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The New FAFSA: 9 Big Changes You Need to Understand | CollegeData

Written by CollegeData | October 9, 2023

Resources / Pay Your Way

The New FAFSA: 9 Big Changes You Need to Understand

The Free Application for Federal Student Aid (FAFSA) – the form students and families use to apply for federal financial aid for college -- has undergone some major changes. Here’s what you need to know.

The FAFSA Simplification Act represents a significant overhaul of the processes and underlying formulas used to award federal student aid starting with the 2024-2025 award year and includes multiple changes to the Free Application for Federal Student Aid (FAFSA) application form. Here are some key changes to be aware of in the 2024-2025 FAFSA.

1. The FAFSA IS available later than usuaL

In the past, students and families could access the FAFSA form online every year on October 1. The FAFSA for the 2024-2025 school year was released in a "soft launch" during the last weekend of December in 2023. According to the Department of Education, it intends to move the FASFA opening back to October 1, 2024 for the 2025-2026 academic year.

For students subject to state and/or college-specific filing deadlines that are earlier than the federal deadline, the delayed FASFA open date could make it harder for them to complete their aid application on time. Be sure to check your state and college filing deadlines.

2. The FAFSA form will be significantly shorter

You’ll see fewer questions on the 2024-2025 FAFSA, only about 36 instead of the previous 108. The online FAFSA application is dynamic, and the number of questions users see will depend on their financial situation and the answers they provide as they proceed through the form.

3. Automated transfer of tax data will be required

Previously, students and parents had the option to enter their tax information manually into the FAFSA form or to download it directly from the Internal Revenue Service (IRS) website using the IRS Data Retrieval Tool. Beginning with the 2024-25 FAFSA, users of the online FAFSA will be required to use the IRS Data Retrieval Tool to provide their tax information. 

4. The EFC is now the SAI

As part of the FASFA changes, the term “Expected Family Contribution” or “EFC,” which has been used for many years to calculate students’ expected financial need for college, will be replaced with the term “Student Aid Index” or “SAI”. Like the EFC, colleges will use the SAI  to determine a student’s financial need by subtracting it from the cost of attendance (COA).

 

However, there is a notable difference between the EFC and SAI. Unlike the EFC, which could only be as low as $0, the SAI can be a negative number, as low as negative $1,500. The fact that the SAI can be negative will help make it easier for colleges to determine a student’s financial need — as well as identify students with high levels of need — and account for expenses not included in a school’s published COA. Also, the new name, SAI, is intended to eliminate the misconception that “Expected Family Contribution” represented how much a family was expected to pay for one year of college, rather than an index used to calculate financial aid eligibility.

 

5. Students may automatically qualify for Pell Grants

The 2024-2025 FAFSA changes how eligibility for Pell Grants (which are a type of need-based financial aid) is determined. Students will now automatically qualify for Pell Grants based on family size and income and will know the amount of their Pell Grant much earlier in the process — before they apply to colleges. Previously, students weren’t aware of their Pell eligibility or how much in Pell grant they might receive until they got their financial aid offers from colleges. Having this information earlier may encourage students to consider colleges that might otherwise seem too expensive.

According to an Urban Institute analysis, the changes to Pell Grant eligibility are expected to increase the number of students who are eligible for the maximum Pell Grant by 16 percent.

 

6. Students can send the FAFSA to more colleges

 

On the online FAFSA application, students will be able to list up to 20 schools to receive their FAFSA information. Previously, the limit was 10 schools. Now, students with long college lists will be able to send their FAFSA information to all their schools at the same time, instead of adding some schools later in the process. For students who fill out the PDF version of the FAFSA, the limit is still 10 schools.

 

7. The Income Protection Allowance is increasing

Beginning with the 2024-2025 FASFA, the income protection allowance (IPA), which is the amount of income that is excluded from determining a student’s financial aid, will be increased. For dependent students, the IPA levels for the parents of dependent students with one student in college will increase approximately 20 percent above their current levels. For dependent students themselves and independent students without dependents, the IPA levels will increase about 35 percent above their current levels.

8. Families with multiple children in college will no longer get a break

The new methodology for calculating aid eligibility required by the FASFA Simplification Act no longer considers the number of family members attending college. This means families with multiple college students could receive less aid for the 2024-2025 school year. However, individual colleges can consider the financial burden of having many students in school and can adjust offers at their discretion.

9. Students must report the income of the parent who provides the most support

In the past, dependent students of divorced or separated parents were required to report the income of the parent they lived with most of the year. The updated FAFSA requires dependent students of divorced or separated parents to report the income of the parent who provides the most financial support. Parents, guardians, step-parents, spouses, and students are all referred to as "contributors" on the new FAFSA.

Don’t forget to file the FAFSA!

It’s important to stay in the know about updates to the FAFSA and to keep track of the FAFSA deadlines for your colleges and your state. Colleges often award financial aid on a first-come, first-served basis, so it’s important to complete and submit the FAFSA as soon as you can after it becomes available. Even if you think your family will not qualify for federal student aid, you should complete and submit the FAFSA to be considered for federal student loans and possibly scholarships or other financial aid provided by your college. For more information about the upcoming changes to the FAFSA and the availability of the 2024-2025 form, visit the Federal Student Aid Website.