FAFSA Changes You Need To Know (Part 1)
The Free Application for Federal Student Aid (FAFSA) is a government document that all parents need to fill out in order to receive need-based AND merit-based aid. There are some big changes coming down the line. These changes are important for you to understand far in advance, in order to get the best possible results.
These changes listed below are set to begin in July of 2023 and will impact the academic year of 2024-2025. That means that the following fall (after July of 2023), parents of seniors (graduating 2024) will be filling out the FAFSA with all its new terms and conditions. It also means that parents of students who are already in college will see these impacts and changes, as well. While this might seem far away, and therefore not a huge priority, I invite you to reconsider.
Here’s what many families are not aware of: the FAFSA is based on the year before the year before the year. Let’s break that down.
The 2024-2025 academic school year will be based on the 2022 tax filing. 2022 is the year before the year (2023) before the year (2024). What does this mean for you? It means that what you do financially this year, and how you file your 2022 taxes in the spring of 2023 will have a big impact on how you fill out your financial aid forms and how much aid your student/family will receive.
Now that you understand the urgency, let’s take a look at part one of this three-part blog series that focuses on the changes that may impact families the most.
Expected Family Contribution (EFC) is changing to Student Aid Index (SAI).
Starting in July of 2023, EFC will be replaced by SAI. This is a more aesthetic change that will not have a big impact on you. It is, however, important for you to know.
For those of you that don’t know, the EFC or SAI is the term used to describe the amount of money the federal government believes you should be able to spend on your students’ college based on your financial aid paperwork.
This EFC/SAI is the monetary outcome in response to how you fill out the FAFSA based on the formula they use. There are strategies that you can use to get the lowest possible EFC/SAI and in turn, the most amount of financial aid possible based on your financial situation.
The number of students in college at the same time no longer divides the EFC/SAI.
This is a big one. In the past (and still presently, until July 2023), the number of students in college at the same time would divide the total EFC or SAI (remember, EFC = SAI). So what does that look like?
Let’s say you filled out the FAFSA and based on your answers, the government gives you an EFC or SAI of $30,000. That is the amount of money the government believes you should be able to pay for your student’s college education per year. Currently, and until July 2023, the number is divided by the number of students in college at one time (which is a good thing for you). So if you have two students that will be in college at the same time…
$30,000 divided by 2 = $15,000 each.
EFC/SAI for student #1: $15,000
EFC/SAI for student #2: $15,000
Total EFC/SAI for family: $30,000
After July 2023, this will no longer be the case (which is not good for families with multiple students in college at the same time). The number will not be divided by the number of students in college at the same time. Instead, it will be multiplied by the number of students in college. This means…
$30,000 multiplied by 2 = $60,000
EFC/SAI for student #1: $30,000
EFC/SAI for student #2: $30,000
Total EFC/SAI for family: $60,000
Now keep in mind that this is not necessarily what you will pay. It is simply the number the government believes you should be able to pay per year.
For most families, this number does not reflect their financial situation. This is extremely common. That’s why it’s important to plan and execute strategies that can bring down the EFC/SAI and increase scholarship eligibility throughout high school.
That’s All For Now
This concludes Part One of this three-part blog series. Check back for Part Two and Part Three later this week and next!
If you’d like to learn about solutions you and your family can use in order to prepare for these changes while also setting your student up for success academically, be sure to check out the DIY College Planning Course available here at College Strategy.