The New FAFSA Is Available Soon — Here Are 6 Big Changes Affecting Financial Aid
College students and their parents will soon be able to fill out the redesigned FAFSA. The long-awaited new Free Application for Federal Student Aid will be available before the end of the month.
Families will see a shorter, more streamlined application, which is used to award federal grants and student loans, as well as college scholarships. Several behind-the-scenes formula updates, meanwhile, could change students’ aid eligibility.
While there still is not an official release date for this year's application, the Education Department recently announced families would have access to the form via a "soft launch" in the days leading up to and following Dec. 31. You don't need to rush to fill out the form as soon as the soft launch opens, officials said, since the information will not be shared with colleges until late January.
The new form, dubbed "Better FAFSA," is years in the making, marking the most significant changes to how students apply for financial aid in decades. It will produce real, measurable results for college bound students, says Kim Cook, chief executive officer of the National College Access Network, which has been advocating for FAFSA simplification for the past decade.
The headline for families is that it will be easier for them to apply for financial aid. But a critical ripple effect is that an easier process means more students are able to complete the form correctly, which in turn means more will get the aid they’re eligible for, Cook says.
FAFSA changes for 2024
Here’s a breakdown of the major changes happening with the 2024-25 form. For more help, read Money’s step-by-step guide to filling out the FAFSA.
1. The timeline will be condensed.
The FAFSA typically comes out at the beginning of October, but this year’s release was postponed to allow for more time to incorporate all the changes. The rest of the timeline, though, remains intact. Colleges will have to review applications and create financial aid offers in a shorter period, and after receiving those packages, many families will have to make decisions about where to attend on a crunched timeline.
“The bottom line is, everyone has three fewer months to complete this,” Cook says.
The Education Department has said that once you submit your FAFSA, you won’t be able to edit the form until February. That could further delay the process if you discover you made a mistake while filling it out. Shannon Vasconcelos, a college finance expert with Bright Horizons, flags that this block on changes even applies to adding schools where you want your application sent. If, for example, you submit the form the day it opens, and decide a few days later you want to add another college to your application list, you won’t be able to send your financial information to the new college right away.
The takeaway? If you’re considering applying to any other schools, add them to the FAFSA when you fill it out so you’re not faced with a situation where you have to wait weeks to edit your form. Nothing happens if you submit a FAFSA application to the school but don’t end up applying there, Vasconcelos says.
2. The application will be shorter and simpler, with direct transfer from the IRS.
Perhaps the biggest takeaway for most parents and students is that the number of questions on the form has been cut by over half.
The brevity comes thanks in part to improved and expanded data sharing with the IRS. While some families have been able to transfer their tax information directly from the IRS for years, the system was clunky and only open to certain tax filers. Now, it actually will be a requirement for filling out the form online; both students and parents have to consent to an IRS data exchange.
Once your income information is inputted, you’ll only see applicable questions. Students with lower household incomes and uncomplicated tax filing situations could see as few at 18 questions.
Everyone who fills out the form is now called a contributor. Students will only see questions they have to answer, and vice versa for parents.
3. The term Expected Family Contribution is replaced with Student Aid Index.
You will no longer see the term Expected Family Contribution, or EFC. The term, which was what families received after filling out the form, was often misleading, as it was not a measure of what families actually were expected to pay (and more often than not, they owed more than that number).
That term is now replaced with Student Aid Index, or SAI, to indicate the number is a measure of financial strength that colleges can then use to award their financial aid dollars. The new figure will still be presented as a dollar amount.
It’s hard to overstate how common it was for families to be confused by the old term. Vasconcelos says she had to explain it to “almost every family that I’ve ever spoken with.” The new term is still a vague bit of financial aid jargon, she says, but at least it shouldn’t actively mislead families any longer.
4. More students will qualify for Pell Grants.
The revamped form comes with a revamped formula for awarding Pell Grants — the federal grant program that reaches more than 6 million low-income students each year.
An additional 600,000 students will be newly eligible for a grant, while about 1.5 million students who are already eligible for a Pell Grant will now qualify for the maximum award. (It’s worth $7,395 this year; next year’s maximum hasn’t been set yet.)
The shorter, redesigned form is getting a lot of the spotlight, but Cook says the expanded grant eligibility is the “sleeper headline that I want students to know about.”
5. Families with multiple kids will no longer get a discount.
While many of the changes this year are universally liked, there are unpopular ones, too. Enter: the elimination of what’s called the sibling discount.
In the past, a family got a break on the FAFSA for every additional child who was enrolled in college. So, for example, if your previous Expected Family Contribution was $20,000, and then you had a sibling enroll at the same time, your EFC would drop in half, assuming your other finances held steady, says Christine McMullan, a college financial aid advisor with Garretson Financial in Kenilworth, New Jersey.
That break is gone now — meaning families who have multiple children in college could see their aid eligibility decrease dramatically. It’s not quite as simple as saying those families will owe double what they would have before, though, because there are other favorable formula changes that can partially offset this.
It’s important to note the question about siblings in college remains on the form. So individual colleges, states or private institutions, all of which use FAFSA information to influence their awarding, can still choose to adjust a family’s eligibility because they are paying for multiple kids at once.
But how things will pan out for current families is unclear, McMullan says. “I have a lot of clients in that boat and they’re very worried about what’s going to happen.”
6. Other formula updates may change your financial aid eligibility.
Along with the changes above, there are several more line-by-line changes that could cause big swings in what a student qualifies for.
Negative Student Aid Index
Students can receive a Student Aid Index (SAI) as low as -$1,500. Until now, $0 was the lowest the financial aid formula went. The SAI, which replaces the old EFC terminology, is a measure of a family’s finances, so lower figures can lead to higher financial aid packages. Remember, though, that most colleges don’t have enough money to meet every student’s need, so a low, or even negative, SAI doesn’t guarantee you’ll receive enough aid to make a college affordable. Still, having a negative measure should help colleges see which students have the most need, so they can better target their financial aid budgets.
Increased income protection allowance and fewer families reporting assets
The income protection allowance is more generous this year. The changes vary by family size, but for a family of four with two college students, $35,870 would be protected this year, up from $28,980, Vasconcelos says. The protection allowance is the chunk of income considered necessary for living expenses and therefore exempt from financial aid calculations. (This should offset some of the pain of the elimination of the sibling deduction.)
Separately, most students with household incomes up to $60,000 will be exempt from having to answer any questions about assets. That limit is up from $50,000 currently, Vasconcelos says.
Changes for divorced parents
Students with divorced parents now have to supply information for the parent who provides the most financial support. That’s a shift from in the past, when students with divorced parents submitted the financial information for their custodial parent, regardless of which parent earned more.
How much that matters to financial aid will vary on a case-by-case basis. But a common scenario, McMullan says, is that a student lives primarily with their mother, while their father earns more money. In those cases, the student may be eligible for less aid going forward.
Changes for families with small businesses and family farms
Small-business owners and farmers could see their aid eligibility drop. In the past, families with small businesses or farms, defined as employing fewer than 100 people, were allowed to completely exclude the net value of the business from the financial aid calculation. That is no longer the case.
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