FAFSA Changes: Applying For Aid 2024-25

The Free Application for Federal Student Aid is getting revamped for the 2024-25 school year – here’s what you need to know.

The Free Application for Federal Student Aid (FAFSA) is getting revamped for the 2024-25 school year to fulfill legislation passed in 2020 aimed to make student aid easier to get. The goal is to make the process easier by reducing the number of questions and providing a better way to import income data from tax records.

The new redesigned FAFSA form is the most significant redesign of the federal student aid application and delivery in decades, and it’ll significantly simplify how students, parents, and other educational stakeholders use the FAFSA form starting this year.

Changes To Expect

The Most Important Changes Include:

• FAFSA will open December 2023, instead of the usual October 1.
• Both students and parents must create a Student Aid Account to get an FSA ID before completing the form.
• Allow at least three days because the updates require verification of FSA IDs through the Social Security Administration in order to access tax information.
• If parents are divorced or separated, the parent who provided the most financial support in the last calendar year will now complete the FAFSA.
• The number of students a family has enrolled in college will no longer factor into the FAFSA calculation.
• The net worth of family farms and small businesses will now be required as part of the application.

Benefits Of These Changes

• The shortened, streamlined FAFSA is expected to increase completion rates as well as improve college access and affordability by making billions of dollars of financial aid available to students.
• Lower-income families will be eligible for more aid under the new formulas, which include:
  • Larger income protection allowances: Those allowances cover a family’s basic daily living expenses and are excluded from the financial aid eligibility formula. Larger allowances lower the income students and parents can contribute to college expenses, which will increase their financial aid eligibility. Allowances will increase by 20% for parents, up to about $2,400 (35%) for most students, and up to about $6,500 (60%) for students who are single parents.

• • Automatic Pell Grants based on income and household size: Families making less than 175% and single parents making less than 225% of the federal poverty level will receive the maximum award, while minimum grants will be guaranteed to students from a household earning below 275%, 325%, 350%, or 400% of the poverty level, depending on the household structure. This makes it quicker and easier for people to know they’re eligible. The Pell Grant is the federal government’s primary grant aimed at low- and middle-income students, helping more than 6 million students afford college in the 2021-22 school year.

• • Restoring Pell eligibility: Incarcerated students and students who have been convicted of drug-related offenses will be eligible for financial aid again.

• • A negative contribution score: Family contribution amounts could be as low as minus $1,500, instead of zero. Although federal financial aid cannot exceed the cost of college attendance, the negative score could be used to distinguish among the neediest students, allowing states and institutions to target need-based aid more accurately.

Negatives Of These Changes

• The later start in December will cut the time families have to submit FAFSA. Even though the final deadline to submit the application will be June 30, 2025, some states and individual colleges set their own deadlines that can be as early as January.
• The Expected Family Contribution becomes the Student Aid Index and will still be subtracted from the cost of attending to determine how much aid you might need, but it’ll no longer be divided by the number of students a family has in college. That means most families with more than one student in college will be eligible for less financial aid.
  • For example, if your Expected Family Contribution was $20,000 last year, the amount was divided by the number of students enrolled in college. So, if you have two children attending college, your Expected Family Contribution was $10,000 per student. In the future, your Student Aid Index will be $20,000 per student, which reduces the amount you might need to attend.

• Families with an adjusted gross income of $60,000 and own farms or small businesses with fewer than 100 employees will have to include their farms or businesses as part of their financial assets that can be used to pay for college and reduce their needs.

Summary

Click here to find important updates regarding the federal student aid programs, plus other helpful information.