The new FAFSA: What you need to know to get financial aid for college
By Katie Lobosco, CNN
Washington (CNN) — There’s one form prospective and current college students must submit in order to receive federal financial aid, and it looks a lot different than in prior years.
The Free Application for Federal Student Aid, better known as the FAFSA, has long been due for an update. On December 30, a new version of the form was released – a culmination of changes approved by Congress in 2019 and 2020. The FAFSA determines eligibility for federal Pell Grants and federal student loans – and in most cases, the financial aid provided by colleges as well, though some require students to submit an additional form.
The new FAFSA, which will be used to determine financial aid eligibility for the 2024-25 academic year, is shorter and easier to fill out.
Additionally, many low-income borrowers are expected to be eligible for more financial assistance, though some other applicants – particularly those with siblings also enrolled in college – could see less.
But the changes may cause some headaches in 2024 as families and colleges adapt to the new form.
At first, families may have experienced times when the FAFSA application was “paused” for site maintenance. During what the Department of Education called a “soft launch period,” the agency monitored site performance, conducted planned pauses for maintenance and made updates. The online form was only available for 30 minutes on December 30, another 30-minute window on December 31 and a two-hour window on January 1.
Starting on January 8, the 2024-25 FAFSA application was made available 24 hours a day, seven days a week – except for routine maintenance typical of any FAFSA cycle, according to the Department of Education.
Here’s what families need to know about the updated FAFSA:
Delay could leave students, colleges scrambling
Usually, the FAFSA is available on October 1 each year, but the overhaul of the form pushed back the release date by roughly three months.
That gives families less time to fill out the form for the next school year. Students will receive an email about whether they are eligible for a federal Pell grant soon after submitting the form, but they may have to wait longer than in the past to receive their financial aid package from their college.
Colleges won’t start to receive the data from the new FAFSA until the end of January, giving them less time to generate financial aid packages.
The timing varies by institution, but typically award letters are sent to students in March, who must commit to a college by May 1. It remains to be seen whether colleges can announce financial aid awards on their usual timeline.
“It’s going to be crunch time for colleges,” said Mark Kantrowitz, a financial aid expert and author of the book “How to Appeal for More College Financial Aid.”
“They may still be able to do that (get letters out by March), but it is going to be a challenge,” he said.
The Department of Education has said that families do not need to rush to immediately submit the FAFSA this year, as the results will not be transmitted to schools until later in January.
A shorter, easier form
The FAFSA has long been criticized as too complicated and, at a maximum of 108 questions, too long.
Former Republican Sen. Lamar Alexander, who worked for years to update the FAFSA, was known to carry around the very long form as a prop. He argued that the FAFSA was so complicated that it discouraged students from applying, effectively preventing them from receiving the financial aid they needed to earn a college degree.
The number of questions on the FAFSA vary by applicant, based on his or her financial circumstance, but there are roughly two-thirds fewer questions on the updated form, Kantrowitz said.
With the new form, some applicants will have to answer as few as 18 questions, which would take less than 10 minutes to complete, according to the Department of Education.
There are two reasons the updated FAFSA is easier to fill out.
First, some information is now directly taken from a filer’s tax return. This means that an applicant won’t have to go hunting for the right information on his or her tax return to input into the FAFSA.
In past years, the IRS Data Retrieval Tool helped filers pull information from their tax return into the FAFSA, but the new process will be automatic and available to everyone, said Jill Desjean, a senior policy analyst at the National Association of Student Financial Aid Administrators. The old tool excluded certain tax filing statuses. For example, parents who were married but filed taxes separately could not use the tool.
Additionally, a handful of questions have been eliminated entirely. For example, drug convictions no longer preclude someone from receiving financial aid. And as of the 2021-22 award year, male students are no longer required to register for the Selective Service in order to be eligible for financial aid, so that question has been removed from the new FASFA as well.
More students will qualify for Pell grants
The Pell grant program is a key way the federal government helps students from low-income families go to college by providing eligible students with money they don’t have to pay back.
