Home Money Saving Changes in College Aid Accompany the Arrival of a Fresh FAFSA Form

Changes in College Aid Accompany the Arrival of a Fresh FAFSA Form

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Changes in College Aid Accompany the Arrival of a Fresh FAFSA Form

A much-anticipated, user-friendly version of the college financial aid form, commonly known as the FAFSA, will be introduced for the 2024-25 school year. The goal of the updated form is to simplify the process of applying for college aid, as research has shown that completing the FAFSA increases the likelihood of attending college. In addition to updating the form, the federal government is expanding eligibility for federal aid, marking the most significant overhaul in decades.

However, some families with multiple children in college at the same time may receive less assistance. This is because the updated form has adjusted the aid formula, eliminating a “sibling discount.” Phillip Levine, an economics professor at Wellesley College and a fellow at the Brookings Institution, explained that there will be winners and losers due to these changes.

The FAFSA is a yearly requirement for college students to access financial aid from the federal government, and many states and colleges also base their own aid on this form. It collects detailed financial information from students and their parents and serves as a gateway to grants, scholarships, and loans for higher education. Although Congress approved changes to the form and its formula in 2020, the Education Department has taken several years to complete the update.

Some of the changes, such as providing more income protection in the aid calculation, will increase eligibility for financial assistance. More students will be eligible for federal need-based Pell grants, and those who previously received partial grants will now qualify for larger amounts. However, the update has also eliminated the sibling discount, which is expected to have a significant impact on families with multiple college students. Levine noted that around one-third of college students have a sibling who is also enrolled, and these families will experience a substantial and unexpected change in their aid packages.

The rationale behind this change is that financing a college education now involves long-term saving and borrowing, making it unfair to give preferential treatment to families with twins or closely spaced children attending college simultaneously. Despite this reasoning, Levine expressed concern about the implementation of the new formula, as it provides little warning to students and parents and may result in a larger out-of-pocket expense. Some college institutions may be able to adjust financial aid packages to compensate, depending on their finances.

One of the anticipated changes on the form is replacing the confusing “expected family contribution” with the “student aid index,” which will offer guidance on the amount of financial help a student qualifies for. The federal government claims that the number of questions on the form has greatly reduced, and the transfer of federal income tax forms from the IRS into the application has been streamlined.

The new FAFSA form will not be available until December, unlike previous years when it was accessible online on October 1. Consequently, students will have less time to complete the form before state priority filing deadlines, which typically start early in the new year. Some states will maintain March deadlines, while others, like California and Tennessee, have pushed theirs to April. Texas is also adjusting its January 15 priority deadline for next year.

To prepare for the new form, students should obtain a Federal Student Aid ID, which will be required to complete it. Applying for this ID now can save time when the new form is released. Additionally, students are advised to apply to a mix of colleges, including in-state public colleges, to ensure affordability. Highly competitive private schools may use a different form, known as the CSS Profile, for awarding institutional financial aid, but it is unclear if it will change its approach to aid for siblings.

It is important to note that these changes will not affect financial aid for the current academic year. Aid packages for the school year beginning this month or in September are based on the form for the academic year 2023-24, which was available in October 2022.

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