By Eli Ashcroft
On August 4 2023, the U.S. Department of Education announced that the latest batch of changes to the Free Application for Federal Student Aid (FAFSA) — requested by Congress two years ago in the FAFSA Simplification Act — would be implemented for the 2024-25 school year.
Students opening the updated FAFSA will immediately notice a decrease in length — the change will shrink the FAFSA to about a third of its current size. Additionally, the wording of the questions has been updated in an attempt to make them more readable.
The updated FAFSA also decreases protection of assets and eliminates a discount for families with multiple children in college. Additional assets, including child support, education savings, and small businesses, will be counted against a family’s aid eligibility.
Along with discontinuing these discounts, the updated FAFSA also introduces some new protections. Previously, contributions to students made by anyone were considered in their income, and thus would decrease their eligibility for aid. In the updated form, contributions made by anyone other than the student’s parents are not considered financial support, and thus do not decrease their eligibility. In other words, there are no financial consequences for contributions made by people outside an immediate family.
Other changes include which parent can file the FAFSA. Under the old rules, in cases of separation or divorce the “custodial” parent completed the FAFSA. In the new rules, the parent who paid the most support two years ago has to complete the FAFSA (the prior-prior tax year).
There are a whole host of other changes, some of which are more about clarifying the current rules than fundamentally changing them. For example, where once the Expected Family Contribution (EFC) determined the student’s eligibility for aid, under the new rules EFC has been renamed to Student Aid Index (SAI). And in the new rules, rather than simply allowing the Student Aid Index to determine eligibility, the forms also use Adjusted Gross Income (a value that is also important when filing taxes.)
Almost everyone can receive loans and grants through the FAFSA, which will open in December.
Editors’ Note: Quest reporters are neither lawyers nor accountants. This news article should not be interpreted as legal or financial advice on how to complete the Free Application for Federal Student Aid (FAFSA).