High school seniors are starting to set their sights on graduation. With that comes the nerve-wracking college search. Not only are they looking for the perfect school but they or their parents also are figuring out how to pay for it.
Changes in FAFSA Format and Submission Date
In 2020, Congress passed the FAFSA Simplification Act. Its mandate was to reduce the number of questions on the form from 108 to less than 50. The goal is also to make the Pell Grant and other aid more accessible.Student Eligibility Changes
Some questions have been eliminated from the new FAFSA. This expands eligibility for some potential students.The Selective Service registration question has been eliminated. This required males 26 and under to enroll in the draft. It is not a requirement to be registered for Selective Service to receive federal aid.
Students gain Pell Grant eligibility who have been in an involuntary civil commitment for a sexual offense. Students incarcerated in a federal or state prison and enrolled in approved education programs are also eligible for the Pell.
Student Aid Index Used
FAFSA was primarily used to determine a prospective student’s expected family contribution (EFC). This is the estimated amount the student and their family would pay toward the education. This amount gave the federal aid administrators and schools a gauge of how much money would be used for support.A different formula will now be used. The Student Aid Index (SAI) will be used. In the past, the EFC could not be a negative. It could only be zero. Under the SAI, it can go as low as negative $1,500.
Change in Pell Grant
The largest amount of financial aid comes through the Pell Grant program. This is geared toward students with significant financial need.The new FAFSA will use the adjusted gross income (AGI) in addition to the SAI. This will determine eligibility for Pell award amounts.
Students can estimate their eligibility for the grant before completing the FAFSA.
Students With Siblings in College Biggest Losers
Currently, financial aid increases for those with more than one child in college. This helps those parents with multiple children.The SAI doesn’t include the number of family members in college as part of the calculation. This won’t affect the lower-income students, but families who earn between $60,000 and $100,000 will see reduced Pell Grants.
The change in Pell Grant amounts results from the elimination of the sibling discount. Although the expected family contribution has been reduced proportionally to the number of siblings, the new calculation doesn’t consider siblings.
For example, if the family has two children in school and an expected contribution to college of $4,000, it was applied as $2,000 per child. Now, it’s applied as $4,000 per child.
Farmers and Small-Business Owners Penalized
Families with an AGI of $60,000 who own small businesses with 100 or fewer employees will see a change. The new FAFSA legislation will also affect families who own farms and have an AGI of $60,000.The business and farm will be considered financial assets that can be used to pay for college.