For a growing number of families, financial aid is essential to pay for their university education.
With rising tuition fees, most college-bound students now rely on a combination of resources to succeed, including income and savings, free money from scholarships and grants and, of course, student loans, according to education lender Sallie Mae.
But students must first complete the Free Application for Federal Student Aid to access any aid. And this year, the FAFSA will be very different.
The FAFSA serves as a gateway to all federal aid, including loans, work-study, and grants, which are the most desirable type of aid because they generally do not need to be repaid.
In ordinary years, high school graduates lose billions in federal grants because they don’t complete the FAFSA form.
Many families mistakenly believe that they will not qualify for financial assistance and do not even bother to apply for it. Others say a long and overly complicated application is a major obstacle.
A plan to simplify the FAFSA took years in the making. In 2020, the Consolidated Appropriations Act was passed to streamline the process. These changes are finally coming into effect.
What has changed with the new FAFSA
A new start date
For the 2024-2025 school year, FAFSA filing season will open in December, two months later than previous years. (The Department of Education said it plans to return to the Oct. 1 start date next year.)
“There is a delay in starting the form due to the complexity of the simplification,” said higher education expert Mark Kantrowitz.
Despite the postponement, it’s still beneficial to file the case as soon as possible, according to Rick Castellano, spokesman for Sallie Mae.
The sooner families complete the FAFSA, the better their chances of receiving help, since some financial aid is awarded on a first-come, first-served basis, or from programs with limited funds. “You want to line up,” Castellano said.
A New Calculation of Affordability
The simplified form uses a calculation now called the “Student Aid Index” to estimate how much a family can afford to pay.
Historically, many factors, not just income, factor into the amount of aid students receive, including the total number of people in the household and the number of children in college, as well as other financial commitments such as a home equity loan or child support. .
Now, the formula will pull federal tax information directly from the IRS.
End of sibling discount
Going forward, the US Department of Education will no longer grant respite to families who have multiple children in college at the same time, eliminating the “sibling discount.”
“The elimination of the multiple-student adjustment is one of many tectonic changes as part of the FAFSA simplification that will take full effect from the 2024-2025 academic year,” said consultant Kalman Chany. in financial aid and author of The Princeton Review’s “Paying for”. College.”
So far, “the multiple student adjustment has been the most significant piece of data affecting eligibility for federal student aid,” Chany said.
According to Kantrowitz, middle- and upper-income families with more than one college student will be hit the hardest. The effect will be less on low-income students whose expected family contribution was already $0.
However, this change only involves eligibility for federal student aid, Chany noted. “Colleges, when providing their own institutional financial aid, are always able to adjust based on the number of family members enrolled in the college.”
An expansion of eligibility for federal assistance
At the same time, the new FAFSA will increase the family income threshold, making more students eligible for need-based federal aid.
More than half a million more students will be eligible for a Pell grant, a type of aid available to low-income families, according to Kantrowitz. And of those who qualify, more than 1.5 million will qualify for the maximum amount.
Currently, the maximum Pell Grant amount is $7,395.
‘It’s a good first step’
Under the new system, more students will have access to federal scholarships, but some students — likely wealthier ones — won’t get the sibling discount, Kantrowitz said. “It’s a good first step.”
Kantrowitz predicts that there will be inevitable setbacks as the new FAFSA rolls out. “It has the potential to go well, but any time there is a major change there are always initial pains,” he said.
With so many changes, “it will be more important than ever for families to plan their financial assistance in advance if they want to get the most help possible,” Chany advised.