep up with loan payments, and how to be responsible about spending, saving and budgeting.