This article will:
- Tell you why filing the Free Application for Federal Student Aid (“FAFSA®”) is important no matter what your family income may be,
- Discuss the Academic Year 2022-2023 FAFSA® form, and
- Outline the likely changes to the FAFSA® form to be used in 2024-25
If you want to skip right to the finish line to get an estimate of the amount of financial aid you might eligible to receive, use this free Financial Aid Estimator.
The Current FAFSA® Form
On October 1, the Free Application for Federal Student Aid (“FAFSA®”) was made available for high school seniors and college students enrolling for Academic Year 2022-23. It may feel like the school year just started, but colleges now in full marketing mode to attract next year’s freshman class. A key part of their evaluation for financial aid: the FAFSA®.
It’s pretty simple: No FAFSA®, no federal aid. No Federal Direct Student Loans. No Pell Grants. No Work-Study, or any other federal student aid program. Students must complete the FAFSA® to be eligible for those federal aid programs.
TIP: Don’t rush but fill out the FAFSA® as soon you can do it accurately. Students applying early-decision or early-action need to pay particular attention to the deadlines to ensure that they are considered for financial aid as well as admission. Some financial aid is awarded on a first-come, first-served basis so filing a well prepared FAFSA® sooner than later is advisable.
Understand the Process and Who is Involved
The federal government and the colleges predominantly deal with students, not parents, in the college admission and financial aid processes. Be sure that filings are done using the student’s information, including their social security number and other required data. Information about parents should be provided only when specifically requested.
Here are the resources provided by the U.S Department of Education to help you better understand the FAFSA® filing process:
Once the FAFSA® is filed, the student will receive a Student Aid Report (SAR), which will also be sent to colleges. The SAR will note the family’s Expected Family Contribution (“EFC”) – the calculation which estimates how much the government thinks a family should contribute to a student’s education. It is not the price of college or a final determination of what a particular college will cost a family. It is an index used to determine how much financial aid a student may be eligible to receive and consequently, how much a family may need to contribute after the aid package is awarded. If the EFC seems high, double-check inputs to be sure that there aren’t any errors. If errors are uncovered, correct them immediately and let the college know of the error.
Based on the SAR, the federal government determines financial need and allocates grants to students with financial need. Colleges also use the SAR to award their own need-based grants and scholarships, a.k.a. Institutional Awards.
Other Helpful Tools
Mobile App: The U.S. Department of Education launched myStudentAid, a mobile App for the FAFSA®. You can find the myStudentAid App in the Apple Store (iOS) and at Google Play for Android.
IRS Data Retrieval Tool: Family income is a key factor in determining eligibility for federal financial aid. The FAFSA® form requires information from a family’s tax returns that were filed two years before the Academic Year for which a student is seeking federal financial aid. Students filing for financial aid for the next Academic Year (2022-23) must use tax information from the tax year 2020. To make this easier, the Department of Education now has a link to those tax forms via the IRS Data Retrieval Tool.
Free EFC estimator: The FAFSA® collects information about various aspects of the student’s and parents’ situation including, but not limited to their income and number of students attending college. The data is fed into a calculation that produces the family’s Expected Family Contribution (“EFC”) using a formula established by law. Most undergraduates are dependent students for this purpose and are required to report their parent’s income in addition to their own. If parents are separated or divorced, the custodial parent must provide their income data for FAFSA® filing purposes. Use this free EFC Estimator to estimate your family’s Expected Family Contribution.
Do you need to file the CSS Profile?
Some private colleges and universities also require students to file a second financial aid form known as the CSS Profile. For a fee, the College Board administers this process for colleges and universities. Like the FAFSA®, the CSS Profile is available on October 1 and helps to determine a student’s eligibility for institutional financial need. You can learn more here about the CSS Profile and the colleges which require it.
Don’t miss the deadlines
Some colleges require the FAFSA® and CSS Profile to be filed at about the same time that Early Decision or Early Action applications are due. Be sure you know the relevant deadlines well in advance. Missing financial aid deadlines, even by a day, will likely result in a student not being considered for aid.
Many states provide need-based grant programs to students with low income based on data provided on the FAFSA®. While the federal FAFSA® is available beginning October 1, not every state will not yet have their grant budgets passed for the 2022-2023 Academic Year. Be aware of any financial aid awards relying on estimates for state-based funding as they may be subject to change based on final state budget legislature.
One final note: Institutional Awards are funds reserved by the college and distributed based on their own internal criteria and methodology. Eligibility requirements and deadlines can vary from school to school. Make sure to identify any deadlines for institutional funding to stay ahead of the curve. The simplest way to achieve this is by making sure all financial aid forms are completed and submitted in advance of any deadlines.
Future changes to the FAFSA® Form in 2024-25
Who should be affected by the FASFA® changes in 2024-2025?
Each year on October 1, the U.S. Department of Education releases the FAFSA® form used to calculate need-based financial aid for the next academic year. The proposed changes discussed below will affect the:
- High school class of 2024 (this year’s freshman class).
- College students who will be in their freshman, sophomore, and junior years of college, and
- Returning graduate students.
In 2020, Congress passed the FAFSA® Simplification Act which made some changes to the current FAFSA® form including and called for more significant changes to be implemented in the future.
Some of the key changes include:
- The term Expected Family Contribution (EFC) will be replaced by Student Aid Index (SAI). Like the EFC, the SAI will be used to calculate eligibility for need-based aid programs when the FAFSA® is completed. Cost of Attendance minus the SAI = Financial Need.
- Number of children in college will no longer be reported on FAFSA®. This has two primary ramifications.
- The Income Protection Allowance (IPA), sheltering a portion of parent income, is currently reduced by a factor based on the number of children in college, and no longer will be reduced when two or more children are enrolled in college simultaneously. This will shelter more parent income from need analysis.
- The FAFSA® will also no longer divide the parent contribution portion of the SAI (previously EFC) by the number of children in college.
- The income protection allowance will increase.
- The new FAFSA® will be shortened to under 40 questions from a current 108 questions.
- For divorced and separated parents, the parent responsible for providing information on the FAFSA® will be the parent providing more financial support to the student, instead of the parent with whom the student resides most of the time. This will be based on financial support provided during the prior-prior tax year.
- The question relating to “money received or paid on student’s behalf” will no longer be on the FAFSA®. No longer will a distribution from a grandparent-owned 529, for example, be reportable as untaxed student income. This is important since the FAFSA® currently counts a portion of student income towards calculation of the EFC.
- Changes to how cost of attendance (COA) is defined. Under the new law, COA will be expanded and will include tuition and fees, housing, and meals (previously called room and board), books and other course materials, transportation, personal expenses, loan fees (for those receiving federal student and parent loans), and costs associated with obtaining professional licensure, certification, or credentials.
The Last Word
The financial aid process requires families to file information in order to receive financial aid. Some families decide not to participate in the process for a variety of reasons. Despite the inconvenience of the filing process, families are best advised to file the required forms. Why not ensure students have access to all of the federal aid for which they are eligible?