By Trea Branch | NerdWallet
For the primary time in 40 years, college students will see a totally revamped Free Application for Federal Student Aid (FAFSA). These modifications are a part of the FAFSA Simplification Act and will profit most households, however some households might see their eligible assist lower considerably, specialists say.
“Overall, I think there are a lot more winners,” says MorraLee Keller, senior director of strategic programming on the National College Attainment Network, a nonprofit group supporting school affordability. On the opposite hand, Keller says she doesn’t need to underestimate the destructive influence these modifications could have on some households.
The FAFSA Simplification Act goals to streamline the appliance course of, take away obstacles for key scholar populations and develop federal assist eligibility. Notable modifications to the FAFSA embrace:
- Replacing the Expected Family Contribution with the Student Aid Index.
- Expanding Federal Pell Grant eligibility.
- Automatically populating federal revenue tax information from the IRS.
- Adding particulars that decide a college’s price of attendance.
- Removing questions on Selective Service and drug convictions.
- Simplifying questions that decide the impartial standing of scholars in uncommon circumstances, comparable to homeless college students, orphans or former foster youth. Institutions could have extra flexibility in adjusting sure elements that influence federal scholar assist for these college students.
- Translating the appliance so will probably be obtainable in additional languages.
The long-awaited modifications will launch in December 2023.
How the FAFSA modifications will influence your assist
Changes that may influence most college students
The Department of Education is altering how a household’s need-based assist is calculated. As a end result, extra households might obtain extra assist.
Before FAFSA simplification: A household’s want was calculated utilizing the Expected Family Contribution (EFC). The EFC included revenue and belongings, household dimension and the variety of kids presently enrolled in school. Typically, the decrease the EFC, the extra assist you’d be eligible for.
After the FAFSA simplification: The EFC is being changed by the Student Aid Index (SAI). And just like the EFC, the decrease the SAI, the extra assist you’ll be eligible for. But the brand new method will increase the revenue safety allowance — permitting for extra of a scholar’s or household’s revenue to be excluded from the calculation.
For instance, utilizing the EFC, the mother or father revenue safety allowance for a household of 4 for the 2023-24 tutorial 12 months is $32,610. For the 2024-25 faculty 12 months, the identical household can exclude $35,870 — defending an extra $3,260 from their revenue calculation and reducing the coed’s SAI.
Changes that may influence low-income college students
Moving away from the EFC to the SAI, will probably be simpler for some households to indicate the magnitude of their monetary want.
Before FAFSA simplification: Students from a family with restricted revenue and belongings might, on the lowest restrict, obtain an EFC of zero. If your EFC was zero, you have been mechanically eligible for the utmost quantity of federal scholar assist.
How it really works:
Cost of attendance – EFC = Financial want
For instance, in case your faculty’s price of attendance is $20,000 and your EFC is zero, you’ll be eligible for $20,000 in need-based assist.
After FAFSA simplification: Unlike the EFC, the brand new SAI calculation can drop under zero. The SAI could be as little as destructive $1,500. A household with considerably fewer monetary assets might obtain extra assist within the 2024-25 tutorial 12 months than they have been eligible to obtain within the 2023-24 faculty 12 months.
How it really works:
Cost of attendance – SAI = Financial want
Using the instance above, having a $20,000 price of attendance and an SAI of destructive $1,500, you possibly can be eligible for $21,500 in need-based assist — a rise of $1,500.
The SAI calculation additionally makes it simpler to qualify for the Pell Grant:
- If your SAI is between destructive $1,500 and 0, you qualify for the utmost Pell Grant.
- If your SAI is bigger than $0 however lower than the utmost Pell Grant award, you possibly can qualify for the utmost Pell Grant — minus your SAI.
- If your SAI is bigger than the utmost Pell Grant award, you possibly can nonetheless qualify for a Pell Grant relying on your loved ones dimension, adjusted gross revenue and poverty pointers.
Changes that may influence college students with siblings in school
Families with multiple baby in school on the identical time will now not obtain a sibling low cost.
Before FAFSA simplification: The contribution for folks with a number of kids in school was divided by the variety of kids enrolled. This was based mostly on the concept a mother or father’s capacity to pay for school doesn’t improve as they’ve extra kids enrolled, in response to the Department of Education.
Using an instance from the Department of Education, a mother or father with one dependent in school full time might have an EFC of $10,000. When their second baby enrolls, that baby’s EFC could be $5,000. If they’ve three kids enrolled, the third baby would have an EFC of $3,333, and so forth.
After FAFSA simplification: The SAI doesn’t take into account the variety of kids enrolled in school when figuring out the mother or father’s contribution.
For some households, notably these with incomes and belongings between $75,000 and $200,000, the influence of eradicating the sibling low cost might be massive. Their eligibility for monetary assist might be reduce by 1000’s of {dollars}, defined Phillip Levine, an economics professor at Wellesley College.
All modifications to the FAFSA shall be in place for the 2024-25 tutorial 12 months, however you don’t have to attend to take motion. Use the federal scholar assist estimator to see what you’ll be eligible to obtain.
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Trea Branch writes for NerdWallet. Email: [email protected].
Source: www.bostonherald.com”