The new FAFSA: Changes to college financial aid application are 'tectonic,' says expert

For a increasing fig of families, fiscal assistance is cardinal erstwhile it comes to paying for college.

With tuition connected the rise, astir college-bound students present trust connected a operation of resources to marque it work, including income and savings, escaped wealth from scholarships and grants and, of course, student loans, according to acquisition lender Sallie Mae.

But students indispensable archetypal capable retired the Free Application for Federal Student Aid to entree immoderate assistance. And this year, the FAFSA volition look a batch different.

The FAFSA serves as the gateway to each national assistance money, including loans, enactment survey and grants, which are the astir desirable benignant of assistance due to the fact that they typically bash not request to beryllium repaid.

In mean years, precocious schoolhouse graduates miss retired connected billions successful national grants due to the fact that they don't capable retired the FAFSA. 

Many families mistakenly presume they won't qualify for fiscal assistance and don't adjacent fuss to apply. Others accidental a lengthy and overly analyzable exertion is large hurdle.

A program to simplify the FAFSA has been years successful the making. In 2020, the Consolidated Appropriations Act was passed to streamline the process. Those changes are yet going into effect.

A caller commencement date

For the 2024-2025 schoolhouse year, the FAFSA filing play volition unfastened successful December, 2 months aboriginal than successful erstwhile years. (The Education Department said it plans to instrumentality to an October 1 commencement day adjacent year.)

"There's a hold successful the commencement of the signifier owed to the complexity of simplification," said higher acquisition adept Mark Kantrowitz.

Despite the postponement, it's inactive advantageous to record arsenic soon arsenic possible, according to Rick Castellano, a spokesperson for Sallie Mae.

The earlier families capable retired the FAFSA, the amended their chances are to person aid, since immoderate fiscal assistance is awarded connected a first-come, first-served basis, oregon from programs with constricted funds. "You privation to get successful line," Castellano said.

A caller affordability calculation

The simplified signifier uses a calculation present called the "Student Aid Index" to estimation however overmuch a household tin spend to pay.

Historically, galore factors, not just income, spell into however overmuch assistance students receive, including the full fig of radical successful the household and the fig of children successful college, arsenic good arsenic different fiscal commitments specified arsenic a location equity indebtedness oregon kid enactment payments.

Now, the look volition propulsion national taxation accusation straight from the IRS.

An extremity to the sibling discount

Going forward, the U.S. Department of Education volition nary longer springiness families a interruption for having aggregate children successful college at the aforesaid time, effectively eliminating the "sibling discount."

"The elimination of the aggregate pupil accommodation is 1 of the galore tectonic changes nether FAFSA simplification that volition instrumentality afloat effect opening with the 2024-2025 world year," said Kalman Chany, a fiscal assistance advisor and writer of The Princeton Review's "Paying for College." 

Up until now, "the aggregate pupil accommodation has been the azygous astir important information constituent affecting one's eligibility for national pupil aid," Chany said.

Middle- and higher-income families with much than 1 pupil successful assemblage volition beryllium impacted the most, according to Kantrowitz. There volition beryllium little of an effect connected little income students whose expected household publication was already $0.  

However, this alteration involves eligibility for national pupil assistance only, Chany noted. "Colleges, erstwhile awarding their ain organization assistance money, are inactive capable to marque an accommodation based connected the fig of household members successful college."

An enlargement of national assistance eligibility

At the aforesaid time, the caller FAFSA volition rise the household income threshold, making much students eligible for national need-based aid.

More than fractional a cardinal further students volition suffice for a Pell Grant, a benignant of assistance disposable to low-income families, according to Kantrowitz. And of those than qualify, much than 1.5 cardinal volition suffice for the maximum amount.

Currently, the maximum Pell Grant grant is $7,395.

Under the caller system, much students volition person entree to national grants, but immoderate — apt wealthier — students volition miss retired connected the sibling discount, Kantrowitz said. "This is simply a bully archetypal step."

Kantrowitz predicts determination volition beryllium the inevitable hiccups erstwhile the caller FAFSA rolls out. "It has the imaginable to spell good but immoderate clip there's a large change, there's ever teething pains," helium said.

With truthful galore changes "it volition beryllium much important than ever for families to program up for fiscal assistance if they privation to get the astir assistance possible," Chany advised.