Dreading the FAFSA this year? Things just got better.
You may have heard that the federal Student Aid office revamped its FAFSA form. This is the Free Application for Federal Student Aid, and it has historically been a doozy to complete. It has been intimidating, so much so that many have chosen not to complete it, potentially missing out on significant financial aid.
Changes were made to the 2024-25 FAFSA form in an effort to make it less cumbersome and encourage completion. To provide a bit of fresh motivation to those looking into the process, we are providing the highlights of what changed.
10 Major Changes designed to improve the experience.
- Fewer questions. Perhaps the most visible change is the length of the form. The number of questions reduced from 108 to 36.
- Direct data transfer. Most reportable data on the FAFSA will now be directly transferred from the IRS.
- Pell eligibility. The number of students eligible to receive the Pell grant increased. The Pell grant is designed for the lowest income families. It also tied Student Aid Index (SAI) to the Pell grant award.
- Student Aid Index (SAI) replaces the Expected Family Contribution (EFC) . The primary goal of the change is to provide more accurate representation of how colleges and universities use this number.
- Net Worth of Family Business. Families will be required to report net value of family farms and small businesses as an asset, unless eligible for a simplified needs test.
- Number in College. Although this question still remains on FAFSA, the number of students a family has enrolled in college is no longer factored into the SAI Calculation.
- Income Protection Allowance (IPA). The allowance increased for both parents and students, protecting more income amounts from being included in the FAFSA formula than before.
- Tax Deferred Retirement Contributions. Contributions made to tax deferred pension and retirement plans, which were paid either directly or withheld from earnings, that are not delineated on the federal tax return, no longer are reported.
- Money Paid to the Student. Students are no longer asked to answer the “money paid on my behalf” question. This eliminates reporting outside financial support, which includes distributions from non-parent owned 529 plans.
- Child Support Received. Child support that is received is now reported as an asset moving forward vs. actual income, which is a more favorable treatment because assets are counted less in the formula than income is counted. The difference is approximately 5.6% as an asset vs 20% as income.
We hope these highlights are helpful to you. It appears to be a positive move in the right direction for student financial aid. For more information and to get started on the new form visit FAFSA® Application | Federal Student Aid.
The opinions expressed herein are those of SYM Financial Corporation (“SYM”) and are subject to change without notice. This article is for informational purposes only and does not constitute investment, legal or tax advice and should not be used as a substitute for the advice of a professional legal or tax advisor. Information was obtained from third party sources which we believe to be reliable but are not guaranteed as to their accuracy or completeness.
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