FAFSA SIMPLIFICATION- NEW FAFSA

The FAFSA Simplification Act passed by the US Congress in 2020 allows for the first major redesign of the Free Application for Federal Student Aid (FAFSA) process in over 40 years. It represents a significant overhaul of federal student aid, including changes to the FAFSA form, need analysis, storage of federal student aid application data, and many policies and procedures for schools that participate in Title IV programs. Students and families will see a different measure of their ability to pay for college and experience a change in the methodology used to determine aid.

There are numerous changes to different aspects of the FAFSA: the length of the form, questions asked, the calculation of a family’s ability to contribute, introduction of new vocabulary, ability to create an FSA ID without a Social Security Number, and the requirement to consent to data sharing with the IRS. Additional changes are detailed in other answers.

Changes to FAFSA Questions:

• The number of questions will be reduced and the application will maximize the use of previously collected data.
• Some questions will have additional available responses to better describe an applicant’s unique circumstances.
• The form will include new demographic questions about an applicant’s gender and race/ethnicity, but students will be offered a choice of “Prefer Not to Answer.” Schools and state agencies will notbe able to see a contributor’s responses to these questions and this information will not be used to calculate aid.
• Students will be able to list up to 20 schools on their FAFSA via the online application.
• Foster, homeless, and unaccompanied youth—as well as applicants who cannot provide parental information—will be able to complete the form with a provisional independent student determination and receive a calculated SAI.

Additional FAFSA process improvements:

• Resources for completing the FAFSA form will be expanded to the 11 most common languages spoken in the United States.
• Information connected to a student’s and other contributors’ FSA ID will be automatically populated in the form each year.
• Certain information provided in the new FAFSA form will be carried over to the applicant’s form the following year; the greatest benefits of this will be felt in the second year of the new FAFSA (for the 2025/26 application).
• Applicants may continue to receive support in completing the FAFSA form from financial professionals, but will need to complete and submit the form themselves.

Financial need will be calculated and determined with a new need-analysis formula

• The Cost of Attendance (COA) will be the starting point for calculating financial need. COA includes direct costs (charges for which the university bills you directly) and estimated indirect costs (living expenses) to fund educational expenses for a year.
• The Student Aid Index (SAI) will be calculated by the Federal processor and will be used by the Financial Aid office as an indicator of the family’s financial strength to determine what type(s) of aid will be offered to the student. SAI will replace the Expected Family Contribution (EFC).
• Other Financial Assistance is other financial assistance awarded to the applicant and includes support such as fee waivers, outside scholarships, etc.

The formula uses information that applicants provide on the FAFSA® form and, in most cases, federal tax information (FTI) that is retrieved directly from the Internal Revenue Service (IRS).

The new need-analysis formula (COA – SAI – OFA = Financial Need)

• Removes the number of family members in college from the calculation
• Allows a minimum SAI of negative $1,500 (-$1,500).
• Implements separate eligibility determination criteria for Federal Pell Grants based on federal poverty levels and family size.

The new formula also includes changes to asset reporting:

• Child support received will be included in assets and not as untaxed income.
• Families who own a small business/farm that also serves as primary residence will now have assets of that business/farm considered in their need-analysis calculation.

The Student Aid Index (SAI) is used by financial aid offices when determining student eligibility for need-based financial aid. The SAI can range from negative $1,500 (-$1,500) to $999,999. A lower SAI (including negative SAI) indicates a higher financial need.

The SAI is a number that determines each student’s eligibility for certain types of federal student aid and will replace the Expected Family Contribution (EFC).

• SAI will determine eligibility for all aid except for determining minimum and maximum Pell Grants.
• Pell Grant will be based on Dependency, Marital Status, adjusted gross income (AGI), Poverty Level, and Enrollment Status.
• EFC could never go below 0, but the SAI can be as low as negative $1,500 (-$1,500).
• SAI formula removes the state and other tax income exclusion.
• SAI formula eliminates the family farm and small business asset exclusions–families have to report.
• Income protection allowances are updated to higher amounts.
• Number in college is eliminated so that SAI will not take into consideration the number of family members in college.
• For FAFSA filers with divorced parents, the parent who should file the FAFSA is the one who provided a greater portion of student’s financial support and no longer who the student lived with the most.

The benefits of FAFSA simplification include:

• A more streamlined application process.
• Expanded eligibility for federal student aid.
• Expanded eligibility for the Federal Pell Grant.
• Reduced barriers for certain student populations.
• A better user experience for the FAFSA form.
• Enhanced data sharing with the IRS to simplify the applicant’s experience.

Additional benefits for certain student populations include:

• Ability to be assigned a “provisional independent” status to receive a calculated Student Aid Index (SAI) while independent student status is being verified.
• Students who have their independent student status approved by a financial aid administrator will be eligible for a renewal of their dependency status in subsequent years if their circumstances remain unchanged.
• Ability for family members without Social Security Numbers to create an FSA Logon by providing ab email, address and answering supplemental questions to verify their identity.
• Eligibility for the Pell Grant is extended to incarcerated students.

