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The Simplified FAFSA Changes – The Good and The Bad

Last Updated on August 20, 2024 by Jill Schwitzgebel

If you have ever completed the Free Application for Federal Student Aid (FAFSA) previously, there are some welcome changes coming to the application!  The simplified FAFSA is significantly shorter, and the Expected Family Contribution number is now a thing of the past.  There are a couple of changes that may not be so welcome however, especially for students whose parents are divorced, or families that have multiple students in college.  But, no matter how you feel about them, the changes are here.  The FAFSA changes were originally to take effect on the 2022 FAFSA, for the 2023-2024 school year.  Many of you likely heard (or experienced firsthand) about last winter’s FAFSA fiasco, and that those promised changes were pushed back.  But, the totally overhauled FAFSA finally rolled out in January 2024,  for the 2024-25 school year.

Here’s what you need to know.

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The Good News

I’ll start with the good news first, in hopes that you’ll keep reading.  The FAFSA went from 108 questions down to only 36, maximum (it could be less, depending on your situation).  In the current format, there are questions on there that relate to less than 1% of applicants.  Lawmakers decided to eliminate some of those.

Beyond eliminating questions, one of the biggest changes is that families’ income information is directly imported into the form, instead of having to be manually entered or using the data-retrieval tool.

The hope is that these changes will increase the numbers of students that complete the application.  Determining if your student will qualify for need-based aid is important.  And often, to receive scholarship funding from institutions, students are required to submit the FAFSA in order to qualify.

Good-Neutral News

Back in the 1990s, the FAFSA used the term Student Aid Index (SAI), rather than Expected Family Contribution (EFC).  The term SAI is now back to replace the EFC.  The term EFC had been confusing families for years.  Families see that number and understandably assume that’s how much they will be expected to pay for college, when the reality is they often ended up paying more than that calculated EFC.   The hope is that by returning to Student Aid Index, families will not look at the number and assume that’s what they will be expected to pay.  It’s an index for distributing governmental funds (like Pell Grants), that colleges also use to determine aid eligibility. In some cases, the SAI number could now even be negative, to indicate the highest amount of financial need.

The calculation for the SAI really will not change from the EFC calculation.  Things like income, household size, income, non-retirement assets, and 529s are still factors in determining a family’s SAI number.  The FAFSA will still exclude a portion of your non-retirement assets, such as checking and savings accounts, stocks, etc., from the financial aid eligibility formula.

The Bad News

As a parent of twins, I see this as the worst thing to come out of the new FAFSA changes.  The FAFSA will no longer increase financial aid to families that will have more than one child in college at a time.  Previously, families with multiple children in college at once have increased financial aid eligibility.  A family’s EFC for each child could drop by as much as 50%.  That will no longer be the case.  If a family’s EFC was calculated to be $10,000, each student might have an EFC of $5,000.  With this change, under the current system, it would mean that each student has an EFC of the full $10,000.

Bad News, Part 2

The other potential bad news is for parents that are divorced.  Previously, the custodial parent filled out the FAFSA, based on their income. If that custodial parent earned a lower wage than the other parent, this was an advantage for financial aid calculation because it is their wages and assets are used.  But (you knew that was coming!), the new legislation says that the parent who provides the most financial support must complete the FAFSA. If custody if 50/50, the parent with the highest adjusted gross income must complete the application.

Conclusion

These are just a few highlights to the changes to the application and the rules for completing it.  But, there are other beneficial changes too, like the expansion of the Pell grant program, which benefits students with the greatest financial need.  And remember, I recommend that you complete the FAFSA, whether you believe you will receive financial aid or not!

See also:  FAFSA vs. the CSS Profile Financial Aid Forms

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