Changes are coming to FAFSA this month. Who are the college financial aid winners, losers?
Applying for college financial aid is about to get a little bit easier this month.
The Free Application for Federal Student Aid, better known as FAFSA, is getting a long-awaited facelift, which federal education officials say will make the process easier for students and their families to navigate. But some experts say changes in the formula for awarding aid might hurt some families, especially those with multiple children in college.
In 2020, Congress passed the FAFSA Simplification Act, which updated the financial aid application process, expanded Pell Grant eligibility and significantly overhauled the systems used to award federal student aid starting in the 2024–2025 award year.
While higher education advocates have long pushed for an easier FAFSA form, and students will receive billions in assistance overall, some say the changes mean others will lose out of financial aid.
"For these dependent students enrolled full-time at four-year institutions, there will be winners and losers in this process," researchers at the Brookings Institute, a nonprofit public policy organization, wrote in a report on FAFSA simplification in April.
What are the biggest changes coming to the FAFSA?
One of the most noticeable differences to the FAFSA is its length. What was once a cumbersome 108-question application will be cut down to 36 questions.
Some of those questions removed were related to Selective Service registration and drug convictions. It also added questions about applicants’ sex, race, and ethnicity, which have no effect on federal student aid eligibility.
Ashley Logan — director of college advising at I Know I Can, the only college access program in Columbus — said previous FAFSA forms were so long and technically complicated that some families felt too overwhelmed to complete it.
"A more simple FAFSA should open up doors to more funding for more families," Logan said.
Another big change in the FAFSA process is when it opens to the public. Typically, the U.S. Department of Education opened applications in October for the following school year. This year, however, the FAFSA will open in Dec. 31.
Logan said it's been an adjustment for schools and colleges that have operated under the old timeline. Some colleges have pushed back their priority application deadlines to line up with FAFSA, she said.
The change has also shortened the window that students will have to hear back from colleges about their financial aid options, Logan said. That means some students relying on financial aid to decide which college they can attend will have less time to make those decisions. Financial aid letters typically come out in late winter or early spring, Logan said.
Some other changes include:
Replacing the "Expected Family Contribution" (EFC) with the "Student "Aid Index" (SAI): Expected family contribution, meaning the amount of money the government determines a family can likely pay for a year of college costs, will be renamed to "Student Aid Index." The change is make it clear that the number families see after filing the FAFSA isn't what they're required to pay but rather an indicator of their financial need. Students will also be able to have a negative SAI under the changes, which will make it easier for colleges to see which students need the most aid.
Pell Grant eligibility expanded: The bill both expands who is eligible for Pell Grants as well as the maximum amount awarded to each student. It will link eligibility to family size and the federal poverty level. In the 2023-2024 award year, the maximum Pell Grant award was $7,395. That was up from $6,895 in 2022-2023.
Larger income protection allowances (IPA): IPA, which covers a family’s basic daily living expenses, is excluded from FAFSA's financial aid eligibility formula. Larger IPAs will lower the income students and parents can contribute to college expenses, ultimately increasing their financial aid eligibility.
Who are the biggest losers from FAFSA changes?
Researchers say students with siblings also in college, about a third of all students, will likely lose the most.
Commonly known as the "sibling discount," a student’s expected family contribution is currently reduced proportionally to the number of that student’s siblings who are also enrolled in college. While the new FAFSA calculations will still take family size into account, it will no longer give breaks to families who have multiple children in college at the same time.
Students at the lowest income levels won’t be affected. Student or their parents who earn between $60,000 and $100,000 annually, however, will see reduced Pell Grants and institutional grants, according to EconoFact, a nonpartisan publication that analyzes economic and social policies.
These changes will increase the financial burdens for families with multiple students enrolled in college, Brookings researchers found.
"They stand to lose thousands of dollars in financial aid," researcher wrote. "For those students who are already on campus, they will be shocked by the large increase in their net price."
Another potential loser of FAFSA simplification are families with an adjusted gross income of $60,000 and own farms or small businesses with fewer than 100 employees.
Currently, those farms and businesses are exempted as financial assets, which FAFSA would calculate as money that could be used to pay for college. The new FAFSA calculations does consider those items to be assets.
An analysis by Iowa College Aid found that a family earning $60,000 with a farm valued at a median $1 million would currently be expected to contribute about $7,600 toward college. Under the new formula, that same family would be responsible for more than $41,000 because the farm would be considered an asset.
In April, seven U.S. Senators introduced the Family Farm and Small Business Exemption Act to reverse those FAFSA changes, saying farms are unlike other liquid assets that can be easily sold for cash. That bill is still in committee.
Who are the winners from these FAFSA changes?
Most other students, especially those from low-income families, will benefit from the changes.
An analysis by the State Higher Education Executive Officers, a national association that helps develop education policies, found that among all students, more than 75% of students are likely to see a decrease in SAI relative to EFC, meaning they could be eligible for more financial aid.
About 13% are expected to see no change in their SAI, and about 11% may experience an increase in SAI. Among students who might experience an increased SAI, the majority were already ineligible for Pell Grants under the existing formula and expected to be ineligible under the new formula.
When should I fill out the FAFSA?
The FAFFA will be available for students to complete on Dec. 31. The form, along with additional information about the changes, can be found at www.studentaid.gov.
Logan said filing a FAFSA is best done sooner than later, as most money in higher education aid is doled out on a rolling basis.
All prospective and current college students must fill out the FAFSA to qualify for federal, state and institutional financial aid, including federal student loans, grants and work-study.
A 2022 analysis by the Association of Independent Colleges and Universities of Ohio found that high school graduates statewide missed out on more than $111 million in financial aid by not filling out the FAFSA.
FAFSA applications are also the greatest indicator of college enrollment, Logan said. Last year, almost all Greater Columbus school districts had higher FAFSA completion rates than the national average, according to state and federal data. Many local colleges and universities saw a boost in enrollment this fall.
"It's free," Logan said. "You never know what doors it might open up."
Sheridan Hendrix is a higher education reporter for The Columbus Dispatch. Sign up for Extra Credit, her education newsletter, here.
shendrix@dispatch.com
@sheridan120
This article originally appeared on The Columbus Dispatch: Changes are coming to FAFSA. What it means for your financial aid
