Simplifying the financial aid application process: the FAFSA Simplification Act is an initiative by the United States Department of Education to make applying for federal student aid easier for students.
The 2024-2025 FAFSA will be available in December 2023. The exact date has not yet been released by the Department of Education.
Benefits to Students, Families, and Borrowers
Students and families will see a different measure of their ability to pay for college and experience a change in the methodology used to determine aid. The benefits of FAFSA simplification include:
- A more streamlined application process
- Expanded eligibility for federal student aid, including the Pell Grant
- Reduced barriers for certain student populations
- A better user experience while completing the FAFSA form
- Enhanced data sharing with IRS to simplify the applicant’s experience
Key Changes Highlighted
- Name Change of EFC: The FAFSA will no longer calculate the Expected Family Contribution (EFC), but calculate the Student Aid Index (SAI) instead.
- New Terminology: Please click the link for a list of changes along with general terms: “Student & Parent Glossary of Financial Aid Terms”.
- Fewer Questions: Questions have been reduced from over 100 to 36.
- Parents/Guardians: Who should be reported on the FAFSA as a contributor. For more information check out: “Who’s My Parent When I Fill Out My FAFSA?“
- Who Must have an FSA ID for the Student Aid Index (SAI) calculation: If you’re a dependent student, you will need your own FSA ID to sign your FAFSA form online, and so will one of your parents. An FSA ID is an account username and password that you use to log in to certain U.S. Department of Education websites. Do NOT share your FSA ID with anyone. If you share your FSA ID, you’re risking identity theft, and your FAFSA form could be delayed. For more information regarding this check out: “Do You Need an FSA ID?“
- Easier to Add Income Tax Information: Using the IRS Direct Data Exchange (IRS DDX) allows students, spouses and parents to add their tax information even if they have filed separately.
- Number of Students in College: The number in college is no longer a factor in the SAI calculation.
- Untaxed Items: Payments to tax-deferred retirement or pension plans, veteran’s non-educational benefits, and workers compensation will no longer be listed on the FASFA.
- Parents Assets: The net worth of businesses and net worth of family farm must now be reported regardless of the number of employees.
- Divorced/Separated Parental Information: The parent who provided the most financial support will need to report their information. This is a change from the current FAFSA which asks for the income of the parent the student lived with most in the last year.
- Selective Service Requirement Removed: Students no longer must register for selective service in order to qualify for federal aid, and the question will be removed from the application. You did not have to be registered in order to COMPLETE THE FAFSA, but you did in order to RECEIVE aid.
- Drug-related convictions: the question will be removed from the application.
Changes to Calculating Your Aid Eligibility
Students and families will see a different measure of their ability to pay for college, and they will experience a change in the methodology used to determine aid.
- The formula for calculating the SAI is:
- Parent Contribution + Student Contribution from income + Student Contribution from assets = SAI
- The formula for calculating Student Need is:
- COA (Cost of Attendance) – SAI (Student Aid Index) – OFA (Other Financial Assistance) = Need Calculation
- The new need-analysis formula:
- removes the number of family members in college from the calculation,
- allows a minimum SAI of -$1,500,
- implements separate eligibility determination criteria for Federal Pell Grants based on federal poverty levels and family size.
- Child support received will be included in assets and not as untaxed income.
- Untaxed items that will no longer be reported: payments to tax-deferred retirement or pensions plans, veteran’s non-educational benefits, worker’s compensation.
- Families who own a small business/farm that also serves as their primary residence will now have assets of that business/farm considered in their need-analysis calculation.
Changes to the FAFSA
- Students will be able to list up to 20 schools on their FAFSA via the online application.
- The Student Aid Index (SAI) will replace the Expected Family Contribution (EFC).
- The Student Aid Report (SAR) will become the FAFSA Submission Summary (FSS).
- The Cost of Attendance (COA) will be the starting point for calculating the SAI. COA includes direct costs (charges for which the university bills you directly) and estimated indirect costs (living expenses) to fund educational expenses for a year.
- Foster, homeless, and unaccompanied youth—as well as applicants who cannot provide parental information—will be able to complete the form with a provisional independent student determination and receive a calculated SAI.
- Anyone asked to provide information on the aid application—student, spouse, student’s parent(s) and/or stepparents(s)—is called a “contributor” to the application.
- The Custodial Parent on your FAFSA will be the parent(s) who provided you with more financial support, instead of the parent(s) with whom you lived more during the past 12 months.
- Students, spouses, parents, and stepparents (contributors) will now need to provide their consent to provide their Federal Tax Information (FTI) in the new Consent to Retrieve and Disclose Federal Tax Information section of the FAFSA for federal student aid eligibility.
- A Future Act Direct Data Exchange (FADDX) with the IRS will replace what is currently known as the IRS Data Retrieval Tool (DRT).
- If any contributor to the FAFSA form does not provide consent, submission of the form will still be allowed. However, a Student Aid Index (SAI) will not be calculated, which will make the FAFSA invalid.
- There will be two-step verification and all FAFSA contributors must have an FSA ID to log into the online form. There will be a new process to get an FSA ID for parents and spouses without a Social Security number.
- Students will be asked to report their sex, race, and ethnicity on the FAFSA itself, but will be offered a choice of “Prefer Not to Answer.” Schools and state agencies won’t see responses to these questions on the FAFSA.
Changes to Number in College
Under the old Estimated Family Contribution (EFC) calculation, if you had multiple family members in college for the academic year, your EFC was split between them. Under the new Student Aid Index (SAI), the FAFSA will still ask the question, but it does not consider the number of family members in college in the calculation.