Revamped FAFSA Streamlining College Aid in 2024-25

Big changes are coming to the FAFSA application, for the 2024-25 cycle!

In a significant development for prospective college students across the United States, an eagerly awaited, user-friendly version of the FAFSA (Free Application for Federal Student Aid) is set to debut later this year.

If you’ve ever filled out the FAFSA, you’re probably familiar with the anxiety, confusion, and frustration it can cause. The revamp aims to simplify the college financial aid application process, fostering increased accessibility and boosting college attendance rates.

Alongside the new form, the federal government is embarking on a sweeping reform, broadening eligibility for federal aid in what is being hailed as the most significant overhaul in decades.

This article is meant to help high school seniors and returning college students understand the changes in the 2024-2025 FAFSA compared to the current version.

Key Changes:

• One of the most significant alterations is the reduced number of questions on the FAFSA application. According to a draft version of the new form, the number of questions will be cut by almost two-thirds (from 108 to 46), making it easier to apply.
• Students may list up to 20 colleges. The FAFSA previously only allowed students to list up to 10 colleges and universities.
• Financial Aid applicants will be required to use the IRS Direct Data Exchange (DDX). Applicants previously had the option to use the IRS Data Retrieval Tool or enter their tax information manually.
• The FAFSA will be available in more languages. At this time, the FAFSA is only available in 2 languages (English and Spanish). The 2024-25 application will be altered to include the 11 most common languages spoken in the US.
• The Federal Pell Grant, a vital source of financial assistance, will now be available to even more students. Eligibility will be linked to Adjusted Gross Income (AGI), family size, and the federal poverty level, ensuring that financial aid reaches those who need it most.
• Another substantial change is the replacement of the term Estimated Family Contribution (EFC) with the Student Aid Index (SAI). This new index introduces a different approach to determining aid eligibility. For instance, as part of the calculation, it will not include the number of family members in college. Also, the new formula would allow an SAI of less than zero (-$1,500). Here’s a draft of the calculations to be used to determine SAI.
• It’s important to note that, unlike the previous EFC calculation, the SAI will not factor in the number of family members in college. This adjustment could impact the eligibility of current students with siblings pursuing higher education, potentially altering their need-based aid eligibility.
• Guidelines pertaining to reporting parent income for students whose parents are separated or divorced have been updated as well. The new criterion designates the parent providing the most financial support to the student rather than the parent residing at the student’s primary residence.
• To expedite processing times, parents lacking a Social Security Number will now have the option to apply for an FSA ID and submit their FAFSA application online, eliminating the need for printing, signing, and mailing the form.
• For students facing unique circumstances, such as homelessness or an inability to access parental financial information, the process has become simpler. Those qualifying for a dependency override will no longer need to recertify their dependency status annually unless their situation changes.
• Another significant change pertains to male students under the age of 26. They are no longer obligated to register with the Selective Service System to be eligible for federal financial aid.

This list of key changes, although comprehensive, is not exhaustive. It is recommended to stay updated with potential modifications based on guidance from the Department of Education (DE).

What Isn’t Changing?

With all the mentioned changes, a few aid-related aspects will remain constant:

• The requirement for submitting the FAFSA annually to be considered for federal and state financial aid will persist.
• The questions determining dependency status, dictating whether parent(s) should complete the FAFSA, will retain their current format.
• The FAFSA will continue to solicit tax information from the prior-prior year, implying that 2022 income and assets will be reported on the 2024-25 application. Families experiencing substantial income reductions can contemplate initiating an appeal process.
• Queries about an applicant’s gender, race, and ethnicity will uphold their role as statistical and data collection tools. These inquiries will not influence federal student aid eligibility.

Amidst the shifts and improvements, these constants ensure stability and predictability for students navigating the financial aid landscape.

Why is the FAFSA Application Changing?

The FAFSA has long been a double-edged sword for many students and their families, offering financial aid opportunities while simultaneously presenting a labyrinthine application process.

To address this concern, Congress passed the FAFSA Simplification Act in late 2020 to streamline the financial aid application process for college students and families. The Act was amended by the Consolidated Appropriations Act of 2022, further simplifying the form.

The forthcoming version of the FAFSA will prioritize user-friendliness, ensuring that applicants can navigate the application with greater ease and efficiency. This development is particularly significant given the findings that individuals who successfully complete the FAFSA are more likely to pursue higher education.

Richard Lerner, Senior Vice President, Investments at David Lerner Associates, Inc., commented on the transformative potential of these changes.

In an interview, Lerner stated, “The introduction of a user-friendly FAFSA form and the expansion of federal aid eligibility mark a critical shift in the landscape of higher education finance. Simplifying the application process can potentially remove barriers that might have otherwise deterred students from seeking financial assistance.”

“Furthermore, the broader eligibility criteria will undoubtedly open doors for a more diverse range of students to access higher education. This is a move in the right direction and is likely to have a positive impact on both individual futures and the nation’s workforce,” he added.

2024-25 FAFSA Available in December 2023

One noteworthy aspect of the upcoming change is the shift in the timeline for application submission. Traditionally available online from October 1, the updated FAFSA will not be accessible until December 2023, as stated by the Federal Student Aid office. Updates on a firm release date will be posted here when announced.

The postponement is due to significant changes to the application and the rebuilding of the FAFSA processing system. The deferment is also meant to provide prospective students additional time to gather necessary information and make informed decisions about their education.

However, it’s important to note that these adjustments will not affect financial aid for the forthcoming academic year (2023-24).

DE plans to open the 2025–26 form to applicants on October 1, 2024.

What Can I Do Now in Preparation for The New Form?

• A crucial requirement for completing the new FAFSA form is the Student Aid Account or FSA ID. Both students and parents must create an FSA ID. This unique identifier enhances security and ensures the application process remains protected against potential unauthorized access. Kindly note that it will take 1-3 days for an FSA ID to undergo the verification process.
• Think about engaging in partnerships with community organizations and local institutions of higher education (IHEs) over the remaining weeks of the summer month. This collaboration can provide valuable assistance in the FSA ID process as you prepare for the upcoming aid year.
• Start the process of revising checklists, presentations, timelines, and any pertinent documentation that currently indicates the opening date as October 1 to align with the newly scheduled release date of December 2023.

• Keep an eye out for additional tools and resources from NCAN here.

Conclusion

With the new FAFSA form and the impending overhaul of federal aid eligibility, the 2024-25 academic year is poised to witness a transformative change in the landscape of college financial assistance. These developments promise to make higher education more attainable for countless students, ushering in a new era of accessibility and opportunity.

Filling out the FAFSA can be an intimidating prospect. And so, to help lessen some of the confusion associated with the FAFSA form, we can guide you through the whole process.

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IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.