Tuition Simplified: FAFSA Changes Ease Financial Aid Process

Computer Screen With Announcement That Changes Are Coming To The FAFSAFilling out the Free Application for Federal Student Aid (FAFSA) is one of the most difficult parts of applying to colleges, but changes are coming to make the process less of a challenge.

Required for all current and incoming college students, the FAFSA determines if students are eligible for a wide range of federal, state and institutional financial aid, and how much aid they are eligible to receive.

In the past, filling out the FAFSA has been a daunting process requiring hours of work. In 2024, the government is making substantial changes to the FAFSA, streamlining the process and reducing the information required. The new FAFSA is expected to be available in late December.

“The biggest change is going to be in the number of questions,” said Debbie O’Dea ’06, Pacific University’s director of financial aid. “The old FAFSA was over 100 questions and now it has been reduced to just over three dozen, which makes it a much faster process.”

The reduction in questions is made possible by legislation allowing the Department of Education to automatically receive tax information required on the FAFSA from the Internal Revenue Service. As long as a family’s tax information is up to date, that data will no longer need to be manually entered.

With the simplification measures, the major metric that the FAFSA generates to determine aid eligibility is changing. Previously known as the Expected Family Contribution (EFC), it was often misinterpreted as the final amount of money students would be expected to pay to attend college.

“This was a real misnomer,” O’Dea said. “If a student did their FAFSA and it said that they had a zero EFC, the assumption was that they owed zero money for college. Then they get this financial aid package that would show that they had an out-of-pocket expense. It was an unpleasant surprise for lots of students and families.”

The new metric, called the Student Aid Index (SAI), is designed to more accurately reflect a student’s financial need. The SAI will take into account a family’s adjusted gross income, as reflected in their tax information, as well as where a family falls on federal poverty indexes. The SAI can reflect a negative amount, reflecting a greater need for need-based aid.

“The SAI gives us more ability to see where to put those resources and make more room in the cost of attendance to receive more gift aid, if eligible,” O’Dea said. “On the financial aid side of things, it gives us a better, more comprehensive view of where our students are in terms of need.”

Changes to the FAFSA will also impact how 529 college savings plans, a popular tax-advantaged vehicle, are reflected in the Student Aid Index. Under old rules, any 529 plan opened on behalf of a student was figured into the Expected Family Contribution as an available financial resource.

Under new rules, 529 plans opened by parents must still be reported as financial resources, but plans opened by anyone other than parents or the student themselves do not have to be reported.

“If it is in the name of an aunt, a friend, or a grandparent, it no longer has to be reported,” O’Dea said. “A student isn’t going to get dinged for prior planning that others have put into place for them. They won’t be penalized for having that extra resource.”

Additionally, changes are being made in eligibility standards for Pell Grants, awarded by the federal government to undergraduate students who demonstrate exceptional financial need. The change is expected to increase Pell eligibility to an additional 500,000 students each year, with a projected 7.4 million students receiving Pell Grants in 2024-25.

While most of the changes to the FAFSA will result in net positives for students and families, two changes have the potential to negatively affect eligibility.

The Student Aid Index will no longer split the metric between multiple college students in the same family. On the old FAFSA, the Estimated Family Contribution was split between all family members attending college. Under new rules, the Student Aid Index for each student in a family will be the same amount.

There are also changes to how business assets will be figured into the Student Aid Index.

“In the past, if you had a family business with less than a certain number of employees or a family farm, you did not have to report that asset,” O’Dea said. “Moving forward for 2024-25, you will be required to report family farms and business as an asset. That will have an impact on some students.”

• All students and parents will be required to have unique email addresses and phone numbers to receive an FSA ID, which is required to fill out the FAFSA.

• A Social Security number is no longer required to fill out the FAFSA. There will be a process for parents without Social Security numbers to be verified.

• The FAFSA will be available in 11 different languages most commonly spoken in the U.S. This includes the majority of commonly spoken languages in Oregon, except for Ukrainian and Marshallese. In the past, the FAFSA was only available in English or Spanish.

While the simplifications to the FAFSA are designed to make it easier for students and families, there will still be plenty of questions figuring out the new system.

O’Dea recommends several online resources that will have up-to-date information. The Federal Student Aid website, which includes online access to the FAFSA form, is the direct source of information from the federal government. For students in Oregon, the Oregon Goes To College and Oregon Student Aid websites are valuable sources of financial aid and scholarship information.

If you are not finding the right answer online, any college’s financial aid office can provide assistance.

“I’ve worked at a variety of colleges and every single one is ingrained in the community surrounding it,” O’Dea said. “Any school that you’re looking at or any school that you are familiar with, reach out to their financial aid office if you have questions.”

Above all else, O’Dea asks for patience as both families and financial aid professionals alike navigate the new process. As the most radical change to college financial aid in four decades, there is plenty to learn.

“These changes to the FAFSA are taking the fundamental structure of how we do financial aid awarding and turning it all on its head,” O’Dea said. “It’s a learning year for everyone. It’s all hands on deck and asking everybody to get through it with grace.”

Wednesday, Dec. 13, 2023