Nearly 6.1 million students received a Pell grant during the 2021-22 school year, according to the latest data available from the Department of Education.
The Pell grant is worth up to $7,395 during the current school year – though not every recipient qualifies for the maximum amount as it depends on financial need.
Due to changes to the FAFSA calculation, more applicants are expected to qualify for a Pell grant going forward.
In fact, the Department of Education estimates that 610,000 more students will qualify on an annual basis. And an estimated 1.5 million more students will be eligible for the maximum amount, which typically changes each year.
Students from the lowest-income families already get the maximum Pell grant. But those whose family income is in the range of $40,000 to $70,000 and who have no siblings in college are expected to see an increase in their Pell grant amount, according to a Brookings Institution report that Desjean co-authored.
The updated FAFSA created a completely new and simpler way to determine Pell grant eligibility that’s based on fewer factors, Desjean said.
It’s now based on the following factors: family size, whether the family is headed up by a single parent, and the family’s adjusted gross income and how it compares with the federal poverty guideline.
The simplified calculation makes it easier for families to determine whether they can afford to send their child to college without having to fill out an entire FAFSA. In fact, the Department of Education has created an online tool that can help estimate how much a student will receive in federal financial aid – including Pell grants, loans and work-study funds – for 2024–25 in a matter of minutes.
“It’s simpler. It’s more transparent. It’s more predictable,” Desjean said.
Some students with siblings in college may lose money
Previously, students with siblings in college were often eligible for more financial aid than those who did not have a sibling enrolled at the same time – thanks to something known as the “sibling discount.”
For example, if a family had two children in college, each student’s eligibility for financial aid was roughly double what it would have been if the family did not have any other children in college at the same time.
But under the new FAFSA calculation, that benefit goes away. Not factoring in the other changes to the formula, the amount of financial aid a student is eligible for will no longer increase if he or she has a sibling in college at the same time.
Different lingo: SAI instead of EFC
Current college students who have submitted the FAFSA in the past may notice a change in terminology with the new form. What was previously called the Expected Family Contribution, or EFC, has been replaced with the Student Aid Index, or SAI.
After an applicant’s FAFSA is processed, he or she receives the FAFSA Submission Summary (formerly known as the Student Aid Report), which includes the SAI. The SAI is a number that estimates the applicant’s ability to pay for college, generated based on the information provided on the FAFSA.
Colleges compare an applicant’s SAI with the cost of enrolling in the institution to help come up with a financial aid award offered to a student.
With the new FAFSA, the calculation for the SAI is slightly different than it was for the EFC – but both figures serve the same purpose.
It’s worth noting that the SAI is not actually equal to what a student will pay to enroll in college, and the family is often on the hook for more.
Gifts from grandparents, others will no longer decrease financial aid eligibility
In the past, the FAFSA would consider whether a student received money – say, from a grandparent – to cover the cost of college. This included distributions from a 529 college savings plan not owned by the parent or student.
“Previously, the distribution from a grandparent or aunt or uncle from a 529 plan was treated as untaxed income to the student – which reduced aid eligibility by as much as half of the distribution,” said Kantrowitz.
Essentially, if the gift is not on the federal tax return, it won’t have an impact on the student’s aid eligibility any longer.
How to start the process
The student is responsible for filing the FAFSA, though if the student is a dependent, his or her parent must also sign the form. Both the parent and student will need to create their own account with Federal Student Aid, known as the FSA ID.
This can be done even before the updated FAFSA is released each year. Students who previously created an FSA ID in prior years can use the same username and password.
Parents who are not US citizens and don’t have a Social Security number could not create an FSA ID in the past and had to file on paper. But with the new form, people without Social Security numbers will also be allowed to create an FSA ID, Desjean said. A parent’s citizenship status is not taken into account in determining the student’s eligibility for federal student aid.
Undocumented students remain ineligible for federal student aid, including Pell grants and federal student loans, but may be eligible for aid from their college or state or through private scholarships.
CORRECTION: This story has been updated to reflect when the new FAFSA became available.
This story has been updated with additional information.
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