Six key changes to financial aid

This year there are a few changes to the FAFSA.

1.       New application start date: The form used to open on October 1 every year; however, for the 2024/2025 school year the FAFSA is expected to open in December 2023. The FAFSA is expected to return to an October 1 start date with the 2025/2026 FAFSA.

2.       Shorter, less intimidating form: The new form will be simplified and a lot shorter, down from roughly 100 questions to about 35. Many families may have been intimidated by the longer form, which kept them from applying for financial aid. Questions regarding Selective Service registration, drug-related convictions, and gender have been completely removed. Students and families can also import their tax records.

3.       Changes to the EFC: The Expected Family Contribution (EFC) was the calculation that the U.S. Department of Education used to determine how much aid families could receive. The EFC will be renamed the Student Aid Index (SAI). Colleges will use the SAI to determine a student’s financial need, relative to their other applicants. In the past, the EFC created confusion and led students and families to believe it was a calculation of what they were expected to pay. The SAI is expected to be a more accurate way of determining financial need than the EFC.

4.       Eligibility changes for families with multiple children: One of the biggest changes to the FAFSA affects parents with two or more kids in college at the same time. In the older FAFSA form, the calculations would allow for the family to have a lower EFC per student. They received increased financial aid eligibility, which parents with kids who are farther apart in age didn’t receive. The new rule eliminates this. Now students in college have their SAI and if two or more are in college at the same time, the parents are going to be paying more.

"The changes were made because they felt it wasn’t fair that people who had twins or triplets or two or three in college at one time were getting a break that parents who had spaced their children out were not getting,”—Nancy Steenson, College Admissions Coach

5.          Change to who files the FAFSA: Previously, it used to be that the custodial parent filed the FAFSA form in case of divorced parents. However, the new rule states that the parent responsible for filing the FAFSA will be based on whichever parents provides more financial support to the student, not the parent with whom the student resides.

6.          Report family farms and small business: The new FAFSA rules require families to report their family farm or small business net worth, and this will also be considered an asset while calculating the SAI.

With all these changes to financial aid, it’s important to have a plan in place for your child’s education. A financial professional can help you put together a plan for sending your child to school, including setting up a specific savings account such as a 529 education savings account.