Keep It Simple: Previewing Changes to FAFSA
In December 2020, policymakers passed the Free Application of Federal Student Aid (FAFSA) Simplification Act to address barriers to higher education related to federal student financial aid or Title IV aid—named in reference to Title IV of the Higher Education Act of 1965, the landmark legislation that in part sought to provide financial assistance for students in postsecondary and higher education. Key benefits of FAFSA simplification are a streamlined application process, removal of barriers for specific student populations, and the expansion of federal aid eligibility.
Some elements of the FAFSA Simplification Act have already been implemented. Prior to 2021, students who received a drug conviction while receiving Title IV aid could face penalties or suspension of their aid. Removing this penalty reflects efforts to increase racial equity; drug convictions disproportionately affect communities of color despite comparable rates of illicit drug use in white communities. In another change, male students between the ages of 18-25 no longer have to register with Selective Service to be eligible for federal financial aid. Previously, they had to answer a series of questions that have now been completely removed. Students are limited to the equivalent of six years of Pell Grant funding, and the percentage of what a student has received to date is referred to as their Pell Lifetime Eligibility Used (LEU). Beginning with the 2023-24 award year, Pell LEU was restored for students whose school closed while they were enrolled or if the school was found to have misled the student. And, after a nearly 30 year ban, Pell eligibility has been restored for students who are incarcerated.
On December 15, the US Department of Education announced that it would treat the period leading up to and following December 31, 2023 as a “soft launch period,” which will allow students to access and submit the FAFSA and Federal Student Aid (FSA) to monitor and respond to any issues. This year’s delayed launch, while intended to help the Office of Federal Student Aid facilitate trainings and produce toolkits, notably shortens the window for students to fill out the form by three months. In this blog post, we look at both the possible effects of this delay and the changes to FAFSA on students and other key stakeholders.
The Changes Improve Processes for Families
The most ambitious changes will come with the 2024-25 FAFSA itself. The form will be shortened dramatically, down to only 46 questions compared to the last year’s 108. In addition, more filers will have the ability to transfer their information directly from the IRS to the form, streamlining the process. Overall, these two changes mean that for most students, the FAFSA will be much less stressful and time consuming.
The Changes Provide More Clarity in Terminology
Starting with the 2024-25 FAFSA, once a student has completed the form, they will receive a Student Aid Index (SAI) rather than an Expected Family Contribution (EFC) metric. Despite its name, EFC was not an estimation of what a student’s family was expected to pay, but rather an assessment of a student’s family’s financial resources that would determine a student’s Pell Grant amount. Schools and states also used the EFC to determine the amount of financial aid they would award. Changing the metric’s name to SAI clarifies what this metric actually represents.
While the change to SAI is mostly a rebranding of EFC, there are two primary differences between SAI and EFC:
- The EFC considers whether the applicant has siblings in college, but the SAI will not. Colleges will still receive this information via FAFSA and may consider it in the final aid package.
- The SAI can go as low as -$1,500, meaning students with the highest need may receive an allowance that can be used on specific school-related expenses. The EFC bottomed out at $0.
The Changes Should Benefit All Low-Income Students
While students from families with incomes at or below $30,000 won’t see major changes in terms of their Pell Grant eligibility, most low-income students are likely to benefit in terms of the amount of their Pell grant award, at least to some extent. A negative SAI also reflects possible gains in institutional aid that schools may offer their low-income students, and the new rules will reduce parents’ expected payments for families with low incomes.
The Changes Will Expand Minimum Pell Grant Eligibility Criteria
While the transition to SAI might seem costly to middle class students and their families as it no longer factors in family size, it’s being done jointly with the expansion of Pell Grant eligibility. Under the FAFSA Simplification Act, as a family’s income rises, Pell Grant eligibility will recede at a slower rate than formerly. And while the calculation of SAI no longer factors in a student’s siblings, Pell Grant awards will consider family size. This means that, depending on family size, students with a larger SAI may still be eligible for a Pell Grant. (Specific scenarios are available here).
The Delay May Result in Additional Burdens on High School Counselors
High school counselors, who are often responsible for assisting and ensuring students file a FAFSA, are feeling the heat of a condensed timeline. This rings especially true in states that have Universal FAFSA, those that require all high school students to fill out the form. Currently, this is a graduation requirement in seven states, with two more joining them this academic year. Counselors are typically already overwhelmed with caseloads much larger than the recommended from the American School Counselor Association (ASCA); those in states that have introduced this policy have discussed the exhausting aspects of enforcing another graduation requirement. With a condensed timeline, it’s hard to imagine how counselors will juggle all their responsibilities without feeling overwhelmed and burnt out.
The Delay Creates Challenges for College Financial Aid Offers
This truncated timeline also poses challenges for college and university financial aid offices, many of which are already struggling with staffing shortages. Typically, financial aid offices receive students’ application information, or an Institutional Student Information Record (ISIR), three to five days after students fill out the form. ISIRs are then used to determine students’ institutional aid, meaning that in theory, schools might have begun receiving ISIRs and determining aid as early as October. However, because FSA will not begin processing FAFSA forms until January, schools will likely have to wait to the end of the month to receive student data from completed applications. And given the significant formula change from EFC to SAI, financial aid offices may well need more time to review ISIRs to determine institutional aid. NASFAA’s president and CEO commented that “any significant delays in delivering applicant data to schools would fall short of the spirit of the law.”
Financial aid can play a significant role in a student’s decision to enroll, particularly for lower-income students. Since many institutions require students to commit by May 1, students will have a much shorter timeline to make their enrollment decisions, unless schools decide to push back their deadline this year.
A delayed commitment deadline would add to the existing complexities faced by admissions offices this cycle. Most schools in the US are need-aware, meaning that admissions officers consider a student’s financial situation in their evaluation of an applicant. As this information will not be available until January, some schools have decided to create their own forms to get a sense of students’ financial needs early.
The Delay Compresses Timelines to Apply for State Aid
State aid, in addition to institutional aid, will also be impacted by the delayed launch date. In some states students must submit the FAFSA as early as February to be eligible for state financial aid. That gives students just two months to fill out the form. Advocates in college access and success have called for states with these early deadlines to move them back for this award year. At the time of publishing, we’re not aware of any states that have responded to this demand.
While all these changes can seem daunting, and it is easy to focus on some of the more negative impacts, we should remember that this is called the FAFSA Simplification Act because the FAFSA is becoming just that: simpler. Implementation is tough and there is no downplaying the challenges for those in the college access space, but it is important to remember the goal of making higher education affordable for more students and for next year’s FAFSA award year to be seamless.
We look forward to monitoring how these changes impact the institutions and students we work with and sharing lessons learned.