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Writer's pictureAlison Merzel

Upcoming changes to the FAFSA - What you need to know

Updated: Jan 12, 2023

When Congress passed the most recent COVID-19 relief legislation, it included the FAFSA Simplification Act. While the 167 pages do describe some positive improvements to the complicated process required to apply for federal student financial aid, there are some changes that are less desirable. Mark Kantrowitz published a detailed article in Forbes that summarizes all of this. Changes are being implemented in phases, and all changes will be in effect by July 1, 2024. Here are some important highlights:


  • The number of questions has been reduced from 108 to 36.

  • The term Expected Family Contribution (EFC) will be replaced with Student Aid Index (SAI). EFC is a calculation used to help families estimate how much they will be asked to pay for college and how much financial aid they qualify to receive; however, it is often misleading, as some families pay more than the EFC indicates and some families end up paying significantly less.

  • Currently, if a student has divorced or separated parents, the parent with whom the student primarily lives is the one who completes the FAFSA. Under the new Act, the parent who provides the greater financial support will be responsible for completing the FAFSA.

  • The cost of attendance will be more streamlined and transparent - colleges will be required to list out the items including in cost of attendance on their websites so it will be more difficult for them to "bury" costs.

  • Income Protection Allowance will be increased, allowing a greater amount of income to be sheltered from the financial aid formula.

  • The new calculation will allow for negative numbers and the SAI to fall as low as - $1,500. This will ensure that the neediest students qualify for the greatest amount of aid.

  • In a negative change, the FAFSA will no longer divide the parent assessment by the number of family members enrolled in college. This will reduce the amount of financial aid available to families with multiple students enrolled in college simultaneously.

There are also changes to the Financial Aid Formula, the Pell Grant Eligibility Criteria, and the process for submitting Financial Aid appeals.


The good news is that the form will be shorter and more user-friendly. Data on taxed and untaxed income will be automatically transferred from an applicant’s tax return directly to the FAFSA, saving applicants lots of time from self-reporting income information.


Put this information in your back pocket for now - in the meantime, happy saving for college!

If you don't have a 529 savings plan for your kid(s) college education and you still have a few years before having to pay for college, it may be time to look into creating one.


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