Eligibility for federal student aid will be expanded in the following ways:

• Selective Service and drug conviction questions will be eliminated to reduce applicant barriers.
• New methodology will be introduced to calculate and determine applicant eligibility.
• The Expected Family Contribution (EFC) will be replaced with the Student Aid Index (SAI).
• The new need-analysis formula allows for a negative SAI calculation and implements separate eligibility criteria for Federal Pell Grants.
• Federal Pell Grant access will be expanded and linked to family size and federal poverty levels, which will allow more students and families from low-income backgrounds to qualify.
• Federal Pell Grant access will be restored to incarcerated students under specific rules and programs.

To complete the FAFSA, you and your parent(s), if you are a dependent student, will be required to consent to the IRS to share your tax information with the FAFSA processor. Each person required to provide their information on the FAFSA will need an FSA ID. It will be helpful to have records of child support received, net worth of investments, businesses and farms, if applicable. If the Federal processor is unable to retrieve your tax information from the IRS, you should also have the tax returns available (2022 tax returns for the 2024/25 academic year).

The FAFSA Submission Summary replaces the Student Aid Report (SAR) as the student’s output document providing a summary of data input on the FAFSA form.

Family Size replaces the term “household size” on the FAFSA form. It captures the appropriate number of family members and dependents in the applicant’s household.

Anyone asked to provide information on the aid application—student, student’s spouse, student’s parent(s) and/or stepparents(s)—is called a “contributor” to the application. Contributors are required to provide consent and approval for federal tax information (FTI) along with their signature on the FAFSA form.

• The student applying for aid is always a contributor.
• A student who is a dependent will have at least one parent as a contributor.
• An independent student may not have contributors other than themselves.
• For independent students who are married and filed taxes separately for the reporting tax year, their spouse is considered a contributor.

The new FAFSA form will include a “Parent Wizard,” an interactive worksheet that helps the applicant to determine which parent or parents they should be planning to include on their application.

Students, spouses, parents, and stepparents (any contributors identified during the application process) will need to provide their consent to provide their Federal Tax Information (FTI) in the new Consent to Retrieve and Disclose Federal Tax Information section of the FAFSA for federal student aid eligibility. Once the required contributors are identified, the Federal processor will send an email to each with consent instructions. The consent lasts for that application year and will need to be given for all contributors every year the applicant submits a FAFSA.

It is vital that all contributors provide consent for direct data share. If any contributor to the FAFSA form does not provide consent, submission of the form will still be allowed. However, a Student Aid Index (SAI) will not be calculated, so the student will not be eligible to receive federal aid.

The new FAFSA form will include a “Parent Wizard,” an interactive worksheet that helps the applicant to determine which parent or parents they should be planning to include on their application.

• If the parents are married and their tax filing status was “married filing jointly” for the reporting year, then only one parent needs to create an FSA ID and provide consent on the FAFSA. Providing consent allows both parents’ tax information from their tax return to be retrieved from the IRS.
• If the parents are married and their tax filing status was “married filing separately” for the reporting year, then they will both need to create an FSA ID and will both need to provide consent on the FAFSA, since their tax information is provided on separate tax returns.
• If the parents are separated or divorced, the Custodial Parent will need to create an FSA ID and provide consent on the FAFSA.

For dependent students, the Custodial Parent will be the parent who provided the most financial support, instead of the parent with whom the student lived more during the past 12 months. If both parents provided an exact equal amount of financial support, then this will typically be the parent with greater income or assets. The Custodial Parent will need to create an FSA ID to provide their information for the student’s FAFSA.

Direct data share with the IRS will replace what is currently known as the IRS Data Retrieval Tool (DRT). This allows the IRS to directly provide Federal Tax Information (FTI) for contributors to an applicant’s FAFSA.

Each contributor will be asked to provide consent in a section of the FAFSA application form that provides details about what information is shared. When completing the FAFSA, students will be able to invite contributors to complete their section of the form by providing an email address and basic information for the contributor. That contributor (parent or spouse) will need to log in to the form with their FSA ID and will be able to consent to the data exchange. Alternatively, parents may start a FAFSA form on behalf of their student and invite the student to complete their section.

Yes, contributors will need to consent to direct data share with the IRS for the FAFSA every year, but only once a year when completing the form. Once the consent is granted it cannot be revoked.

Yes. Even if a tax return has not been completed, the applicant and all other contributors must provide consent in order for the student to be considered eligible for federal financial aid. Note that if taxes were not filed and no filing extension has been obtained, the applicant may not be eligible for Title IV federal student aid.

Yes. Throughout the 2024/25 FAFSA, there are several opportunities to update your consent approval. You can log in to StudentAid.Gov and update your consent on your dashboard.

No. The applicant and other contributors will each have their own section of the FAFSA form to complete. According to the Department of Education, much of the applicant’s tax return information, including information from their spouse and parents, will come directly from the IRS and will not be viewable by the student and other contributors.

Applicants with unique circumstances (like international students or families navigating identity fraud) will still need to provide consent for direct data exchange with the IRS. For instances where income and tax information cannot be obtained directly from the IRS, the applicant will be prompted to enter the necessary information into the FAFSA manually, and that manual entry may be subject to verification.

Yes. Foreign tax filers can enter tax information manually on their student’s FAFSA.

If you are determined to be a Dependent Student, based on the information you’ve added to your 2024-2025 FAFSA, and your parent refuses to provide their information, then you can indicate that you would like to be considered for a Direct Unsubsidized Loan. The Direct Unsubsidized Loan is the only federal financial aid that you can be considered for without your parent’s information.