New Changes To The Student Aid Process
If you have college-age children you’re probably familiar with the Free Application for Federal Student Aid (FAFSA) form and provisions. There were some pretty major changes made as part of the Consolidated Appropriations Act that was passed at the tail end of 2020. Here’s a brief summary.
The Expected Family Contribution (EFC) has been renamed the Student Aid Index (SAI) to acknowledge that the amount is based more on eligibility for the distribution of available federal funds than on what a family should be able to pay for college. It will now be the primary qualification for all Federal student aid programs except for Pell Grants. The calculation has been changed such that the amount could go as low as minus $1,500 rather than the previous zero minimum. This is to enable the very neediest students to receive a level of aid greater than the actual cost of attendance.
Pell Grant award eligibility will be based primarily on household size and family income. Single-parent independent students or dependent students in a single parent family whose AGI is below 225% of the federal poverty level would qualify for a maximum grant. For dual parent situations the threshold would be increased to below 175% of the poverty level. Students whose family income is between 275% and 400% of the poverty level would receive the maximum minus their SAI. Incarcerated students would once again be eligible for Pell Grants (that provision had been removed in 1994).
The FAFSA forms have also been simplified (a bit). The threshold for students who meet the government’s simplified needs test – which allows them to skip entering their asset information on the form – was raised to $60k. For everyone else some items previously required on the form but not on the federal tax return have been eliminated, making it easier to directly enter the data electronically. If the student’s parents are divorced the parent providing the bulk of the student’s financial support would be the one to fill in the form rather than the one the student lived with the most.
There are numerous other changes. Drug convictions and Selective Service registration would no longer be requirements for student aid eligibility. A limitation on lifetime eligibility for subsidized Direct Loans has been removed. Regulations involving cost of attendance have been modified.
According to The National Association of Student Financial Aid Administrators, this legislation will “simplify the federal student aid application process and improve financial aid predictability for students.”
The provisions are scheduled to take effect starting on July 1, 2023 for the subsequent school year.