3 changes to know from the FAFSA Simplification Act
Although the FAFSA Simplification Act was passed in 2021, the changes are only now being implemented for the 2024-25 school year. The Free Application for Federal Student Aid (FAFSA) determines how much financial aid you may qualify for to cover college education, including federal student loans, need-based grants, some scholarships and even work-study programs. It’s important to understand how to submit the new FAFSA and when to ensure you have access to as many aid options as possible. Let’s explore the key changes.
1.Student Aid Index
The biggest change in the FAFSA process is in data collection. Previously, the FAFSA used the Expected Family Contribution (EFC) amount to estimate how much a family could contribute to pay for a student's education. Schools subtract the EFC index from the school’s total cost of attendance to calculate need-based financial aid. The EFC required finding old tax returns and manually entering the information.
Now, the system uses the Student Aid Index (SAI). With this new method, you and your ‘contributors’ provide consent for the IRS to automatically transfer your tax information directly into your FAFSA. The SAI is the sum of your parents’ available income, your income, and assets.
2. Contributors
Contributors could include your biological parents, your adoptive parents, your parent's spouse, or your spouse. The application will instruct you to include certain people as contributors based on your answers to the questions. Note that even though someone is identified as a contributor on your FAFSA, the contributor is not responsible for paying any of your educational expenses.
In order to grant access to tax records, both you and your contributors must set up a FSA ID at StudentAid.gov. This allows you to complete your application and for your contributors to log in and provide consent. If a contributor does not provide consent, you will still be able to submit your application but you will not be eligible for federal aid.
3. The FAFSA Submission Summary
After submitting your FAFSA, you'll receive instructions on how to access your FAFSA Submission Summary. This replaces the Student Aid Report from prior years. This summary will detail your eligibility, your submitted information (excluding transferred tax info), your SAI, and an estimate of the potential amount of federal student aid you could receive.
What’s the goal?
The changes to the FAFSA are designed to improve the fairness of financial aid and ensure that it meets students' actual financial needs.
The government estimates that the changes will help 610,000 additional students from low-income backgrounds qualify for Pell Grants. An estimated 1.5 million will be eligible for the maximum Pell Grant award of $7,395 per year.
The changes also attempt to streamline the process (it is called the ‘Simplification Act’ after all). Previously, you might have faced over 100 questions, but some applicants can now expect as few as 18.
Know the deadline – but apply early
The federal deadline for applying for aid for the 2024-25 school year is actually at the end of the school year (June 30, 2025). However, submitting your FAFSA as early as possible can help ensure you meet state and college financial aid deadlines and that you receive your aid before the start of the school year. Check the Federal Student Aid website for state deadlines and contact the financial aid office at the school you plan to attend to identify the school’s deadline. You can also make corrections to your application for federal aid all the way up to that June 30, 2025 deadline.
Visit our interactive coach for a walk-through on filling out the FAFSA. If you’re looking to put money away for college, check out our high-yield savings accounts.
