Whether this is your first rodeo or you’re well-acquainted with the student aid application process, filling out the Free Application for Federal Student Aid (FAFSA) form is likely not your favorite item on the college planning to-do list. In fact, the old forms felt akin to filling out a tax return — long, a little invasive, yet ultimately unavoidable.
Starting in 2023, however, the longstanding FAFSA forms and process got a facelift. In an effort to streamline the process and, “make it easier than ever for students to get financial aid for college,” Congress approved a new FAFSA form that leverages already available tax data to make the process easier for everyone involved.1
If you’re the parent, guardian, grandparent of a college-aged student, you may have already poked around the new process. But for those who are just dipping their toes in the financial aid application process, here’s what you need to know about the recent changes and how they may impact your family.
At the highest level, the new FAFSA form is shorter and simpler for your student to complete. In prior years, the FAFSA included up to 103 questions (including somewhat controversial ones about joining the Selective Service and disclosing prior drug-related convictions).2 Today’s FAFSA form contains just 18 questions.
Your student can also opt to have up to 20 colleges or universities receive their FAFSA form, up from 10 institutions in years prior.
Aside from these fundamental improvements, there are two major changes for families to be aware of.
A contributor refers to anyone in your child’s immediate family (namely parents or spouses) who is required to provide personal information, and must consent to having their tax information transferred over to the FAFSA form from the IRS.
Contributors can include:
It’s important to note that despite family ties, contributors do not include grandparents, legal guardians, foster parents, siblings, or other family members, like aunts and uncles.
To include contributors on your child’s FAFSA form, you’ll need to provide their:
Each contributor will also need to create a unique login in order to give consent for transferring their tax forms and provide all necessary information. If you’re not sure who should be added as a contributor to your child’s FAFSA form, the application will prompt you and your child based on their answers to previous questions.
In prior years, FAFSA used a formula to calculate an expected family contribution (EFC) based on income, assets, and benefits. The EFC would provide a dollar amount, which represented how much FAFSA believes the student’s family would be able to pay based on their income and other factors. For example, an EFC of $25,000 meant FAFSA estimated your family could pay $25,000 out-of-pocket for the upcoming school year.
In the recent redesign, the EFC has been replaced with a Student Aid Index (SAI). Instead of a dollar amount, the SAI is an indexed number ranging from -1,500 to 999,999 and indicates your child’s financial aid eligibility. The lower the SAI, the higher the need for financial aid for the student.3 Colleges and educational institutions use the SAI number to then calculate how much financial aid to offer.
Aside from enjoying a shortened, more streamlined application process, the updated FAFSA includes a few notable benefits for families.
Under the new process, the Department of Education estimates that 610,000 more students will be eligible for a Pell Grant, which the federal government provides to those who demonstrate exceptional financial need. These grants don’t have to be repaid. Additionally, 1.5 million students will now be eligible for the maximum grant, as opposed to receiving a partial grant. The maximum Pell Grant amount changes each year, but for the 2024–2025 school year, eligible students can receive up to $7,395.4
When FAFSA revamped the form for the 2024–2025 school year, they eliminated questions regarding contributions from grandparents. This is a significant change, as it means grandparents can open and fund a 529 account for their grandkids without impacting their financial aid eligibility.
Keep in mind that if you’re the parent of a college-aged student, your 529 plan will count toward your assets and may impact financial aid eligibility.
If you or your spouse (or ex-spouse) receives income from Workers' Compensation or veteran’s education benefits (also called GI Bill benefits), these can now be excluded from your child’s FAFSA form. The only exception here is if any unused GI Bill benefits are transferred to the student to use, then they’ll need to be included as income on the FAFSA form.
With any change comes some critiques or drawbacks, and the FAFSA redesign is no exception. Here are a few particular changes that may create some additional financial strain for families.
In years prior, the EFC dollar amount would be divided among the number of children attending college for that particular school year. For example, if a family had an EFC of $25,000 and two students attending college at the same time, they’d be expected to pay $12,500 each. Now, that’s not the case.
It may help to think of it this way: The EFC could be considered a minimum out-of-pocket cost “per household,” whereas the new SAI formula calculates the minimum out-of-pocket cost “per student.”
Is this to say parents have essentially doubled their out-of-pocket costs overnight, thanks to the FAFSA formula changes? Not necessarily. It will, however, fall on the individual universities and institutions to help parents make up the difference by offering additional aid packages. The other option is for families to take on more student loan debt, which isn’t ideal either.
For years, divorced parents could take advantage of a loophole in the FAFSA system. The parent with the least amount of income would take the lead on FAFSA, which would help increase the student’s aid eligibility, since the EFC calculation was heavily weighted toward income.
Now, the “financial” parent defaults to the one with the most financial resources, even if that person is not considered the “custodial” parent (meaning the one who the child lives with or whose address is on record). This could lower the student’s aid eligibility.
Changing a system that’s been in place since the early 1990s has proven harder than predicted, as the Department of Education continues to struggle with delays, bugs, website crashes, and data entry issues.
The 2024–2025 FAFSA form rollout was so riddled with issues, the former head of the Federal Student Aid office Richard Cordray resigned at the end of his three-year contract, likely as a result.5 Students were being locked out of applications, the new formulas were returning inaccurate calculations, and institutions weren’t receiving the information necessary to award aid packages in a timely manner.
If you and your child have been impacted by delays or other challenges while filling out the new FAFSA form, you can submit concerns within the Federal Student Aid Feedback Center.
There are so many emotions surrounding the college planning process, from helping your child tour universities, to submitting applications, celebrating acceptances, and making a packing list. Your family will never experience anything quite like this phase of life again, and you shouldn’t let the stress of financial aid forms get in the way of celebrating your child’s accomplishments.
The new FAFSA form is meant to be a more streamlined, easy application process, even if it’s a little buggy for now. Just be sure to give yourself plenty of time to gather up the relevant information, contact other contributors, and submit the application well before the deadline (typically June 30, but check with your child’s list of colleges since it may differ).