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How FAFSA Changes Will Affect Your Family

October 14, 2023
Jess Ullrich

Millions of borrowers rely on federal student loans to pay for college each year. However, upcoming Free Application for Federal Student Aid (FAFSA) form changes will affect federal student aid eligibility for the 2024-2025 school year and beyond. 

 

In 2021, the U.S. Congress passed the Consolidated Appropriations Act. Included in this Act was a provision about simplifying the Free Application for Federal Student Aid (FAFSA) form to encourage more incoming college students to complete it. 

 

Since the FAFSA helps determine federal student aid eligibility, simplifying the form so more people fill it out is a good thing. More applications mean more aid is distributed, but the changes may also reduce the amount of need-based aid certain families qualify for. Here’s what to know. 

What’s Changed on the FAFSA?

The FAFSA form for the 2024-2025 school year is much shorter than its predecessor, meaning it should take less time and effort to complete. The old FAFSA had over 100 questions, but the new form has about 46. 

 

Other changes families can expect include:

 

  • Income exclusions: Certain types of income will now be excluded from FAFSA aid calculations, including grandparent 529 contributions. This change could mean more students are eligible for need-based federal financial aid.   
  • Pell Grant eligibility: Under the new guidelines, more students from low-income families will qualify for the maximum Pell Grant, which totals $7,395 for the 2023-2024 academic year. Students in two-parent homes can qualify for the maximum if their family’s adjusted gross income (AGI) is less than 175% of the federal poverty level, and those in single-parent homes can qualify if their AGI is less than 225% of the federal poverty level.  
  • More school options: On the old FAFSA form, students could only list up to 10 schools, but the new FAFSA online application lets you list 20 schools. 
  • Later application date: Historically, the FAFSA has been available October 1st, but the updated 2024-2025 FAFSA won’t be available until December 2023. 

 

In addition to these changes, families can expect changes to the Expected Family Contribution (EFC), which was an estimate of what families could contribute to college costs. The EFC is renamed the Student Aid Index (SAI) on the new form, and the SAI calculation works slightly differently. 

 

Previous EFC calculations accounted for the number of students enrolled in college, so families with multiple kids enrolled in college simultaneously received a sibling discount. However, the sibling discount no longer applies with the new SAI calculation, which could reduce need-based financial aid for certain families. 

How Changes Impact Federal Aid for Siblings

To illustrate how the new changes could impact need-based aid for these families, let’s consider the old EFC formula first and how the sibling discount is applied. 

 

For example, your family income is $100,000, and your EFC is $20,000 yearly. If the annual cost of college is $40,000 and your EFC is $20,000, the first sibling attending college could qualify for up to $20,000 in federal need-based aid.

 

If a second sibling started college a year after the first enrolled, the old EFC calculation would account for that. The $20,000 EFC would be divided equally among the siblings, with each receiving a $10,000 EFC. Thus, the aid siblings qualified for would increase from $20,000 to $30,000.

 

However, the new SAI formula doesn’t account for multiple siblings in school at once, so need-based eligibility doesn’t increase even if two or more children attend college simultaneously. As a result, families in this position may need to pay more out of pocket or seek out alternative sources of financial aid. This change will likely have the most significant impact on middle-income families.

 

That said, certain colleges may adjust to account for the new SAI calculations, potentially offering additional aid to those affected. But these changes are made at the school’s discretion.  

The Bottom Line

Changes to the FAFSA are intended to simplify the process of applying for federal student aid and will likely increase access for many students. But some will also receive less aid, including certain families with multiple siblings attending school simultaneously. Still, this shouldn’t deter you from completing the FAFSA if you’re seeking financial assistance for college, as this is the best first step toward getting federal loans or grants.

If you need to apply for additional loans for school, ELFI offers private student loans with competitive rates and flexible terms. Learn more about our private student loans today.

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This website is for educational and informational purposes only and should not be construed as legal, financial or tax advice. While the ELFI team works to maintain updated blog content, the information provided is subject to change over time. Information is accurate as of the publishing date. Links to other websites or references to services or applications are provided as a convenience only. A link does not imply ELFI’s sponsorship or approval of any other site, service or application. ELFI does not control the content of these sites, services or applications.

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