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The Free Application for Federal Student Aid (FAFSA) Simplification Act was enacted by Congress as part of the Consolidated Appropriations Act of 2021.  This law reduces the number of questions students will have to answer on the form, makes crucial changes to the Higher Education Act of 1965 to expand Pell Grant eligibility, and removes outdated restrictions to make federal student aid more accessible to all students.  The following changes will occur during the 2024-2025 aid year:

FAFSA completion date – Instead of opening in October 2023, the 2024-2025 FAFSA will not be available until December 2023.  This is only temporary for 2024.  After the 2024-2025 aid year, the FAFSA will be available in October as usual.

Streamlined application process – the FAFSA will feature fewer questions and fewer requirements and retrieve tax information using a direct data exchange from the IRS instead of the previous IRS Data Retrieval Tool.

New terminology and information – the need analysis formula to determine financial aid, formally known as the Expected Family Contribution (EFC), will be referred to as the Student Aid Index (SAI). The new formula removes the number of family members in college from the calculation, better reflects the FAFSA results, and implements separate eligibility determination criteria for Federal Pell Grants.

The FAFSA is also introducing the new term, contributor, which refers to anyone who is required to provide information on a student’s FAFSA form.  This includes the student, the student’s spouse, a biological or adopted parent, or the parent’s spouse.  Being a contributor does not imply responsibility for the student’s college costs.


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
  • Expanded eligibility for the Federal Pell Grant
  • Reduced barriers for specific student populations
  • A better user experience for the FAFSA form
  • Enhanced data sharing with the IRS to simplify the applicant’s experience


Key Changes Highlighted

  • Parent/Guardians: Who is supposed to be the FAFSA contributor for more information, check out: “Who’s My Parent When I Fill Out My FAFSA?”
  • Who Must have an FSA ID for the SAI calculation: If you’re a dependent student, you will need your own FSA ID to sign your FAFSA form online, and so will both of your parents.  An FSA ID is an account username and password that you use to log into certain US Department of Education websites.  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 allows students, spouses, and parents to add their tax information even if they filed separately.
  • Divorced/Separated Parental Information: The parent who provided the most financial support will need to provide their information.  This is a change from the current FAFSA, which asks for the income of the parent the student lived with most of the last year.


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 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.
  • 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 aid eligibility.
    • A Future Act Direct Data Exchange (FADDX) with the IRS will replace what is currently known as the IRS Data Retrieval (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.
  • 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.


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