FAFSA Changes You Need To Know (Part 2)
Part Two of this three-part blog series is all about the Free Application for Federal Student Aid (FAFSA) changes that pertain to Divorced Parents.
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 two of this three-part blog series that focuses on the changes that may impact families the most if the parents are divorced. If you have not yet read part one, please follow this link to do so. Below are the biggest changes that will impact divorced parents.
The parent who supports the student financially will be filling out the FAFSA
This is another big one for you to note if you are a divorced parent. Currently, the custodial parent is the parent who fills out the FAFSA (the custodial parent is the parent who has the majority of custodial support, which usually ends up being the parent the student lives with the most throughout the year). This has always been flexible since the methods of proving who the custodial parent has always been tough and therefore flexible.
However, moving forward (after July 2023), the parent who fills out the FAFSA must be the parent who provides the most financial support for the student throughout the year. This becomes a bit less flexible and it’s something to be aware of.
You will only be able to claim household dependents if they are also claimed on your tax return.
In addition, the way that the household size is calculated is changing, too.
First of all, the household size is important because the larger the household size is, the lower your EFC (or SAI) becomes. It is one part of a very large equation. In the past, the parent could simply state the household size without needing to prove the dependency. Now, in order for the parent that is filling out the FAFSA to list all household members (children) on the form, those children must be claimed as dependent on that parent’s tax filing.
This is especially important if the divorced parents take turns claiming their children on tax filings. It is in the parent’s best interest to identify the parent that will be filling out the FAFSA and make sure that the parent is claiming all dependents for the years that will be used for future FAFSA filings.
Remember: these changes are taking effect for the academic year 2024/25. That academic year will be based on your 2022 tax filing that will be done in the spring of 2023. If your student will be attending college during the academic year 2024/25, we recommend you plan accordingly for your 2022 tax filing.
That’s All For Now
This concludes Part Two of this three-part blog series. Check back for Part Three next week!
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.